Why some companies are stopping service staff from accepting tips

The minimum tipped wage can be more than three times lower than the standard minimum wage, so why would companies choose to eliminate tips and cover the cost?

Why some companies are stopping service staff from accepting tips
h growing concerns about living wages across the US, some companies in the hospitality and service industries are taking it upon themselves to ensure the wellbeing of their service staff isn’t left to the mercy of fickle customers.

Upscale restaurants like Riki in New York City and Brand 158 in Los Angeles now post signs notifying customers that tips are neither expected nor encouraged. To make up for the lost wages, waitstaff are paid living wages. The idea is to provide equity between staff that spend most of their time serving customers and those in the kitchen, Michael Lynn, a professor at Cornell University’s School of Hotel Administration, told The Raw Story.

But not all such establishments are high-end: in Fort Collins, Colorado, the New Belgium brewery has also posted signs pointing out that tips are not necessary. The employee-owned craft brewery is the eighth-largest brewing company in the US, and employed 480 staff in 2013.

Because servers in the brewery’s tasting room were being paid a living wage with full benefits, they felt it would be incongruous to accept tips.

“Packagers, brewers and cellar workers don't get tipped and since we really are a collective of owners, it made sense to keep that part equitable,” said New Belgium spokesperson Bryan Simpson.

Though it would be less costly to pay staff minimum tipped wage and exclude benefits, as the law allows, the cost of wages is one that New Belgium happily takes on. “The economic benefit comes from the fact that by paying a fair wage and being employee-owned, we have a very dedicated team,” said Simpson, “and our retention rate hovers around 93%.”

However, when customers do insist on tipping good service, the company does facilitate it by directing tips toward worthy causes. Co-workers choose rotating non-profits, and the company has been able to donate thousands of dollars in tips toward causes such as flood relief efforts and animal welfare charities.

“Before we started accepting tips in the name of local non-profits, people were a little taken aback when they could not tip,” said Simpson. “They wanted to show appreciation and it almost felt like a rebuke to say no. Now we can take the money, explain the program, and they feel even better about the experience.”

Recent articles & video

Slack CEO to step down

HR veteran to retire after more than 40 years

Patient’s widow claims medical corporation liable for employees’ conduct

Despite reports of layoffs, many tech companies still hiring

Most Read Articles

Does your benefits package include an employee discounts program?

Furniture company fires 2,700 workers just before Thanksgiving

Four ways to improve recruiting and retention