Are Automatic Gratuities Going Away?

Dealnews reports:

A new IRS ruling has resulted in some frustrated restaurant owners and disappointed servers, and could possibly end a practice that's bugged many restaurant patrons for years. At the center of this controversy is the automatic gratuity, that compulsory charge many eateries tack on to your bill when you dine with a large group of people. As of January 1, 2014, the IRS will start treating automatic gratuities as a service charge, a change that's got the food service industry up in arms.

Servers May Feel the Pinch

When the IRS ruling, which was enacted in June 2012, starts being enforced in January, servers will no longer be responsible for self-reporting their income from automatic gratuities to the IRS. Instead, restaurant owners will have a choice: they can start adding those automatic gratuities into a server's wages (which would mean more paperwork), or they can stop charging customers for automatic gratuities altogether. According to Denise Wheeler, an attorney who spoke with the Wall Street Journal, it's likely that "the vast majority of restaurant owners will discontinue the practice."

This could be bad news for servers who depend on tips because their hourly wages are usually far below the minimum wage. When the restaurant where he works stopped charging automatic gratuities, server Michael Turney, who spoke with USA Today, noticed a significant change in his income. "I feel like larger parties don't tip as well as they should for the amount that they spend at the restaurant," Turney said. "When they spend $200 and leave $20, you're losing out on about $16 or $17." He went on to say that some servers at the restaurant are now hesitant to take on large parties, because they can make more tips on smaller groups.

I agree, this could happen.  Back in the day when I was working in food service, we saw this a lot - the same people who would leave a 20% tip for a party of four would only leave 10% for a party of 10.  For some reason, the percentage becomes less important than the dollar amount when the cost goes up due to larger parties.  That doesn't make it right, but I do see how this is a concern.  Now, the flip side...

While restauranteurs and servers may resent the IRS's automatic gratuity rule change, several customers have been vocal in their hatred of the practice. "Even if you generally tip more than 18%, automatic gratuities can't help but rub you the wrong way," read an editorial for the Chicago Tribune. "From a customer's perspective, a predetermined tip is mighty presumptuous. A server who doesn't have to earn his or her tips has little incentive to try, and the customer has no choice but to pay a premium anyway." The editorial also pointed out that a customer is rarely notified when an automatic gratuity is charged, which may lead them to leave a larger tip than they'd intended. "That's dishonest," the writer asserted.

I agree with that, too!  We may be abnormal, but we always confirm the price of our meal (including the tip) before paying, but even when you're looking it can sometimes be hard to spot.  Especially with a large group or multiple checks, it can hide rather easily.  And yes, I completely agree with the presumptuousness of adding the gratuity on from the start!  Plus, there have been times where I would have tipped more if left to my own preference, but since the restaurant forced me into the 18%, that's what the server got.  Again, we may be abnormal in that, but surely there are others who function the same way out there.

Dealnews offers some interesting suggestions and speculations about how it will play out, so check out the link above if you want to see it.  Personally, I've never understood why wait staff get paid a lousy $2.whatever in the first place.  How did that one job get exempted from the minimum wage?  Wouldn't it make more sense if they got the same $7.25/hour as other hourly jobs, and then any tip would be treated as it was meant to be (for excellent service over and above the bare minimum)?  As someone who worked for years in food service, and as someone who now regularly pays the bill at various restaurants, that seems more fair to me overall.

I wonder what that cost structure would do to the price of restaurant food, or what it would do to the typical wages earned by wait staff?  I honestly don't know what the net effect would be, but I bet there are some smart economist type people out there who could figure it out, or at least make a good guess.  If anyone happens to see anything related, feel free to drop me a comment and let me know.

Regardless, it will be interesting to see how this new IRS rule plays out in the real world.  It seems there is an unfortunately high rate at which IRS rules that seem good actually turn out pretty badly.

This Is eSports Episode 7 - The Evolution Of Starcraft And Training Grounds

KSU Wins! (For Real, Not Just A Prediction)

Final score was 31-14. Pretty good prediction, if I do say so myself!

Full recap and details are here: http://scores.espn.go.com/ncf/recap?gameId=333622306

This win snaps a lengthy streak of bowl game losses for the Cats and leaves them at 8-5 on the year. Not quite what the purple nation was hoping for back in August, but certainly a solid effort and some generally positive results.

