In that case, as it turns out, we are in agreement.

This is an article on tipping in Los Angeles. Strong views - just like on TOTV!

'Deceiving and disgusting': Readers react to the rise of restaurant service fees

Bingo.

I knew a fellow back home who was a morning waiter at a local Perkin's Restaurant. Perkins is about as middle-of-the-road as you can get and breakfast tabs aren't usually all that much. But this guy had worked that shift at that restaurant for years and really knew his stuff--and his customers. A lot of the customers were regulars: he'd learn their names and their preferences after a few visits hot coffee, water with no lime, a large orange juice, or whatever they routinely ordered would show up at their table unordered. He never went anywhere empty-handed--a sure sign, according to my wife, of exceptional wait staff. He also knew the menu inside out and was never shy about sharing his opinions. He obviously loved his job and his tip income was as much or more--often a lot more--as he'd earn in wages on a shift.

In my opinion the go-getters prefer the tip system. The ones who move a bit more slowly--well--

Note that the receipt in the article shows a 15 percent mandatory service fee. That is not a tip.

Again, you are confusing a server with a friend. They don’t have to remember your name, in fact to me that can be yucky. They don’t have to remember how you like your water, you can tell them. And they certainly don’t have to share their opinions unless asked. There maybe some lonely individuals that need this kind of ego boost from a stranger but to assume everybody does?

Possibly not but there needs to be an explanation for what it is.

I see a line for Corazon Iced Tea so I assume the diner received Corazon Iced Tea and the charge is for the Corazon Iced Tea. I see a line for Almond Butter Toast so similarly I assume that charge is for the Almond Butter Toast the diner received. When I see a charge for Service I assume that is for the Service I received.

The Service Charge may not be a voluntary tip (the word "mandatory" seems to take voluntary out of the equation) but if it is 15% added to the bill to cover service then it is performing the function of the tip I would have left so I will adjust any additional tip accordingly.

I would prefer to do away with the US custom of tipping but I recognize that it is here today. But the owners should not add fees and charges to the bill to mislead the customers about the true price of the meal and confuse them into tipping more (or less) than they would otherwise choose to.

I didn't read it that way at all.

The server at the Perkins could have done a perfectly acceptable job of bringing coffee, asking for orders, and handing out the food. That's all servers are really required to do. This Perkins server went above and beyond that and provided extra service deserving of extra recognition (tip).

If a server goes out of their way to try to make my experience better I will thank them for that. I won't call it "yucky" or tell them to keep their meal suggestions to themselves.

For a party of 6 or more with a mandatory service fee of 18%, are you supposed to tip on top of that? And do you tip on the 18%?

So for a $500 bill plus a $90 service fee, should you tip $75 (15% of $500) or $88.50 (15% of $590)?

And if the restaurant called it an 18% gratuity fee instead of a service fee, would that make a difference?

I would just add that the IRS does not consider any mandatory payments for service to be "tip" income that would qualify for the special tax treatment rules that they use. For example, the restaurant could not include mandatory service charges on their W-2 forms as an "allocated tip". And the restaurant could not use mandatory service charges as a credit towards their minimum wage calculation, if they are paying servers less than the minimum wage.

As I understand it, mandatory charges are not considered tip income for tax purposes, regardless of what you call them.

For me, almost always, if the restaurant chooses to add a gratuity, whether due to the size of the party or just their policy, I am not likely to leave anything more. This often works out in my favor since I would typically leave more than 18%.

That may be tough on the server but I see it like this:
- If the restaurant has a policy of only cooking steak well done and that cuts down on the number of customers and therefore reduces the tips the server would have otherwise received, the server has the choice to move to a restaurant without such a policy.
- Likewise, if the restaurant has a policy of adding a service charge and it reduces the tips the server would have otherwise received, the server has the choice to move to a restaurant without such a policy.
- I am not obligated to continue to eat at the restaurant that overcooks my steak and I don't feel obligated to tip above what the restaurant feels is appropriate to automatically add to my bill

I understand it that way too which is why I dislike the practice so much. I believe the restaurant is allowed to use any or all of the mandatory service charge as part of the tipped-minimum wage that they are required to pay the servers. Essentially, the mandatory *service* charge becomes a "because we don't want to raise our prices" charge. To me that is dishonest and deceiving and I would have a very hard time going back to that restaurant.

But if the restaurant is going to list it as a "service charge" and is over and above the price for the meal then I am going to treat it just that way: as a charge for the service I received which is over and above the labor amount included in the price of the meal. That may not work out well for the server which ultimately may not work out well for the restaurant.

I don't think the IRS would agree with you. I will need to look up the IRS rules, but I am pretty sure that they consider a tip to be a voluntary payment to a "tipped" employee from a customer. That is why they give special tax treatment to tipped employees.

I believe we see things the same way.

The IRS doesn't treat the mandatory service charge as a tip. It doesn't belong to the employee and it is not used as a credit to bring the tipped-minimum wage up to the minimum wage. The mandatory service charge belongs to the employer just as the money collected for the Corazon Iced Tea belongs to the employer.

The IRS sees it that way, the employer may use it that way, but that doesn't mean I have to like it or that I have to return to the restaurant that chooses to add it to my bill.

I would consider the mandatory service charge a tip. If the restaurant does not share that with the server, then that is between the server and the restaurant.
If, as has been explained, the MSC is a way to offset the rising cost of menu items, then why charge it only to large groups? That makes no sense to me.
I have also read that the MSC reflects an effort of the restaurant to provide a reasonable wage for the waitstaff, which again would indicate that tip would be unnecessary, and also leaves the question of why only large parties get to participate in this largesse.

I always thought it was to make sure the server(s) did not get stiffed by a large group. Serving a large group may require enough effort and time to constitute a very large portion of the server's hours, and getting stiffed would be more impactful by the large group than a table for two. For example, if Mr. "I never tip more than 5%" were in charge of the bill, the server would have a bad night indeed.

But I wouldn't be surprised if it was also a way for the restaurant to get a hand on some of that tip money.