this post was submitted on 28 Jun 2023
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It's the way our tax system works. Employers have to pay taxes on payroll; they don't pay taxes on tips. By having customers pay servers directly, they reduce their tax burden.
Believe me, we don't like it either, but we are familiar with it, so there is little incentive to change.
Tipped employees are primarily paid directly by the people they serve. If you are not tipping a tipped server, you are declaring their work is worth less than minimum wage.
It is lawful to do that, but it is a real dick move.
It cannot be less than minimum wage, or the employer has to pay the difference. In some states there is no tip credit at all and the hourly wage must be at least minimum. Tipping still allows employers to keep wages low, but not that low.
By law, yes, but most restaurants simply do not care. Wage theft is extremely common.