Lehigh students Leslie Pope and John Wagner believe that they now know why tipping is mandatory at the Lehigh Pub in Bethlehem. After they received what they called horrendous service, they paid the bill with no tip. They ended up in jail for the $16.35 tip.
The students were with six friends at the pub, which charges an automatic 18 percent gratuity for parties of six or more.
They claim that they had to get their own utensils and napkins for a waitress that left to take a smoke, beg for refills on sodas, and wait an hour for salad and wings.
The restaurant took the $73 for the meals and drinks and then called the police.
Lehigh Pub thereby succeeded in pursuing $16 in exchange for publicizing to the nation what customers think of its service. So much for a rational actor theory.
For the story, click here.
Absolutely absurd! The definition of Gratuity is: a “a favour or gift, usually in the form of money” therefore it is OPTIONAL. For the authorities to even answer to a call like this, let alone persue it is absurd!
Jodie, as I mentioned in an above reply, gratuity has a different legal meaning than the standard dictionary one. In the service industry, a gratuity (read tip) is regulated by US code. A gratuity cannot be considered a “favo(u)r” or “gift” because it is actually payment for services rendered in lieu of salary. It is taxable income according to the Internal Revenue Service.
I can walk up to the same server and give him or her $500 for no other reason that I like them personally and he or she does not have to report it as income. However, if I give that same server the same amount of money as part of a commercial transaction, it then becomes INCOME. It is no longer a gift or favo(u)r.
It clearly states on the menu that 18% is to be added to the bill. This is the same as noting a price of a menu item. Once you enter into an agreement to dine at the restaurant, the restaurant is obligated to honor the price. The same holds true for the guest. They must honor the terms stated on the menu as well. If they disagree with the imposition of a service charge/gratuity/tip, they are obligated to walk away from the transaction. Also, as I pointed out above, once you note that an autograt is to be imposed given a certain set of conditions, you MUST apply it to every single transaction that meets those conditions. Otherwise, you are susceptible to legal action as a possible civl rights or discrimination charge. You can’t pick and choose whom you wish to apply it to.
Having said that, the restaurant was wrong in not removing the autograt in the face of a claim of poor service. A tip/gratuity is STILL payment for services rendered and if the service wasn’t rendered properly, it’s fair for the guest to ask modify the payment. This was handled improperly by both the restaurant AND the guests. Most restaurants will bend over backwards to accommodate all but the most unreasonable requests, even when the guest is clearly in the wrong. They created an unnecessary PR disaster for themselves.
I bet if they dig a little deeper they will find the Pub/restaurant is failing to comply with minimum wage laws for their service staff, hence the mandatory tip.
To Mike (and others) yes, but gratuity, as well as service charges/autogratuities also have a specific definition under the US code, as interpreted by the Labor Department.
Reference:
http://www.dol.gov/dol/allcfr/ESA/Title_29/Part_531/29CFR531.52.htm
http://www.dol.gov/dol/allcfr/ESA/Title_29/Part_531/29CFR531.55.htm
Note that it’s clearly stated that service charges and autograts are NOT the same as conventional tips and aren’t treated the same way. While this distinction has more to do with the so-called “tip credit”, it’s clear that autograts are an accepted variation of a mandatory service charge and, in this case, would be considered a “compulsory charge for service”, since it’s clearly stated that it’s going to be added. Parsing dictionary definitions is one thing, the Labor Department’s interpretation of the US Code is another.
The problem, as some have stated, is the problem of the use of the word gratuities. Some definitions even include the word “gift”. The problem is, a gratuity isn’t a gift. If it were, it wouldn’t be taxable income. The usual use of the word gratuity in IRS parlance is for military gratuities, which are NOT taxable up to a certain amount.
And to Sally, something that you might not have thought about (or apparently your restaurant) is that you might have actually been doing something illegal in a way by not applying the service charge. If a restaurant imposes a service charge on any portion of their clientele, they need to ALWAYS do it in order to avoid charges of discrimination.
Tips does NOT stand for “To Insure Prompt Service”. I wish people would stop saying this. It’s been debunked for quite a few years now by non other than Snopes.com. The word has its origins centuries ago and it isn’t an acronym, unless you want to make it one yourself, which doesn’t mean that it IS what you say it is. As a server, I might very well say that it stands for “To Insure Proper Salary”.
Here’s an interesting article on the practical ramifications of gratuities vs. tips and how confusing using the term gratuity as a synonym for tips can be:
http://www.tipcompliance.com/polLearningCenter.cfm?doc_Id=2
The ideal thing would be for Webster’s especially to consider redefining both the terms tip and gratuity, at least for the American market (as you see below, some dictionaries have actually entered the 21st century). In Europe, if I give Johan 2 Euros to round up the bill, it’s a gratuity because, a. it’s not taxable and b. it *is* a gift, not payment for services rendered because a service charge has already been added which covers the wages for the server providing the service. Here in the states, if I give John an extra $2 on top of an autograt, it’s still considered taxable income and not a gift (fair or not, it’s still considered part of the “transaction”). and when I give John a “tip” it’s for services rendered, a cost that I haven’t incurred through the menu price because of the wage structure here in the States.
