Gratuity Changes for Las Vegas Restaurants
Once upon a time, I was a cocktail server at the Monte Carlo Resort on the Las Vegas Strip; I also worked as a food and beverage server for local restaurants. I can easily say I preferred slinging cocktails over chow because the hourly wage and union benefits offered were much better. In most cases, restaurants offer the current minimum wage to service employees and you heavily rely on tips, which you are required to claim on taxes.
At the end of the night you would cash out and all the credit card tips would be converted into cash you’d take home. With the recent changes from the IRS, if a server waits on a large party, most restaurants consider this to be eight guests or more so the tip will go towards the employee’s check and become taxable as regular wages are.
So what’s the big deal? The employees are paying taxes on tips anyway, right?
Yes. Tipped employees pay taxes on tipped revenue. However, I see the biggest issue with this blanket law is being taxed on the full amount of a tip when more likely the server will not take home the full amount. This is because of tip sharing. When I was employed in the service industry, it was common courtesy to share a portion of tips with other employees like bussers and bartenders. The policy per establishment may be slightly different, however, the practice remains.
From my understanding of the new law, here is an example of how it will break down. If my one large party tipped me $50, I would in turn share 20% of it with my busser and if I served alcohol to the same party I would also share 15% of the $50 dollar tip with the bartender. I would actually only make $32.50 from that large party, however, I would be taxed on the full $50 dollar tip amount through my paycheck. If I understand policy correctly, this is simply not fair to tip earners.
The other issue that has servers at local restaurants upset is that large parties can be a great deal of work; sometimes you even give other tables away in your section, losing income, to be able to provide quality service to a large number of patrons. Taking the guaranteed 18% gratuity off the table leaves the server open to a potential income loss. Let’s face it, if you’ve worked in the service industry for any length of time you know some people are cheapskates, no matter how good you do your job. And frankly in a city like Las Vegas where we see visitors from the world over, they may not be familiar with the tipping process or in their area gratuity is always included in the check amount. I’ve personally run into both scenarios. This is where I’d personally have a problem with the new law.
The Customer Upside
Having been on the other end of the large party automatic gratuity fee, I can say that only once I felt it was undeserved. With a party of fifteen, at a buffet-type setting with the server essentially doing the job a typical busser would (and did that poorly), our party was charged the gratuity percentage. Considering my background and the minimum job she was to preform (refilling drinks) was not done until the later third of our meal, I was very upset with the automatic “tip”. For me, a tip is a form of thank you for a job well done, and this was far from it. I can see how the removal of the automatic charge can have its upside for those who feel the job was performed poorly. I do believe your tip should directly reflect the level of service; after all that is the point of it.
For many service industry front-of-the-house workers, the new law is simply not on their side. Many workers rely on their tips to pay the bills. Their job can be difficult, serving the public can be a challenge at times, so make sure if you dine out in a large party to try and remember the standard 18% gratuity fee will no longer be directly added to your check amount and please tip accordingly.