In a US restaurant, do you still tip if you know that the tip does not go to the waiter?

Question

I understand that the main point of tipping in restaurants is to supplement low wages for service staff. After personally knowing one waiter who works (perhaps illegally as he may not be permitted to work) in a particular restaurant, I learned that he received a fixed daily salary and whatever tip the customers leave go to the owner of the restaurant.

If this is true, do customers still have any ethical obligation to tip when dining in this restaurant? After all, whatever amount we tip will not go to the waiter.

Answer 1

whatever tip the customers leave go to the owner of the restaurant.

This is illegal. Please report. E.g., in WA state, report here.

Answer 2

In addition to Franck Dernoncourts answer outlining the legal side, I'd like to address the ethical side, because you explicitly referred to ethics in your question.

The ethical thing is to not be a customer of establishments that are both immoral and criminal. If you know a restaurant is run by criminals who steal money that belongs to their employees, you report the establishment to the relevant law enforcement authorities. Hopefully the business will be closed down (or possibly receive a milder penalty and improve their ways), and the landlord will find a new tenant that respects the law.

Possibly, in some places, this is not only the ethical thing to do, but also the mandatory thing to do. You're knowingly supporting an ongoing crime, although it's probably unlikely to get you into actual trouble (I don't know, and I am not a lawyer).

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Excursion into why I believe it is ethical to boycott such establishments, because a comment pointed out my answer violated Hume's law:

If you believe that theft causes harm (even more so if the victim is poor or otherwise vulnerable), and you believe it is moral to reduce harm, then the restaurant owner behaviour is not only illegal, it is also immoral. As a customer, you are rewarding this harmful behaviour, which also causes harm (indirectly). Therefore, it is ethical to not be a customer of such establishments.

Furthermore, if you believe it is moral to reduce harm and the harmful behaviour is illegal (as is the case in the question), then reporting the establishment to law enforcement contributes to reducing harm. You could choose to do this, depending on how strongly you consider this behaviour to be immoral and on what you think of the possible response from law enforcement.

Answer 3

While I don't disagree with the suggestion to report the situation, that will take time; and unless one of the wait staff is willing to come forward it may not go anywhere.

In the meantime, to answer the question: tipping is always optional and you are under no obligation to leave a tip. The situation is different with a 'service charge' advertised on the menu and added to the bill, which must be paid.

You might also consider not eating at the restaurant.

Answer 4

Other people have addressed the legal side and recommended to not visit the establishment if you know about illegal behavior.

Purely from an ethical standpoint I would say it is always ethical to not tip in the USA.

Because legally the waiters still have to be paid minimum wage by the employers if they do not manage to make above minimum wage through tips.

It may often be the case that employers break this law, but in that case if you know about it you should once again not visit that establishment.

(If you know the waiters do not pay taxes on tips, that would be further reason to not visit the establishment.)

As we are on the travel exchange I would add that while ethical it is not socially acceptable. And all my points are not very practical because most restaurants break the law and most waiters break the law. So you couldn’t go ethically eating at all.

Answer 5

Also in addition to Frank Dernoncourt’s and gerrit’s answers:

With regards to tipping someone, I will typically physically hand an employee cash, because wage theft in tipping is more common than you would like to think, but also because of theft by other employees and clientele!

Handing someone cash directly (and maybe saying “thank you”) significantly improves the likelihood that that someone receives the full tip that you meant for him or her, and that she receives it today and not at some future date, even when you are unaware of any illegal behavior on the part of the business owner or his agents.

Use cash to tip, and make it clear on the receipt that you offer NO additional tip surcharge be made from your card. This also decreases the likelihood that any other payment shenanigans will happen with your card.

You cannot prevent all malfeasance, of course, but you can make sure that you left an employee with money in-hand and later dispute any bad action with your credit card.

Answer 6

My answer in no way disagrees with anyone who states that this arrangement is illegal, that the best course of action is to not patronize the establishment, or that tipping is not required. These are all entirely true.

After personally knowing one waiter who works (perhaps illegally as he may not be permitted to work) in a particular restaurant...

(Emphasis mine.)

Sorry for your friend's situation. It sounds unpleasant.

If he is not permitted to work but does, he is breaking the law. The employer is breaking the law by employing him illegally. It should come as a surprise to no one that an employer who breaks one employment law, breaks another also.

All of that aside, while tipping is not required, it is extremely poor form not to tip when receiving sit-down service at a restaurant in the US. There are as many opinions about this as there are people, but if you're asking for societal norms, if you can afford it, 15% is the minimum.

