Come January, the Internal Revenue Service will classify automatic gratuities as regular wages. Thus the automatic tip is on its way out due to the cost of compliance.
Olive Garden, LongHorn Steakhouse and Red Lobster owned by Darden Restaurants, is experimenting with ending the automatic tip for larger parties.
The Wall Street Journal states that “The chain in July stopped automatic tips at 100 restaurants in four cities, where it is testing a new system in which the restaurants include three suggested tip amounts, calculating for the customer the total with a 15%, 18% or 20% tip on all bills, regardless of party size. Diners can opt to tip more or less than the suggested amounts, or to not tip. Depending on how patrons react and how well the new software system works, Darden may switch to such suggested tips at all of its restaurants. A spokesman said the company will decide by year-end.”
Wait Staff in most restaurants do not make the $7 plus minimum wage, their minimum wage is based just over $4 plus an hour. They make up the difference via a tip. That is the reason that we hear that if service is bad the least a tip should be is 10 percent.
Personally I never add the tip when paying with plastic. I always carry cash with me just for the tip. The reason is simple, if you add it to the check the restaurant has a record that the IRS could use against the staff. I do not care what the staff does with the cash it is on them to report what they want to report to the IRS.
