Here’s a hypothetical situation: You’ve dined in a restaurant and received excellent service, so you place a generous tip on the table. Several minutes later, the restaurant owner approaches the table with a member of the kitchen staff; he takes part of your tip and hands it to the cook. When you protest, the owner explains that the cook is underpaid and deserves a raise. And when you ask why he’s raiding the tip money rather than paying the cook himself, he smiles and replies: “Because I can.”
The problem is that this situation is not hypothetical: it’s happening every day in restaurants across the U.S. In New York City, the problem became so widespread that an attorney named Maimon Kirschenbaum filed a series of class action lawsuits on behalf of servers against some of Manhattan’s most famous restaurant names: Mario Batali, Smith & Wollensky, Balthazar, Nobu, Le Bernardin and Jean Georges. Many of the lawsuits were successful and resulted in multi-million-dollar settlements.
Just when the owners’ ability to distribute the “tip pool” was threatened, they came up with the no-tipping policy. Some of the country’s best establishments (such as The French Laundry, Eleven Madison Park and Danny Meyer’s Union Square Hospitality Group) raised menu prices and included gratuities. This put the entire tip pool under the control of the owner. Then, in 2018, an amendment to the Fair Labor Standards Act allowed sharing between tipped and non-tipped employees, provided the restaurant paid the full minimum wage to everyone (as opposed to the reduced hourly rate allowed for tipped workers).
The no tipping policy and resulting higher prices did not resonate with customers, and many of the restaurants that implemented no tipping have since reversed course (most recently Danny Meyer, who announced his decision last week). Nor does it matter, since the 2018 changes to the FSLA have allowed restaurateurs unfettered access to the tip pool. It’s also fair to say that few people are paying attention to this situation, since many Americans have more pressing issues to worry about at the moment.
Can you think of another industry where business owners can require employees to pay the salaries of other employees? If so, please leave a comment at the end of this post. In the meantime, let’s call this what it is: theft. It may be government-licensed theft, but it’s just as morally reprehensibe.
Mark Spivak specializes in wine, spirits, food, restaurants and culinary travel. He is the author of several books on distilled spirits and the cocktail culture. His first two novels, Friend of the Devil and The American Crusade, are available on Amazon; his third novel, Impeachment, will be released on October 1.