“It put everyone in a weird position”: Our waitress said a 20% service charge was added to cover social security and health insurance, but that it wasn’t a tip. Is that normal?

I went for brunch last weekend and when the waiter handed us the bill she said a 20% service charge was added to cover her services and health insurance but that it was not a tip.

I’m all for paying restaurant workers and waiters a living wage and they deserve to get benefits. But I wish the restaurant would have just baked it into their prices.

No one would have flinched if our meal was just $3 more, but the way it erupted was just weird and threw us in the wrong direction. This put everyone in a strange position, especially the server who had to explain this to us.

Is this a trend in gastronomy now?

Stunned customer

dear amazed,

More and more restaurants charge a service charge, but they do so in lieu of tips. While other restaurants add a low service charge — often up to 10% of the bill – to pay for allegedly higher healthcare costs. However, if you add 20% to the bill, you risk depriving the servers of their tips – when customers are expected to tip on top of that.

It is a legally precarious area. Under some state laws, a service charge should be considered a tip unless it is entirely “unreasonable” to assume that the charge is for services rendered. That’s probably why your waitress was instructed by the manager to point you out the fee and to tell you that she should cover the services.

Restaurant workers have had to grapple with low and volatile wages, unpredictable and long hours, and often few benefits during the pandemic, a situation exacerbated by two years of recurring waves of COVID-19 that have closed many restaurants and left many more struggling to survive.

That’s according to the law firm Larkin Hoffman Such restaurant fees can often be ambiguous: “To say that a service fee is ‘mandatory’ under state law is not accurate if the state does not require businesses to collect the service fee,” it states. Importantly, this can also affect a server’s actual tips.

“The growing use of service fees has generated significant debate between customers and service industry groups,” the company adds. “Some opponents say they would rather see price increases with posts explaining the increase or touting the benefits the increases offer.”

Waiters are among the lowest paid workers. Nearly a third of US workers earn “poverty-level wages” of less than $15 an hour, according to a recent data analysis by global poverty organization Oxfam, which found 51.9 million US workers earn less than $15 an hour Hour or earn $31,200 an hour per year.

The federal minimum wage in the US is currently $7.25 an hour and was last increased in 2009 several states pay more than that and others require employers to pay tips a minimum cash wage above the minimum cash wage required under the federal Fair Labor Standards Act.

Some restaurants waive tips altogether, but include a 20% service charge direct to staff to level the playing field at a time when some customers are under-tipping and/or behaving in ways that make waiters feel uncomfortable or even unsafe. But that didn’t happen in your case.

The restaurant industry has recently made efforts to support and protect its workers. Last year, One Fair Wage, an advocacy group for waitresses, released a report stating that over a two-week period, 1,600 restaurants in 41 states raised wages to pay the full minimum wage — with tips on top of that.

These restaurants paid an average wage of about $13.50 an hour, the report said, but the vast majority of restaurants in these states paid a minimum wage of $5 or less. “The pandemic has exacerbated the economic instability and vulnerability of tipped workers earning wages below minimum wage,” the report added.

Grocery costs are rising as inflation hits a 40-year high and it’s a tough time for restaurants trying to win back both staff and customers. Whatever you do with the service fee — whether you dispute it or pay it — make sure you tip the server in cash. Ultimately, they are the ones who end up paying the price.

yeahand You can email The Moneyist with financial and ethical questions related to the coronavirus at qfottrell@marketwatch.com and follow Quentin Fottrell Twitter.

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More on tipping from Quentin Fottrell:

‘Enough touchscreen tips! I’m over it’: After two years of the COVID-19 pandemic, do I have to tip for coffee, ice cream and takeout? am i cheap

Is that the most outrageous request for a tip you’ve ever heard? “I looked at the seller with a confused expression”

My girlfriend tells me to tip at restaurants. I say waiters are like construction workers and fast food workers. Who is right?

https://www.marketwatch.com/story/it-put-everyone-in-a-weird-position-our-waitress-said-a-20-service-fee-was-added-to-cover-benefits-and-health-insurance-but-that-it-was-not-a-tip-is-this-normal-11649682590?rss=1&siteid=rss “It put everyone in a weird position”: Our waitress said a 20% service charge was added to cover social security and health insurance, but that it wasn’t a tip. Is that normal?

Brian Lowry

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