NYC Restaurant Bans Tips to Benefit Servers - Free Enterprise
Free Enterprise - The FindLaw Small Business Law Blog

NYC Restaurant Bans Tips to Benefit Servers

Restaurants banning tips? This is apparently the norm in many other countries, and now a New York City restaurant is taking up the same model.

Sushi Yasuda, in Midtown Manhattan, is no longer allowing workers to collect tips, and has opted to pay their workers a set salary instead. So instead of a blank line on the bill where the customer would normally leave a tip, there is a note about the restaurant's unconventional tipping policy.

Any tips still received will go straight to the restaurant, rather than the staff, according to Salon. Is this even legal? Why would a restaurant want to do this?

Raising the Bar by Barring Tips?

While it doesn't feel like it at times, with the withering stares you get for leaving nickels on the table, tips are generally voluntary. The Fair Labor Standards Act (FLSA) does not require tips for service workers, and this is exactly why patrons are allowed to (more or less) offer tips for good service.

However, the FLSA does require a legal hourly minimum wage. While the current federal minimum wage is $7.25, state and local minimum-wage laws are also in effect; employees take whatever is higher.

Restaurants usually pay servers a much lower base wage (around $2 to $3 per hour), with tips making up the rest of their paycheck. This amounts to at least the legal minimum wage level, or higher.

Therefore, as long as Yasuda is ensuring that its workers are being paid at least the federal, state, or local minimum wage (like the federal minimum, New York's minimum wage is currently $7.25 an hour), this is fine.

Should Your Business Ban Tips Too?

Yasuda's co-owner, Scott Rosenberg, explains this decision with a whole host of reasons. One is that the tipping process felt "cumbersome and confusing" to him and often ruined the flow of a restaurant experience, he told The Price Hike.

Rosenberg also raises the question: Why don't cooks or busboys get tips? In a restaurant with no tips, wages are likely to be more consistent. Even among servers, this would mean no concerns on a dead Monday night with pennies and hard candies to split, versus a bustling Saturday evening when tips can add up to more than a week's worth of pay.

Follow FindLaw for Consumers on Google+.

Related Resources: