OPINION: Deregulating Tipping Policy Does Not Mean The World Will Spontaneously Burst Into Corrupt Flames
Restaurateur Katie Button on the misconceptions around owner-regulated tipping, and how it may lead to a healthier industry.
March 20, 2018 ● 4 min read
As told to Priya Krishna by Katie Button | Original photograph by Evan Sung; photo illustration by ChefsFeed
Last December, the Trump Administration proposed changes to restaurant tipping policy that would eliminate regulations on tips — meaning employers have control over who gets to receive them, rather than servers automatically keeping their own tips.
Katie Button, the accomplished restaurateur behind Asheville hits Cúrate and Nightbell, disagrees with many of the assumptions made about employers in the stories surrounding these potential policy changes. Here, she talks about how the discussion around tipping has mischaracterized restaurant owners, and policies she thinks would best ensure that employees are treated fairly while allowing restaurateurs to run a sustainable business.
Tipping has been a contentious issue in restaurants for years.
You have people fighting for keeping tips the way that they are so that servers can make more money; you also [hear] a lot of restaurant owners and chefs try to come up with creative solutions to solve the wage disparity problems our current tip structure has created for them.
This proposed change basically eliminates any requirement for tips to stay in the hands of people who are serving. What bothered me when reading about this was a New York Times article that came out surrounding the policy titled, “Labor Dept. Plan Could Let the Boss Pocket the Tip.” That title deeply offended me because, yes, there are scumbag business owners everywhere, but it’s unfair to assume that owners will be walking off with the cash.
From the restaurant’s perspective, the current law severely limits how we can pay our workers. Right now, customers eat in the restaurant, they leave 20 percent, and that goes to my servers. Because of the law, I can’t share that with the back of the house. This creates a wage disparity in which I have front of house people making between 60 and 75K a year, which puts them above what many managers make. So then, I don’t have many servers who want to move into manager roles — there is no incentive for forward career movement. And then we also have these back of house staffers making 15 dollars an hour versus a server making 75K, and it creates a huge amount of animosity.
The second problem with current policy is that the server is only incentivized by the tip left for them by the guest. I can’t incentivize them through pay raises and performance reviews, because they are just making all their money from the tips. I can’t penalize them for poor performance, and the guests are more dissatisfied because the server’s sole motive is to get the check amount higher so the tip is higher.
We are creating a system where instead of rewarding service, we are rewarding salesmen. But the best servers should be the ones [who] are team players, [who] care about the personal experience of the guests more than the money coming into their pocket — and that only happens when they know they are making enough before tips. I believe that someone’s pay should be based on performance, and that should be dictated and provided for by the management running the restaurant.
One thing I always struggle with is trying to grow benefits for our staff. We offer health insurance, as well as paid time off for all employees. We were thinking about a retirement plan, and how we can create an environment where people see a real future working with us for them and for their families. But when I looked into offering a 401K, I saw that you have to offer it to all of your employees, and so I’d have to match up to 3 percent of the money made each year for all employees. That means I’d end up contributing to my servers’ 401Ks more than any of my other employees, including my managers. So I cannot offer a 401K as an employer because it just makes this disparity worse.
I think that tipping deregulation is something we need to explore, but I think there also needs to be a way of protecting workers. To do that, I propose raising the minimum wage. $7.25 is absurd — that’s 15 to 18K a year. Who can live working a full-time job on that amount?
If you give me, as the owner, access to tips, I can pay higher wages to everybody, [and] the restaurant industry then works like every other industry. Deregulation would give us access to this income that allows us to create a fairer working environment with more benefits and more pay. And then the minimum wage increase is the protection that’s in place — that ensures workers are taken care of and helps hedge against the fact that tips are likely to be much smaller at diners than they are at bigger restaurants. Minimum wage protects all workers, regardless of the type of restaurant they work in.
This issue seems so insular within the restaurant industry, but it’s something that we should all care about. So many restaurants have tried to eliminate tipping in favor of raising the prices of the food, or adding an administrative fee, and a lot of them have had to reverse course because guests want to be in control of their experience, so restaurants end up losing business when they institute these changes.
This allows guests to be in control of their experience while not penalizing restaurants that want to more equitably distribute revenue.
When you go to a restaurant, your tip is a reflection of your whole experience — how your food was prepared, how it tasted, how the service was — and so many guests don’t understand that their tips only go toward part of that experience, and not to the kitchen. People need to understand where their money is going, and how difficult it is for restaurants to be able to manage employees in a system that doesn’t give us control over their payment.
Restaurateurs that want to reward good work should have the opportunity to do so. That seems like something everyone should want.