Handing the tip directly to your server is generally pointless. Many establishments have tip pools or tip-sharing arrangements, where some of the people who you didn't interact with directly, but are still involved in your service (bussers, expo, bartenders, etc.), receive a portion of the collective pool. These schemes also often serve as normalization, so no one server benefits disproportionately from better or worse luck. I have no idea if these schemes are legal, but from my experience in the industry, they are normal.

I understand that the main point of tipping in restaurants is to supplement low wages for service staff.

As an American with experience in the service industry as a server and as a manager, I would disagree with this. This is a common complaint but it is factually incorrect.

The federal minimum wage stands, even if a server's posted hourly is below it. Servers declare their tips.

If the amount earned hourly, between wages and tips combined, is below the minimum wage, the employer must pay the difference.

I do not know how many employers either ignore this or get this wrong. I've worked at several restaurants in different states, and every single one I've worked for does follow this. Most have made mistakes that I've caught but none have ever disputed a correction.

This does come with two provisions:

• The actual (legal) minimum wage isn't the putative minimum wage right now. McDonalds (they're often considered a hire-all entry job) in my area pays $13 an hour while the minimum wage is around $8. This is a big difference and I'm not taking a side. It's the way we do things in America.
• Servers routinely lie about their tips when reporting for accounting and taxation, in my experience. I've met some who do some mental math to put their declared tips right in the minimum wage area. I've also met many who don't really care. I've also (as a manager) been instructed to dismiss a server who routinely declared such low tips that their salary had to be padded by the establishment. This person was under-reporting their tips. Lying on reported tips is tax fraud and is illegal. Then again, a lot of people break other laws routinely, like speed limits. Once again, I am making no endorsement of either side.

... I learned that he received a fixed daily salary and whatever tip the customers leave go to the owner of the restaurant.

(Emphasis mine.)

Is the fixed daily salary at or above minimum wage? I am not a lawyer but I don't believe that this is illegal in any way if it meets minimum wage requirements.

If the fixed daily salary is below minimum wage, this is definitely illegal.

So what do I do?

Try to help your friend get out of the situation. This requires somehow getting him on the right side of employment law so he can get a legal job where this is less likely to happen.

If you have presumed incorrectly and your friend is legally employed, or after he has gained the right to work, help him get a better job.

Until then, tip 15%. You're asking in Travel.SE so I presume you're not from the US. This is how we do it here. You are not breaking the law to do otherwise but you will be violating the social contract that Americans follow.

There are a great many Americans who have violated various social contracts (and laws) with mixed success. Martin Luther King, Jr. comes to mind, as well as many others. As a traveler, do you want to be in that company?

I know that I don't want to be an outlier, and definitely not a crusader, when I travel anywhere else. I can barely affect US laws as a US citizen. I feel like I am generally powerless to question, much less dispute, any situation when outside the US, whether societally incorrect or illegal, when I travel.

Answer 7

My experience in the industry tells me that that's an atypical arrangement. I suggest putting cash in the server's hand. That's what I do whenever possible.

Answer 8

According to federal law, the employer is permitted to take up to $5.12 per hour of tips as a credit towards paying the tipped employee a minimum wage of $7.25 per hour. If the employee earns less than $5.12 per hour of tips they are to receive a fixed $7.25 per hour total.

If the employee is getting more than $5.12 per hour in tips and the employer is keeping all the tips then that's illegal. It's up to you if you want to support illegal activities by going to such a restaurant or tipping there.

Answer 9

No, you are not. In fact you probably shouldn't, unless your experience was so extraordinary that you feel the owners deserve more than they chose to charge you.

The general rule of thumb is that you tip at any "sit down" restaurant where the staff takes the order at your table, brings your food to your table, and busses your table for you when you are done. (There are also some other non-restaurant situations, but the question was about restaurants)

The reason you personally want to tip these workers^* is that in the USA restaurants are actually allowed to pay people way below the minimum wage if they are being tipped. The amount varies by state, but the federal minimum is only $2.13/hour! So if a tipped-wage server doesn't get any tip from your table, they were doing all that work for dang near nothing.

However, there are exceptions. Some restaurants have been going with a no-tip model. To do this and still be square with US labor laws, of course they have to at least pay the normal (non-tipped) minimum wage. Now in such a place, I could see where a patron might feel like tipping the server anyway. We're used to doing that. However, as an owner of such a place, I might not like that, as it means now servers may psychologically treat regulars who tip anyway better than those who don't, which now incentivizes everyone to go back to tipping! Suddenly I'm just running a more expensive tipping restaurant again.

So yes, one way around that would be to not let the servers keep those tips. If they're paid a good salary, and knew this was the deal up front, there's nothing wrong with that. It also means in such an establishment you should not be tipping. Its OK. That's what everyone there wants.

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^{* - It always helps me at least to understand things when I know the reason for them.}