Restaurants to Remove Automatic Gratuities in 2014 - 8NEWS - WRIC | News Where You Live

Restaurants to Remove Automatic Gratuities in 2014

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RICHMOND (WRIC) - The way large groups tip their waiters at restaurants is changing because of a new rule that went into effect in the New Year.

Kate Miller has been a waiter for six years and relies heavily on tips to pay bills.

Normally, when she serves a party of eight or more at water coastal kitchen, her 20 percent tip is automatically tacked onto the diners' check.

"There's been times where I have 30 dollars in my account and I'm so glad I'm going to work," she says.

But now many restaurants are ditching automatic gratuities because it's going to increase the cost of doing business.

The IRS now classifies them as service charges and not tips, which means the money gets federally taxed up front and servers have to wait until payday to get it instead of at the end of their shift.

Some believe it's a loss of guaranteed cash.

"You shouldn't be required to pay for a service that you weren't happy with," says diner Nicolas Gonzalez.

But Miller sees it as an opportunity.

"I think that if you do a good job with that party then they will feel like you earned 20 percent and they will leave you 20 percent and sometimes even more," she says.

Many restaurants say now when diners receive their check, there will be a suggested tip listed on the bottom.

At least 100 chain restaurants have already stopped automatic gratuity.


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