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One thing I've noticed recently on 2 restaurant trips in the last couple weeks: The automatic tip calculations are wrong in the server/restaurant's favor. Most

One thing I've noticed recently on 2 restaurant trips in the last couple weeks: The automatic tip calculations are wrong in the server/restaurant's favor. Most of us typically check the 20% option and don't double-check the math, but in the past these calculations were always done pre-tax. If your food came to $100 and you tipped 20%, the total would be $120 + sales tax. Now, the last 2 times I've eaten out the automatic tip calculation was done on the post-tax amount. I live in Alameda county where the sales tax is over 10%, so this is a big difference. Not only that, the default tip options were something like 18, 20, and 25%. The only reason I can see for restaurants to do this is that the minimum wage here is $15/hour, and if tips alone don't make that rate, the restaurant pays out of pocket because it is illegal for them to pay below minimum wage. This seems like yet another example of restaurant owners passing higher labor costs onto customers in a less than ethical way. Has anyone else noticed a similar practice?

xmprt 4y ago
> The automatic tip calculations are wrong Wrong implies that there's a right way to tip and that it isn't just a way for employers to get away with paying employees less.
jaxn 4y ago
I suspect most people tip on the after-tax amount when they calculate it themselves. I get that you don’t. I also know people who tip on the non-alcohol amount. Personally, I have always tipped post-tax. These are also low-margin businesses. A post-tax surcharge keeps your overall bill lower than if they had raised prices, which would also raise the tax amount. The high labor costs are going to be passed on to consumers regardless. The surcharge shorts the government (which most of us are probably fine with).
- illumin8 4y ago
  I always tip on my alcohol purchases, and usually tip 20% regardless of how good or bad the service was. It's mainly because the sales tax is over 10.25% in our county. If the tax were only 5-6% like in most places in the US, it wouldn't be as big of a deal. The food prices are also quite a bit higher here than in most places, but that's just due to cost of living. It is not uncommon to spend $200 to feed a party of 4 even without alcohol, so that tip on the extra $20.50 starts to add up.
- z0r 4y ago
  I think tipping post-tax is part of the longer term inflation of tipping. Once 10% pre-tax was the acceptable tip, then 15% during the 90s, and now it has drifted to 18%, 20% and possibly soon above. Somewhere during that drift it went from being pre-tax to sometimes, and even most of the time, post-tax. All this despite it being a percentage of cost and thus scaling with the price of goods naturally.
  - illumin8 4y ago
    True, the drip drip drip continues...
- KMnO4 4y ago
  I live in Ontario, and most people don’t (unless they use the button on the card reader). Sales tax is 13%, so a 15% tip is pretty easy to estimate as “whatever the tax is plus a bit more”.
- pxx 4y ago
  No, this doesn't work. See e.g. https://www.taxconnex.com/blog-/covid-surcharges-and-sales-tax https://www.taxconnex.com/blog-/covid-surcharges-and-sales-t... for cases where it's explicitly been made clear that surcharges are also subject to tax.
edmundsauto 4y ago
UberEats calculates tip after tax, after Ubers fees, and excludes any discounts you received.
KMnO4 4y ago
Here’s a fun one to try next time you use UberEats. Say your food is $12, and with delivery + fees it comes to $20. The first “tip %” screen is based on the $20 figure. So 20% would be $4 extra. If you decline that, you still have the option to tip before/after your food arrives. However, you’ll notice now the percentages reflect the pre-fees figure. So the 20% tip is now only $2.40.
mhdhn 4y ago
Seen it all over, always assumed it was mistakes in software design or product management by the restaurant software developers.
- OkGoDoIt 4y ago
  Square lets the admin explicitly choose whether to calculate tips before or after tax, and the default is after tax.
ac29 4y ago
>The only reason I can see for restaurants to do this is that the minimum wage here is $15/hour, and if tips alone don't make that rate, the restaurant pays out of pocket because it is illegal for them to pay below minimum wage. There is no exception to minimum wage in California for tipped employees, and many cities in Alameda county have a higher minimum wage than the state minimum (Oakland for example, is $15.97/hr this year and Berkeley is $16.99/hr).

xmprt 4y ago

> The automatic tip calculations are wrong Wrong implies that there's a right way to tip and that it isn't just a way for employers to get away with paying employees less.

jaxn 4y ago

I suspect most people tip on the after-tax amount when they calculate it themselves. I get that you don’t. I also know people who tip on the non-alcohol amount. Personally, I have always tipped post-tax. These are also low-margin businesses. A post-tax surcharge keeps your overall bill lower than if they had raised prices, which would also raise the tax amount. The high labor costs are going to be passed on to consumers regardless. The surcharge shorts the government (which most of us are probably fine with).

illumin8 4y ago
I always tip on my alcohol purchases, and usually tip 20% regardless of how good or bad the service was. It's mainly because the sales tax is over 10.25% in our county. If the tax were only 5-6% like in most places in the US, it wouldn't be as big of a deal. The food prices are also quite a bit higher here than in most places, but that's just due to cost of living. It is not uncommon to spend $200 to feed a party of 4 even without alcohol, so that tip on the extra $20.50 starts to add up.
z0r 4y ago
I think tipping post-tax is part of the longer term inflation of tipping. Once 10% pre-tax was the acceptable tip, then 15% during the 90s, and now it has drifted to 18%, 20% and possibly soon above. Somewhere during that drift it went from being pre-tax to sometimes, and even most of the time, post-tax. All this despite it being a percentage of cost and thus scaling with the price of goods naturally.
- illumin8 4y ago
  True, the drip drip drip continues...
KMnO4 4y ago
I live in Ontario, and most people don’t (unless they use the button on the card reader). Sales tax is 13%, so a 15% tip is pretty easy to estimate as “whatever the tax is plus a bit more”.
pxx 4y ago
No, this doesn't work. See e.g. https://www.taxconnex.com/blog-/covid-surcharges-and-sales-tax https://www.taxconnex.com/blog-/covid-surcharges-and-sales-t... for cases where it's explicitly been made clear that surcharges are also subject to tax.

edmundsauto 4y ago

UberEats calculates tip after tax, after Ubers fees, and excludes any discounts you received.

KMnO4 4y ago

Here’s a fun one to try next time you use UberEats. Say your food is $12, and with delivery + fees it comes to $20. The first “tip %” screen is based on the $20 figure. So 20% would be $4 extra. If you decline that, you still have the option to tip before/after your food arrives. However, you’ll notice now the percentages reflect the pre-fees figure. So the 20% tip is now only $2.40.

mhdhn 4y ago

Seen it all over, always assumed it was mistakes in software design or product management by the restaurant software developers.

OkGoDoIt 4y ago
Square lets the admin explicitly choose whether to calculate tips before or after tax, and the default is after tax.

ac29 4y ago

>The only reason I can see for restaurants to do this is that the minimum wage here is $15/hour, and if tips alone don't make that rate, the restaurant pays out of pocket because it is illegal for them to pay below minimum wage. There is no exception to minimum wage in California for tipped employees, and many cities in Alameda county have a higher minimum wage than the state minimum (Oakland for example, is $15.97/hr this year and Berkeley is $16.99/hr).