Tipped restaurant and bar workers in Chicago will make $15.80 per hour through raises over the next few years as subminimum wages are banned.
Tipped restaurant and bar workers in Chicago will make $15.80 per hour through raises over the next few years as subminimum wages are banned.
This is true, in Illinois. However, restaurants can do whatever they like with “service charges”, though customarily those go to the service staff. Automatic gratuity is already illegal in Illinois, or at least illegal to enforce, so a lot of restaurants already apply a service charge on large parties… easy enough, and perfectly legal, to expand that and claim it as revenue.
And that’s just the legal route. Wage theft is rampant in this industry, at least in Chicago.
Source: Am current server in Chicago for over decade.
You think it’s just in Chicago? Wage theft is the biggest type of theft in the entire nation. Dollar for dollar, it dwarfs the rest put together.
I don’t think it’s just in Chicago, but I can only speak to my experience, which is in Chicago.
How can they just get away with doing the same thing simply by calling it something else?
Because tips, even automatic ones, go straight to servers and the restaurant isn’t taxed on that money. Service charges are counted as revenue and the restaurant has to pay taxes on it.
So the state has an interest in encouraging the latter, since it gets taxed twice.
Don’t they charge income taxes on tips?
Yes, but with service charges, the restaurant is taxed as revenue AND the sever is taxed as income.