This Is How Sleazy Restaurants Are Stealing Your Tip Money


At some point in time you’ve gone to a restaurant or ordered delivery and seen “service fee” or “delivery fee” at the bottom of your bill. You pay the fee and don’t tip because you assume, as any smart person would, that the fee is going to the servers and delivery guys. It doesn’t, and now a Hilton Garden Inn in Montana is being sued because of it.

Laurie Zabawa is suing the Hilton in Bozeman, Montana and an Ohio based Company, Gateway Hospitality Group, because she says they have been illegally pocketing tip money meant for banquet servers by tacking a 20% service fee on customers’ bills.

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Zabawa, the banquet manager, says that in 2012 the Hilton outsourced its banquet events to Gateway. The company didn’t fire servers, but instead gave them a $1 raise and started keeping their tips.

In the years before Gateway took over, the customers would run up a banquet tab and at the end they’d pay an 18-20% gratuity fee. That money was then split amongst the servers, busboys, bartenders, etc., who catered to the customers. Zabawa says that when Gateway took over, the company renamed the gratuity fee a service fee and started pocketing that money. Then she was forced to implement the new policy and employees were forced to sign a document terminating their rights to the tips.

It was awful. Just imagine working there with those people for years. They were my family. It was horrible to go through, and I had no options. [Source]

Zabawa was terminated after she told management that she believed the fee was illegal.

Not only are the servers having their money stolen, but customers are also victims of their theft.

The company is essentially tricking customers into thinking that they are paying their servers and instead the company is stealing the money. So the servers are then screwed out of half of their pay.

It is common knowledge that servers make their living on tips. Now suddenly these people were forced to give that up in exchange for a measly one dollar raise.

The Hilton isn’t the only business that runs this despicable tip scam. Pizza makers like Domino’s do it, too. The “Huffington Post” reported that another big company was sued for the very same thing and forced to settle:

In 2010, catering employees who worked the U.S. Open at Arthur Ashe Stadium in New York sued the concessions company there for allegedly pocketing a 21 percent service fee that was tacked onto customers’ bills. The workers, who also claimed they were shorted on overtime pay, argued that the service fee was portrayed as a gratuity. The class-action lawsuit was settled in 2013 for $600,000.

Nobody should be surprised by this practice. Big corporations have proven time and again that they will walk right over the little guy so that they can collect millions of dollars in bonuses. This is a perfect example of class warfare.

Isn’t capitalism fun?!

Featured image via Outsidethebeltway.com

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