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.

 

Copyright 2014 by Young Broadcasting of
Richmond

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