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Servers Petition Employers to Bring Back Automatic Gratuities, Citing Major Pay Cut

Many say their paychecks have been drastically affected by new IRS rules


Anyone who's ever dined out has noticed the fine print at the bottom of their menu: "An 18 percent gratuity will be added to parties of six or more." Restaurants have historically tacked on an automatic gratuity, as it's called, to ensure servers don't get stiffed on large tabs. But all that changed in 2014, when the IRS changed how such income was taxed: Under the new rule, said auto-grats are classified as regular wages rather than tips, meaning it's up to restaurants to withhold payroll taxes from them instead of leaving it up to employees to report them as income (or not).

Insisting this would result in more paperwork and complications, many restaurants chose to get rid of automatic gratuities altogether — and as Gawker reported yesterday, many restaurant servers say they're feeling the pinch. Employees of big national chains such as Red Lobster and the Cheesecake Factory are petitioning their employers to bring back automatic gratuities, claiming that their paychecks have suffered dramatically. According to a survey by, servers at several different national chains "say they’re losing between $50 and $200 per week as a direct result of not having automatic gratuities added to the checks of large parties."

All this adds further fuel to the no-tipping argument: When the burden of paying servers a living wage falls to the customer, workers are often left out in the cold. An increasing number of restaurants are following in the footsteps of trailblazing restaurateur Danny Meyer and getting rid of tipping in favor of surcharges or higher menu prices, but it seems Americans as a whole aren't yet ready to end the cultural institution of tipping. In the meantime, don't be stingy — 20 percent is customary, particularly when you're having lunch with ten of your besties.

Video: Why Some Restaurants Are Banning Tipping

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