New IRS Rule Problematic For Hospitality Employers

Law360, New York (October 21, 2013, 12:23 PM EDT) -- It’s a familiar scenario — a party of eight or more guests enters a restaurant, orders dinner and receives a check with an 18-percent gratuity automatically added to the total bill. This sizable gratuity is included irrespective of the competency of the service to ensure that the waiter or waitress gets a fair tip.

Although useful in protecting the earning ability of tipped employees, this method takes away the customer’s discretion in choosing whether and/or how much to tip the server. As a result of this...
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