Mandatory tipping

Mandatory tipping (also known as a mandatory gratuity or an autograt[1]) is a tip which is added automatically to the customer's bill, without the customer determining the amount or being asked. It may be implemented in several ways, such as applying a fixed percentage to all customer's bills, or to large groups, or on a customer by customer basis.[2] Economists have varied opinions on the issue of mandatory tipping. Argument against mandatory tipping include higher food price at the restaurant to make up for wages and loss of control of dining experience.[3]

General discussion

Some bars in New York City's borough of Manhattan have instituted mandatory tipping. Mandatory tipping is considered an oxymoron, as tipping is by definition a voluntary act on the part of the customer.[4] The BBC has reported that some find the practice bothersome; particularly those who are not aware that the tipping is used to subsidize the sub-standard pay at the workplace.[5] One waiter in London, England has criticized the low wages to the popular press.[5]

Mandatory tipping and voluntary tipping are illegal in some cases: Australian casino employees,[6] and US government employees, for example. Tipping is not generally part of Japanese culture, and can be confusing or offensive.[7] Tipping in China is frowned upon, except for those living in the semi-westernized regions of Hong Kong and Macau.[8]

Slightly less authoritative sources are appellate court decisions, with the U.S. Supreme Court at the top. Appellate courts regard mandatory gratuities as income for servers rather than a tip, thus affecting taxation. However, court cases have yet to set a precedent that failing to pay "mandatory gratuity" is illegal. [9]

Restaurant customers who pay the food portion of their bill but not the mandatory gratuity have at times been arrested, but charges are generally dropped.[10][11]

Some cruise lines charge their patrons $10/day in mandatory tipping; this does not include extra gratuities for alcoholic beverages.[2]

Judith Martin in her 2005 manners book opines that fast food restaurants will never charge mandatory tipping for their customers, despite the presence of tip jars,[12][13] and considers tipping for non-table services to be inappropriate.[12][13]

Ian Ayres, Fredrick E. Vars & Nasser Zakariya published a paper suggesting that tipping contributed to racial prejudice, since ethnic minorities would often be less able to pay a large tip. Another paper by Yoram Margalioth of Tel Aviv University argued that there was a negative externality associated with tipping, and that the practice facilitated tax evasion.[14] Two other American studies have contributed to the thesis that tipping is racially discriminatory, finding that ethnic minority servers and taxicab drivers received lower tips on average than their white counterparts. In the study of the servers, an attempt by the author to isolate other possible contributing factors, such as poor service, found that "After controlling for these other variables … the server race effect is comparable across customer race."[15]

Labour laws

Canada

According to guidelines established by the Canadian Restaurant and Foodservices Association, autograts and any tip pools controlled and distributed by the restaurant are legally subject to income tax and other mandatory deductions before being paid to the servers. All other gratuities are deemed direct tips and it is the server's responsibility to declare them as taxable income when filing for income tax.

References
  1. ""autograt" definition from Double-Tongued Dictionary". Retrieved 28 June 2010.
  2. "Will mandatory service charges replace voluntary gratuities?". USA Today.com. Retrieved 2011-06-02.
  3. "An economic and pedagogical defense of gratuities". ProQuest 2043223593. Cite journal requires |journal= (help)
  4. "High-End Manhattan Bars Institute Mandatory Tipping". CBS New York. Retrieved 2011-06-02.
  5. Shankleman, Martin (July 18, 2008). "Hard Rock wages 'below minimum'". BBC News. Retrieved April 2, 2010.
  6. Tasmanian Gaming Control Act 1993
  7. "What to tip when travelling". Television New Zealand. AAP. August 30, 2005. Archived from the original on May 10, 2015. Retrieved October 19, 2011.
  8. A few tips on handling gratuities worldwide
  9. A Google Scholar search of the exact phrase "mandatory gratuity" among all legal opinions and journals found 17 hits (excluding two articles), and all of those cases regarded mandatory gratuities as mandatory.
  10. NBC10 Philadelphia: Theft Charges Dropped Against No-Tip Couple (November 24, 2009)
  11. New York Times: Charges were dropped yesterday against a Long Island man who was arrested last week for failing to leave a required 18 percent gratuity at Soprano's Italian and American Grill in Lake George, N.Y. (September 25, 2004)
  12. "Miss Manners Guide to Excruciatingly Correct Behavior, Freshly Updated" by Judith Martin, p. 762. 2005. ISBN 0-393-05874-3
  13. Emily Post Institute—Tip Jar Survey Results Archived 2008-12-08 at the Wayback Machine
  14. Margalioth, Yoram. "The Case Against Tipping". University of Pennsylvania Journal of Business and Employment Law. 117 (9).
  15. Ayres, Ian (2008-03-20). "The Racial Tipping Point". Freakonomics Blog. New York Times. Retrieved 2008-03-22.

Further reading
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