Tipping the Table
When Covid hit the fan 15 months ago we pivoted pretty quickly and a whole new way of doing business was created, beginning with takeout, then adding delivery, online ordering and online payments. We never used a third-party delivery service. Our employees needed work; they could drive! We got our chain yanked a few times: open-close-partially open-close, etc. Tips came in from the online ordering and, of course, from the dine-in business when allowed.
Goodbye AutoGrat
This week we finally eliminated the service fee and are returning voluntary tipping. The tips that are paid through online ordering, takeout and delivery are paid to the staff that performs those duties. They tip pool with the kitchen (BOH) staff and pay them 5% of gross sales. The rest they divide amongst themselves.Similarly, your lunch and dinner servers share your generosity with the kitchen as well as the host and support staff based on gross sales. For example, a server will pay the BOH $5 and the support staff at least $2 on a $100 tab, regardless of whether or not he receives a tip. By setting the rules so that tips are pooled based on gross sales servers are rewarded directly when they are generously tipped for great service. Correspondingly, if a server gets stiffed on a $100 bill it will cost him $7 for the pleasure of serving an unhappy customer.
Our Pandemic Policy
With the takeout and delivery business running strong and dine-in business hit or miss, we instituted and mandatory gratuity policy and gave our server-driver-admin-floor sweepers a raise to $25 per hour. This allowed us to channel your generosity into the paychecks for our entire cast of characters. When we were in the throes of the pandemic nobody minded, especially once we put a note on the check presenters explaining our motives and granting permission for customers to not pay the fee if they did not feel it was warranted, which was seldom the issue. People mostly objected because they wanted to be free to make their own determination. Our customers are typically quite generous.As circumstances have evolved to simulate normal (having been burned a few times we still half-expect yet another shoe to drop) the hybridized policy has run its course.
Tipping Regulations – A History
Here is the why and how of our decision making. Many (most) states allow employers of tipped employees to use an alternate minimum wage as low as $2.13 per hour. Years ago, a number of bad actors took advantage of this so that they could starve their employees even more, skirting the $7.25 federal minimum by requiring tip pools and declaring their dishwashers and cooks to be “tipped employees.” The Labor Department moved against this practice and enacted regulations defining “normally tipped employees” and establishing a hands-off policy, clearly stating that tips are the property of the server to whom they were given. Eventually a lawsuit was brought by a server that objected to sharing tips with her co-workers (tip pooling). She initially prevailed but when the case made it to the 9th Circuit the judges did not immediately rule on the matter but temporarily set aside the restriction against tip pooling for employers who did not take the tip credit and provided a base pay at least equal to the minimum wage. After a few years of this they issued a final ruling and reinstated the restriction. Then, about five years ago, the Labor Department rewrote the regulations to permit employers to require tip pooling if they paid at least the minimum wage. Not only does Oregon require employers to pay the minimum wage to tipped employees, the rate at $14 per hour is nearly twice the federal minimum.Around the same time another edict was handed down. Businesses that charged service fees, or mandatory gratuities, were not to pay those fees as tips, they must pay them as wages. (Strangely, monies paid in these scenarios could count toward the minimum wage requirement. We never did that and even now at $14 per hour we do not have any minimum wage empl0yees.) Additionally, fees collected in this way were in fact the property of the employer and he could allocate them however he chose, or not at all.
An Apology
I (David) have been binging on my work in Walla Walla and neglected this matter for too long after reopening. This has made some of you a little grumpy. I apologize. I hope that this explanation and apology gets your hair laying back down. We enacted the policy for good reasons. I discontinued it too late. It was a tough year. Welcome back!