Perhaps as much as anything, it positions K-State for another Big 12 title contention next year as most of the skill positions return and the team seems to have finally learned how to play Snyderball -- clean, smart, and hard -- over the second half of the year. If they can retain this mojo, next year should be another great year in the Little Apple.

But that's next year. For now, many congrats to Coach Snyder and the entire Wildcat football team on a job well done!

EMAW!

KSU Wins!

Here's the short version...

Michigan is a storied program with lots of history and a bit of a snooty attitude, like USC, Alabama, or Notre Dame. But, they've lost something like five of their last six games, and they're without their starting QB. There's a lot of potential psychological damage waiting to happen if things go badly early on, especially to an upstart like K-State. Also, their O line has been pretty bad this year, so if the Cat D is on point they could have a field day (especially with a true freshman QB standing in on short notice). KSU, on the other hand, comes into the game with confidence, winning five of their last six games and with everything humming along smoothly. Plus, the biggest monkey on KSU's back -- not winning a bowl game in over 10 years -- has been discussed in the open, and is actually a major motivation.

Bottom line: KSU Wins, 34-20

Elf (Via Pug)

Awwww.....

Merry Christmas!!!

 

Luke 1:26-38
Now in the sixth month the angel Gabriel was sent from God to a town in Galilee, named Nazareth, to a virgin who was to be married to a man named Joseph, of the family of David; and the name of the virgin was Mary.

And the angel came in to her and said, "Peace be with you, to whom special grace has been given; the Lord is with you."

But she was greatly troubled at his words, and said to herself, "What may be the purpose of these words?"

The angel said to her, "Have no fear, Mary, for you have God's approval. And see, you will give birth to a son, and his name will be Jesus. He will be great, and will be named the Son of the Most High: and the Lord God will give him the kingdom of David, his father:
He will have rule over the house of Jacob for ever, and of his kingdom there will be no end."

Mary said to the angel, "How may this be, because I have had no knowledge of a man?"

The angel in answer said to her, "The Holy Spirit will come on you, and the power of the Most High will come to rest on you, and so that which will come to birth will be named holy, Son of God. Even now Elisabeth, who is of your family, is to be a mother, though she is old: and this is the sixth month with her who was without children. For there is nothing which God is not able to do."

Mary said: "I am the servant of the Lord; may it be to me as you say." And the angel went away.

Luke 2:1-20
Now it came about in those days that an order went out from Caesar Augustus that there was to be a numbering of all the world. This was the first numbering, which was made when Quirinius was ruler of Syria. And all men went to be numbered, everyone to his town.

Joseph went up from Galilee, out of the town of Nazareth, into Judaea, to Bethlehem, the town of David, because he was of the house and family of David, to be put on the list with Mary, his future wife, who was about to become a mother. And while they were there, the time came for her to give birth. She had her first son; and folding him in linen, she put him to rest in the place where the cattle had their food, because there was no room for them in the house.

And in the same country there were keepers of sheep in the fields, watching over their flock by night. An angel of the Lord came to them, and the glory of the Lord was shining round about them: and fear came on them.

The angel said, "Have no fear; for truly, I give you good news of great joy which will be for all the people: For on this day, in the town of David, a Saviour has come to birth, who is Christ the Lord. This is the sign to you: you will see a young child folded in linen, in the place where the cattle have their food."

And suddenly there was with the angel a great band of spirits from heaven, giving praise to God, and saying, "Glory to God in the highest, and on the earth peace among men with whom he is well pleased."

When the angels had gone away from them into Heaven, the keepers of the sheep said to one another, "Let us go now to Bethlehem, and see this thing which has come about, which the Lord has made clear to us."

They came quickly, and saw Mary and Joseph, and the child in the place where the cattle had their food. And when they saw it, they gave them an account of the things which had been said to them about the child. All those to whose ears it came were full of wonder at the things said by the keepers of the sheep.

But Mary kept all these words in her heart, and gave much thought to them. Then the keepers of the sheep went back, giving glory and praise to God for all the things which had come to their ears and which they had seen, as it had been said to them.

This Is eSports Episode 6 - The Art Of Gaming

The next chapter...

This Is eSports Episode 5 - Meet The Fans Of StarCraft 2

So...I didn't realize it'd been so long since I posted!  Between wrapping up school, the usual end of year stuff, and heading out of town for a few days on vacation, things got pretty crazy for a couple of weeks.  Sorry about that...I'll try to make up for it over the next few weeks.  To kick things off, we need to get caught up on the eSports series, so here you go...