Most of the time, when the IRS is discussing “gratuities” it’s in the nature of a true “gratuity”, i.e. non-taxable as in the case of a military death benefit “gratuity”. but even THEY occasionally slip and use the term gratuity when talking about tips. Hence the confusion. And not all dictionaries define gratuity the same way, so we can’t rely on Webster’s ancient definition as the only authority. here’s the one that seems to reflect the modern world the best:
http://www.yourdictionary.com/index.php/gratuity
gra·tu·ity (grə to̵̅o̅′i tē, -tyo̵̅o̅′-)
noun pl. gratuities -·ties
a sum of money, often a percentage of the total billed, given to a server, porter, etc. for a service or favor; tip
And another from Merriam-Webster:
Meaning:
[count] 1 formal : an amount of money given to a person (such as a waiter or waitress) who has performed a service : tip ▪ A 15 percent gratuity is automatically added to the restaurant bill.
2 Brit : an amount of money given to a retiring soldier or employee
and another, from the Free Dictionary:
gra·tu·i·ty (gr-t-t, -ty-)
n. pl. gra·tu·i·ties
A favor or gift, usually in the form of money, given in return for service.
Note that none of these addresses the issue of “voluntary” or “obligation”.
“So You Want To Be A Waiter” blog
http://teleburst.wordpress.com
I hate gratuities because then it’s like the restaurant/server assumes a tip is deserved just for waiting on tables.
A tip is something earned for a very good job, not just because the server makes a few bucks an hour. It’s not my job to pay their salary. They want a good tip, then work for it!
I’ve been a server (while in college) and I was good at my job. And when I worked at a place that charged a gratuity, I never added it and always ended up with a larger tip than I would have with just a gratuity.
The tip amount should always be up to the customer, not the restaurant!
I have read all of the entries on this thread and have to agree with Buddha. The word “gratuity” has a specific meaning, regardless of the restaurant’s unilateral intent. In essence restaurants wish to charge more for larger groups, but for purely marketing reasons do not wish to advertise that groups of six or more will pay 18% more for the same food than groups fewer in number. A gratuity is a gift given as a sign of appreciation for good service. The restaurant’s interpretation of its menu/contract offer is that tips are optional unless groups of six or more are together, in which event they are required to pay an 18% tip regardless of the quality of the service. The students were arrested because they were students and this is a college town. The case should be thrown out. The students may also have an action under Pennsylvania’s deceptive trade practices statute. This would actually be a case to have some fun with.
I must side with Buddha on this. The meaning of gratuity is clear. While it is common for restaurants that cater to crowds of students to add on what is generally called a service charge for parties of a particular size, in this instance the menu statement is too ambiguous to be enforceable. Had it read: “For parties of six or more a service charge of 18% will be added to your bill, in lieu of gratuity” then I think the charge will become a legal (contractual) obligation.
Secondly, the restaurant in fact overcharged this fee by 5%. This alone should negate their claim of theft of service, since the stated menu charge was not strictly followed. How can the restaurant then claim that the implied contract was violated, when they in fact were also in violation?
Thirdly and most importantly, this was a monumentally stupid thing for this restaurant to do from a business perspective. They are in a College town, primarily servicing a college crowd. Could they have created worse publicity for themselves, or more suspicion of their operation, given the bogus 23% “gratuity” charge?
Although my means are and always have been modest, I am a large tipper. This is because I supported myself through college working tip related jobs. Nevertheless, I will not tip well for minimum service poorly delivered. I will generally “undertip” for poor service, or not tip at all for horrendous service. I will also clearly express my feelings to both the offending waitstaff and/or the restaurant’s management, since merely tipping poorly sends no clear message and one would hope people could learn and improve from their mistakes.
Coming from NYC, where “in” restaurants are plentiful, it was easy when I was young to be intimidated by snooty management and waitstaff. Dining with more sophisticated friends, taught this working class reared child, not to be intimidated when paying my hard earned money for dining. Many in the restaurant business fail to understand that its’ volatility and high failure rate is related to not providing both good service and good food. My own rule of thumb is that any place that makes me feel at all uncomfortable when dining, is one I will never return to despite its popularity.
ONLY IN Pentucky.!!!!
If the “gratuity” was mandatory because it appeared on the check,thus supposedly supporting the theft charge, wouldn’t the server/cashier/calculator be guilty of attempted theft for adding a charge which was greater than the menu specified 18 percent?
fwiw, twenty years ago, servers in Dallas made $2.13/hr. + tips. i don’t believe it’s changed much.
My favorite waitress, Jeri, is 75 years old and pulling the breakfast shift. For 30 years now.
I wonder how long the table was occupied.
Wow! This is one long thread over a measly $16.35! I have to agree with Buddha that the meaning of words are important and this restaurant’s claim cannot stand. I am also amazed that the police would jail someone over this amount of money, when the bill is in dispute. Professor Turley, as usual, was spot on when he said this restaurant really got some great publicity over $16.00!