Tipping in restaurants is fundamentally unfair, arbitrary, and often discriminatory. A few intrepid restaurants and chains are getting rid of it and paying all employees a decent wage instead. Every restaurant should do the same.

Think back to your last restaurant meal. When the check arrived, you found yourself pondering the eternal question: How much should you tip? Was your server attentive? Did you have to wait too long to order, or for your food to arrive? And--especially if you had alcohol with your meal--can you calculate the correct tip amount in your head?

The 20 percent (or so) restaurant tip is a mostly American and Canadian phenomenon. In many other countries, tipping in restaurants is not expected, and servers are simply paid a living wage. In the U.S., tipping in restaurants is so ingrained that we're accustomed to these mental gyrations every time we eat out. Restaurant software often provides a helpful guide--and hint--by printing suggested tip amounts at the bottom of the check. That makes the math easier. But it doesn't address the bigger problem: We shouldn't be tipping at all.

What's so wrong with tipping? A lot, it turns out. First of all, it allows restaurants to legally pay servers a lower-than-minimum wage on the assumption that patrons will make up the difference with their tips. Often they do, but most of the time, neither the restaurant nor the servers pay taxes on that income. For servers, it means that going to work is something like visiting a casino--you could have a big spender come in and order the lobster and most expensive wine, or you could wind up struggling to pay your bills if your restaurant has a slow week.

For cooks, dishwashers, and other back of the house employees, the fact that they're not eligible for tips means they earn a lot less than their server colleagues, which makes it much harder for restaurants to retain those employees. Especially since, as of last year, it's illegal for restaurant owners to pool these tips and distribute them among servers and other employees unless they pay everyone the full--not tipped--minimum wage.

But there are much bigger problems with our current tipping practice. For one thing, research shows that tipped workers, such as servers, are much more vulnerable to sexual harassment from customers than their non-tipped co-workers. It's easy to see why. If a drunken diner is making unwanted sexual advances, telling him to stop or complaining to the manager may mean losing that customer's tip, which is part of your livelihood. It's much safer to just put up with it.

Not only that, tipping is discriminatory. Preliminary research suggests that restaurant customers of both races routinely tip white servers more than black ones. That being the case, today's tipping practices might actually be illegal under the Civil Rights Act of 1964, researchers claim. That law prohibits employment discrimination based on race, gender, religion, or national origin. The Supreme Court has held that an employer may not have business policies that create the effect of discriminatory treatment, even if those policies appear neutral and were not intended as discriminatory. That means restaurants could be held liable if their tipping policies result in non-white servers--or female, Muslim, homosexual, or immigrant servers--earning less than their colleagues.

If tipping is so bad in so many ways, shouldn't somebody try to stop it? Indeed they should, and they are. I first got interested in this topic after wandering into Seattle Coffee Works, a cafe and coffee tasting room near Pike Place Market. There's a sign outside explaining that they have a no tipping policy and that they pay their employees fair wages. It turns out they're part of a no-tipping movement whose most high-profile proponent is billionaire restaurateur Danny Meyer, founder of Shake Shack and Gramercy Tavern, among many others. Meyer has eliminated tipping at 11 of his restaurants. And celebrity chef David Chang opened Momofuku Nishi as a no-tip restaurant in New York in 2016.

But within a few months, Chang was forced to change his policy and begin accepting tips at Momofuku Nishi. The same thing happened to the Joe's Crab Shack chain, which eliminated tips at 18 restaurants but wound up reversing that policy at most of them. Why? Because if you get rid of tips and start paying a fair wage, the only way to pay for it is either by raising prices or adding an automatic service charge to every check. Even though most would have paid the same total with a tip, diners balked at the higher prices or extra charges. In fact, no-tipping restaurants found themselves faced with more negative online reviews than before they instituted the policy. 

That points up a fundamental problem with the no-tipping movement: Eliminating tips is a great idea, but it will only be feasible once more restaurants are doing it. As one restaurant owner put it, "It's kind of like competing in sports without performance-enhancing drugs. It's the right thing to do but it doesn't work if you are the only one."

I've lived and traveled in many places where tipping isn't the norm. Once you get used to it, it seems much better for everyone involved. Servers don't have to worry that they'll lose part of their pay to a customer's bad mood. Diners don't have to fret about how much to leave, or whether they're being unfair. Restaurant owners can guarantee employees a living wage. Everything is straightforward and everyone knows what they'll be paid--regardless of their race or willingness to put up with harassment. I'm just hoping more restaurants and chains figure out how to make it work.

Published on: Apr 18, 2019
Like this column? Sign up to subscribe to email alerts and you'll never miss a post.
The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.