Observations From a Tipless Restaurant, Part 6: Why Tipping Should (And May) Be Made Illegal

This is part 6 of a series detailing what I learned from operating our farm-to-table flagship restaurant, the Linkery, as a “no-tipping” restaurant that instead charged a fixed percentage for service, from 2006 to 2013. We also operated a sister restaurant, El Take It Easy, that followed the traditional tipping model, allowing for a fairly direct comparison. Click here to read Part 1, Part 2, Part 3, Part 4, and Part 5.

In some American restaurants, the code word used to describe black customers is “Canadian”. As in:

“I don’t want that table,” my colleague said to me. “They’re Canadians. You can take them if you want.”
           – Courtney Swain, FUSION magazine

People say that tips motivate servers to do better work. The reality is that tips motivate servers to discriminate against their customers.

As mentioned in Part 3 of this series, researchers have shown that we diners don’t vary our tips much based on service quality, even though we think we do.

However, their same research shows that we do vary our tips quite a bit based on who we are. In other words, each individual person has an amount they pretty much always tip, and that amount varies a lot from person to person.

It’s like you have an invisible sign written on you that says how much you tip. Servers can count on you to tip about that much, no matter how good or bad the service is. Maybe you’ve got a “20%” on you, and the guy next to you has a “30%” on his sign, and the next two people are “12%” and “18%”.

Servers often have some control over who they get as customers, as in the excerpt above where one server passes the “Canadians” off to another server. Plus, servers always have some control over which customers they attend most to. And since servers are paid principally by customers, not by their employer, servers are motivated to identify the better tippers so they can focus their work on those guests.

People being people, you can imagine how respectful and open-minded this process of identifying high and low tippers is. And so we have a restaurant industry where African-Americans are demeaned as “Canadians”, in reference to another group which is considered by US servers to be low tippers.

Here’s a excerpt from Michael Lynn’s paper, Tipping and Its Alternatives: Business Considerations and Directions for Research (PDF link):

…[M]any servers dislike waiting on black parties and deliver inferior service to those black customers they must serve (Lynn and Thomas- Haysbert, 2003). Other groups likely to receive reduced attention from U.S. servers under a tipping system include foreigners, women, teenagers, the elderly, and anyone bearing coupons (Caudill, 2004; Harris, 1995; Lynn, 2004b).

Based on discussions with people in the restaurant industry, I’d add to this list people who are dining with their children, people who don’t order alcoholic drinks, and people of Asian descent (who are perceived as less likely to order alcoholic drinks).

I don’t see how anyone can defend a method of compensation that has as a primary function ensuring poorer treatment for every person who isn’t a adult white male. But apparently it’s important to us as a culture, that every time a nonwhite person, or a woman, or a teenager or an old person, goes into a restaurant, they be reminded that they just don’t matter as much as white men. Perhaps it’s because we’ve outlawed overt racism in our daily life, that we love the way tipping puts its boot on the neck of the outsider and reminds her who’s still in charge.

From my perspective, it just makes me sad. We believe in treating all people with equal respect; we should be advocating the abolition of a compensation system that blatantly encourages daily discrimination by skin color, gender, age, and accent. It saddens me to think that my future elderly self, future daughters, future darker-skinned grandkids would all be denied the full joy of restaurants, because from the minute they walk in the door they will all be labeled as “low tipper — do not bother with.”

None of these issues crossed my mind when we got rid of tipping and replaced it with a service charge. I wasn’t thoughtful enough to see them; we were just trying to improve our business. And once we primarily worked in a no-tipping environment, these issues didn’t apply to our business, so I still didn’t become aware of them.

These externalities of tipping were invisible to me until we were visited by a couple Canadians — Canadians from Canada, in this case — Bruce McAdams (see his TedX talk on tipping here) and Mike von Massow, from the University of Guelph. They were researching tipping and potential alternative methods of compensation and asked us to share what we had learned with them.

In our interviews, I explained the reasons we believed the service charge was a better system — the same reasons I’ve outlined in the first four parts of this series. I also shared how I’d come to believe there was a deep anti-woman component to the tipping system, as I discussed in Part 5 of this series.

At which point they blew my mind, explaining the research that showed tipping perpetuates racial discrimination. And then they even hinted that Canada, with its strong commitment to social justice, might be open to legislation or court rulings that replaced tipping with a more standard method of compensation.

