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New Law Creates Tipping Changes for Servers

If you dine out often, a new law could affect your dining experience and how much you tip.
(ST. JOSEPH, Mo.) Ronilyn Rice is no amateur, she's worked as a server for nearly twenty-five years and says she loves every thing about it.

Rice said, "I like the flexibility and when my daughter was younger I could be at everything that she needed to do at school."

Rice, like every other server depends on tips from customers as a source of income for her family.

In 2013, the Internal Service Revenue changed the law forcing restaurants to report auto-gratuities as a service charge to large parties.

That law went into effect January 1 of this year.

Since it's a taxable wage they now have to wait until payday to see the tip.

"My performance should reflect how much I make and sometimes when you give an automatic gratuity it can lessen the performance that you're going to get because you know it's guaranteed," added Rice.

But she says just because it's no longer a law doesn't mean people shouldn't tip as a part of their dining experience.

"If everyone knew how much we made then they would understand why they tip.You'll tell them do you realize we only make three dollars an hour and they're in shock because they have no idea," said Rice.

The ruling was issued last year but the IRS gave restaurants a year to prepare for the changes.

Experts say it's a win-win for everyone.

"I think servers are likely to get more money under the new rules than they did under the old. I understand their point completely because they're used to getting tips and getting them right away and if instead it gets added on to their paycheck and they don't get paid but twice a month then it creates cash flow problems and the restaurants don't want to do it that way anyway," said Dan Danford with the Family Investment Center.


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