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Why are some restaurants saying no more tips?

In our post last week, our blog discussed how there is currently movement, albeit limited, in Tallahassee to raise the minimum wage here in Florida from $8.05 per hour to as much as $15 per hour.

While the two senators behind this proposal concede that the odds of the Sunshine State introducing a minimum wage hike are slim given the concerns among fellow lawmakers about its affordability for small business owners, they may want to point them to the surprisingly positive experience of restaurant owners in other U.S. cities.

In cities like Seattle, New York and San Francisco, where the minimum wage has already undergone or is slated to undergo a significant bump, many restaurant owners have implemented new systems designed to not only manage rising employment costs, but also rectify what they see as a longstanding inequity among staff.

Specifically, many of these restaurants are doing things like raising prices, introducing all-inclusive menus (i.e., gratuities are included in the price), and/or adding compulsory service charges.

In addition to helping many of these restaurant owners cover the cost of meeting the new minimum wage, these measures have also served to help minimize the sometimes drastic pay differences between those employees who earn tips serving customers and those who prepare food yet receive no tip revenue whatsoever.

"We saw there was a fundamental inequity in our restaurants where the people who worked in the kitchen were paid about half as much as the people who worked with customers in front of the house," said one Seattle-based restaurateur.    

Some of the other advantages floated by restaurant owners in support of a higher minimum wage and some variation on a no tipping policy include:

  • Simpler accounting for both employers and employees concerning taxes
  • Better income security for employees in the event of "slow nights"
  • Greater flexibility in terms of rewarding employees for years of service or performing difficult tasks

While there is some concern on the part of no-tipping restaurateurs about losing customers due to higher prices, their experience thus far should serve to demonstrate to lawmakers that a higher minimum wage can indeed work.  

Consider speaking with an experienced legal professional if you have questions or concerns about whether your rights under the state's wage and hour laws have been violated.

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