As you can imagine, my American sensibilities had a hard time finding that plausible. It was one thing for our independent restaurant to eliminate tipping from our business with the goal of improving service quality; but to actually make tipping illegal was obviously something no one would stand for.

No one, it occurred to me as I thought more about it, except for all the people who are getting screwed over.

Yes, it’s disorienting at first when you perceive something as ubiquitous as tipping to be an actual civil rights issue; but then again I imagine most civil rights issues at some point were so ubiquitous they seemed normal. If we can verify with research that compensation by tips causes non-whites and women to be systematically treated worse in places of public accommodation, do we need much more reason to declare tipping a failed experiment and move on to a more proven method of compensation such as wages or salaries?

These thoughts were just settling in when I went to Toronto to participate in a forum arranged by Bruce and Mike. At this forum, Lydia Dobson, a researcher from Carleton University in Ottawa, presented a whole new (to me) perspective on tips-as-discrimination. Tips, she pointed out, are a revenue stream which is legally not controlled by the employer. Because the employer is not considered the source of tips, the employer can use the tipping revenue stream to treat his employees in ways that would be illegal in other industries.

A couple examples I remember:

* A female server who gained weight was moved to low-revenue shifts as punishment until she became skinny again, in a jurisdiction where weight discrimination was illegal; and

* A female server who spurned the sexual advances of her manager was moved to low-revenue shifts as punishment.

This is from an industry which generates five times as many sexual harassment claims per employee as other industries.

Furthermore, discrimination and retaliation from employers is just part of the dark side of tipping. There’s also the fact that tipping lets the mass of consumers anonymously do our dirty work.

You’ll instinctively know once you picture it, without me having to cite the research, that an African-American server will get paid less than his white counterpart for providing the same quality of service, at the same restaurant. Because of course one of those servers is making less than the other, and it’s probably not going to be the white one. Here’s a research paper on the subject, albeit from only one restaurant, which found that both black and white patrons tipped white servers more.

Similarly, research shows that female servers make more when they are more attractive. But you probably knew that, too, without really needing to have it scientifically proven.

I could go on.

The point is this — we know that tipping rewards employees for being white and for being attractive females, and punishes them for being otherwise. We know that compensation by tipping lets employers speciously punish employees by assigning them to low revenue shifts, while still maintaining the legal fiction that the employee is making a full wage.

Additionally, compensation by tips ensures that customers who are non-white, who are female, or old people, or young people, or foreigners all get a lower quality of service than medium-aged white men, in establishments that claim to welcome all peoples equally.

With these features, if tipping didn’t already exist as a compensation system, it’s hard to imagine that, proposed from scratch, it would be considered a legal alternative to wages or salaries. And given that a new system like this would likely not be made legal in our current culture, it’s believable that, as an existing system, it could be made illegal.

In a legal context where compensation by tips can be shown to function primarily as a way to circumvent laws forbidding discrimination in either employment or accommodation, or to circumvent laws protecting employees from capricious retribution, it would be plausible for a court to simply declare the system in violation of these laws. Similarly, a legislature could make such a change by statute.

As for the mechanics of such a change, I picture that the abolition of tips could happen in one (or more) of three ways.

1) It could be made illegal for a business or its employees to collect more on a bill than has been charged;

2) Tips could be made the property of the employer, which would probably eliminate tipping but leaves open the possibility of unintended consequences;

3) Minimum wage could be raised to an amount high enough that it effectively had to include what is now tip money. (I think this would happen at around $15-20/hr.) This would force restaurants to incorporate the cost of table service into their prices, this would increase menu prices enough that customers, knowing the waiters were already being paid from the menu charges, would stop tipping (again subject to laws of unintended consequences).

All three methods would move to eliminate tipping as the primary compensation for servers. While personally I’d like to see the minimum wage be a living wage, as far as abolishing the tipping system goes I think the cleanest method would be option (1) — simply making it illegal.

However, it looks to me that a more likely scenario is that a court or legislature just declares tips to be the property of the employer, making it clear to the guest that any tips are not going to the server at all. Recent rulings from the Ninth Circuit are flirting with this idea – they can be read to say that a restaurant can distribute tip money among its staff in any way the employer wishes. I think perhaps these rulings are cracks in the foundation that props up the system, and the tipping system might be closer to falling than we know.

If so, then we’ll all end up winners.

Click here to read the first Postscript to the series.

Click here to read Part 1.
Click here to read Part 2.
Click here to read Part 3.
Click here to read Part 4.

Click here to read Part 5.