New law ending automatic gratuity could hurt servers' income - KCBD NewsChannel 11 Lubbock

New law ending automatic gratuity could hurt servers' income


It's three weeks into the new year, and already many restaurant-goers with large parties have noticed some changes at the end of their bill.

A new IRS law that took effect January 1st could end, or at least curtail, automatic gratuity, and several local servers are not happy about the change.

"Having gratuity was kind of a fall back plan," said Colton Ancell, a local bartender and server, "kind of an insurance policy that made sure you made some money during your shift. So with that gone now, it's kind of a weird thing to not be able to rely on that."

This new law doesn't just affect local or state restaurants - it impacts restaurants across the nation.

Co-owner of the local Caprock Café and Orlando's, David Cea, said it's all just a huge headache.

"This is not something that the Lubbock Restaurant Association or the Texas Restaurant Association wanted," Cea said. "This is a new rule from the IRS. Basically they're just looking for additional dollars to tax."

Cea said that in the past, servers waiting on large parties could take their tips from the automatic gratuity home at the end of the night.

Now, if restaurant owners decide to keep the new policy, those tips are considered taxable wages to the employee.

In other words, they have to wait to see that tip on their paycheck at the end of the pay period.

Cea said doing away with this practice is optional for restaurant owners, but all the restaurant owners he's talked to won't be using automatic gratuity anymore.

Ancell said servers will have to make up for it in other ways.

"There's other ways in this business to make that money up," he said. "Whether you're trying harder on your other tables to make bigger tips on the ones that you know will tip, or whether it's turning tables faster or whatever you have to do, I think people will make up for it for the most part."

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