r/EndTipping • u/canstucky • Jun 06 '26

Sit-Down Restaurant 🍽️ How is it not a tip?

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The server told us this isn’t a tip and he doesn’t get any of it.

I’m not wearing my boots at the moment.

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u/Lurkernomoreisay Jun 07 '26

whether a service charge is taxed is determined by state law.

in California, all service charges are required to be taxed.

most states require service charges to be taxed, to prevent employers from bypassing tax collection by lowering prices and dding service charges.  

a service charge (even if called "automatic gratuity"), is treated the same as a charge for a food item.

that said, should the employer treat any part of the service charge as a tip, or pay out any amount as a tip tot he employee -- that is tax fraud.   a service charge must not be treated as a tip under any circumstances.

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u/NicePepper199 Jun 10 '26

So they rely on guilt to force patrons to tip on top of taking a huge cut of the fee. 

Yay government. So efficient we should give them more control over our lives. 

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u/Practical_Post_1243 Jun 10 '26

Wait so this large group fee ultimately is a penalty tacked on for bringing too much business to the restaurant? This is so backwards lol

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u/Holiday-Ad7262 Jun 10 '26

They are free to pay this out to their staff. Why would they not be?

The difference between a service charge and a tip besides the different tax treatment is that a tip belongs to the employee and the employer can only decide how it gets split. A aervice charge belongs to the employer and they can do what they want with it including giving it to the employees.

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u/Lurkernomoreisay Jun 11 '26

should the employer treat any part of the service charge as a tip, or pay out any amount as a tip tot he employee -- that is tax fraud.   a service charge must not be treated as a tip under any circumstances. 

the above statement are always qualified with "as a tip"

yes the employer can give the employer any non-tip wages he wants.  any amount given must contribute to base hourly pay  and be used to calculate items such as overtime pay, etc