Something like this happened in Oakland’s Chinatown years ago. Many of the restaurants there were keeping the tips, rather than turning them over to the waitstaff. A local lawyer found out about it and represented a group of waiters pro bono to get them a monetary settlement.
I originally answered “I’d still eat there but leave no tip, feck 'em” but that’s not the right answer. I would not support a restaurant that allowed diners to tip under the mistaken assumption that the tip goes to the server, only to have the tip line the owners pockets.
That said, if the restaurant clearly stated that its policy is to pay its servers at least minimum wage and that any tips given would not go to the servers, then I would have no problem with that concept.
Someone once told me how they were audited and grilled by the IRS on the low amount of tips they claimed, the agents actually said we have the income claimed by your coworkers and yours is thousands less than all of them.
They worked in a bar and the other servers would flirt their asses off and on the male customers to get tips, they couldn’t flirt out of a paper bag. I believed them and they said the IRS had no proof so had to believe them too.
(they really couldn’t)
That is so outside of the US norm that unless there was a statement of their policy posted clearly where everyone could read it, say on the bottom of the menu in type large enough to be read in dim light, I would consider that the owner was taking advantage of his waitstaff and his customers and go elsewhere. The owner does not get tipped, period. His money comes from the price charged to the customer. The only way this would work ethicly would be if they made clear that the waitstaff was paid a living wage by the restaurant and thus tips were neither expected nor encouraged.
Just to be clear, Europe doesn’t have a non-tipping culture but rather a lower-tipping culture. A standard tip here is to round up to the next euro and add enough that it totals between 5 and 10 percent.
That episode of Kitchen Nightmares was staggering. What a couple of nutcases!
According to this the restaurant in question has this to say on the subject in its employee contract:
On how much this actually is; Having realised that they were probably one of the only eateries in the nation to have this payment structure they have rescinded this policy;
If they were upfront about it, then sure I wouldn’t mind (I also wouldn’t tip).
If they didn’t say a word and nobody told me that tips went to the owner, then I’d be mad as hell.
They were probably also advised by their lawyer it violates the terms of the FLSA, and they could potentially have had an awkward conversation with the Feds over it.
The Dept of Labor is pretty clear on it - even if you have a policy on no tipping, tips that customers do happen to leave go to the employees. The employment contract doesn’t really matter if it violates US law. E.g. you can’t legally force employees to work below minimum wage via contract.
In the show Ramsey is gobsmacked to find out that the owner takes the tips. Later on he tells a customer that a $10 tip he left went to the owner. The customer reacts as you’d expect - “That’s horrible”, so one can safely assume it wasn’t exactly advertised.
On previous; @ Great Antibob, that isn’t even my favourite, which would be #20 from that link:
How exactly this is supposed to be enforceable is anyone’s guess.
I actually know a restaurant like this. One of my son’s friends works there as a server and he’s told us to not bother leaving a tip because the owner takes all of the tips. He does get paid a little more than minimum wage, so no labor law is being broken, I believe. But there are no signs that let patrons know that tips are confiscated, so I have to assume that many people leave tips for their servers, but are unknowingly adding to the owner’s pocketbook. So, I will either leave no tip or surreptitiously give the server a few bucks hand-to-hand.
Still illegal under the FLSA, actually. Though I doubt anybody knows enough to really kick up much of a fuss. Tips you leave for employees go to employees. Period. It wouldn’t shock me if even the employer didn’t know this, but it’s a slimy, reprehensible practice, in any case.
What is allowed is a pool arrangement where tips are split among all the people who might be tipped (bussers, wait staff, cooks, etc), but this policy must be told to employees ahead of time. This can result in some of your tip money getting shared out to other people.
What is also allowed is for an employer to pay less than $7.25 an hour - though no lower than $2.13 - if they credit tips against wages and jump through the appropriate hoops (mainly letting employees know about it ahead of time).
Why does the question assume tips have to go to the owner? I would have my waiter bring me back my change, and I put the cash tip directly into the waiter’s hand. This ought to be a poll option, but isn’t.
Now… if the waiter chooses to turn this over to the owner, that’s their own business. It’s not my ethical dilemma anymore. Even waitstaff should be treated as responsible adults who can decide for themselves where they want to work.
Isn’t that just analogous to still leaving a tip? Otherwise all the waiters would just do that anyway. Judging by the restaurant that inspired our hypothetical eatery, a waiter would probably be compelled to turn over said tip or lose their job; see the contractual clause quoted above.