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Tip, Tax,...and Health Insurance Surcharge?

From NY Daily News on a new plan in San Francisco that requires employers with 20 or more employees to provide insurance for each of their workers:

"Those costs are especially hard for small businesses to absorb. A growing handful of San Francisco restaurants are responding to the city's new health plan by adding a health care surcharge of about $3 to $4 to every bill.

"Food, drinks, tax, tip and ... health care. Restaurant owners taking part in this creative approach say they have little choice; it's the only feasible way they can afford to follow the law and keep their doors open. For the most part, they claim, customers don't mind."

What do you think about this? How would you react if you saw this added to your tab?

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  1. i would love it. As long as there is a mechanism to make sure the surcharge actually went to the employees' healthcare plans.

    1 Reply
    1. re: hala

      Yeah... it should just become an official Luxury Tax collected by the City... which would offer a choice of 10 competing plans etc.,

      1. From NY daily News, as quoted by gloriousfood:
        "Restaurant owners taking part in this creative approach say they have little choice; it's the only feasible way they can afford to follow the law and keep their doors open."

        I think that the above is not the only feasible way they can follow the law and keep their doors open. The restaurants should be able to charge more per plate. They should cost the health care surcharge into the price of the meal. As for the "the high prices would drive customers away" argument, if all the restaurants were doing it, they would all go up a similar amount.

        Out of curiousity, does anyone know what fast food-type places are doing? Because if there was a $3 surcharge "for health benefits for employees" on my $6 order, I'd be livid. How about the movie theatre concession? Are they doing it there? Does the plan in SF stipulate that the workers must be full-time?

        Being from a slightly more socialist environment than the US (I'm Canadian), I have a different view on health care in general. I have never been afraid to go to a doctor's or a hospital because I thought I couldn't pay the bill. While I think that everyone should have access to health care, I just don't think that charging customers directly is the way to do it. I would simply rather not know.

        1 Reply
        1. re: miss_bennet

          I just don't think it should be a matter of "personal choice" by any given taxpayer The inherent paternalism in that, where something like healthcare is concerrned, is just too much for me. Whether any particular person/group should or should not have healthcare shouldn't depend on the day-to-day actions of individuals, imnsho, which is how a voluntary surcharge at random businesses plays out.

          But the whole "cost of doing business" thing is a red herring, as I see it. It irks me too, but the bottom line is the total price - what do you get for what you pay? They can calculate it any way they like but "the price" is the bottom line, not the portion of the total they choose to call by that name, legally mandatory regulated charges/collections being a separate category of course largely because they are more uniformly applied. And there, I would much rather know why I'm being charged what I'm being charged.

        2. It's terrific. Next, they can add their FICA contribution, unemployment tax, electricity surcharge and so on.

          Why should a business have to pay a cost of doing business?

          1. I live in the San Francisco area. This charge shows up added to the bill and noted, or they just raise their prices. I prefer the last one. The restaurants have to pay it, how they get the money is not dictated.

            1. Why not just get in step with the rest of the world and pay a living wage, eliminating tips?

              As for the insurance surcharge - add the dollars to the menu prices, not to each bill. If it's truly citywide, the rising tide will raise your competitors' prices too, so it's just like any other cost of doing business.

              1. I also don't get the surcharge either. I agree with those who said it should be integrated into the prices. Just raise prices. Are we going to see a wheat and fuel surcharge next?

                8 Replies
                1. re: Miss Needle

                  Ha, that's a good one. I wouldn't be surprised.

                  As an independent contractor, I would never add an item to my invoices indicating a health care surcharge. That would piss off some of my clients. Over the years, I've raised my fee accordingly to reflect the growing cost of doing business. Everyone is aware of the rising costs; no need for me to itemize them.

                  1. re: gloriousfood

                    I'm not completely decided on this matter; but part of the reason a lot of restaurants are adding on a separate surcharge for this as opposed to anything else is because its an entirely local and fairly controversial law. The San Francisco city council passes many (many, many) regulations like this that aren't entirely well thought out (which is not to say they're necessarily bad ideas, just that they aren't implemented very well). Further, the whole thing is making its way through a series of law suits and litigation and may be reversed entirely. I think the feelings about it (from employers, residents, etc) is so jumbled that people are responding in a different way than other cost increases that come with doing business.

                    Also, we're all already paying fuel surcharged for shipping anything (UPS, Fedex, etc) and restaurants certainly get a list of surcharges from their purveyors to pass along the costs of fuel increases and the like.

                    As I say, I'm not entirely decided on the question of surcharges but I think the San Francisco Health Security Ordinance (yeah, that's the name) is a fairly unique situation right now and I'm not sure the principles translate well.

                    1. re: ccbweb

                      The "San Francisco Health Security Ordinance"--wow, that sounds very George Orwell-ish.

                      You're right that this is not a black-and-white issue. My overarching feeling about this is how sad that this great country has come to this in terms of its haphazard, misguided health care policy. But that's for another forum, not this one.

                      1. re: ccbweb

                        agree with CCWeb that the restaurant owners should not be faulted because they opened their sf restaurants with menu pricing that reflected their overhead costs-- and then a local law changed. they must adjust now, and the surcharge is obviously a stopgap approach. i think it makes more sense to charge a percentage of the total bill, rather than a flat charge-- as other posters have mentioned, raising the price of a fast food bill a flat $3 does not make sense, but an incremental increase-- fast food bill goes up $0.12, fancy steak goes up $1-- is much more doable and sensible.

                        assuming the law stays, permanently, new sf restaurants which open would incorporate the health care tax into their menu pricing, and the older ones would reprint their menus with new pricing to "roll it in" as well. the separate charges will disappear as adjustments are made.

                      2. re: gloriousfood

                        I agree completely. The only reason to itemize it to make a statement, which isn't why I'm eating there. Just raise the prices accordingly.

                        1. re: rednyellow

                          It also appears to me that some of the restaurants are using the surcharge approach to make a statement. Many restaurants in SF change their menus often enough that they can't say that this is a 'stop gap' until they can change the menu to reflect the higher cost of doing business.

                          1. re: susancinsf

                            change the menu? you can buy a printer for less than a bottle of good wine. There is no reason for menu's or wine lists to not be current and accurate.

                            1. re: rednyellow

                              That was basically susancinsf's point: restaurants change and print new menus often daily and at least weekly around SF, so they can't claim that they're waiting until they print new menus to put information about any surcharge on them.

                    2. It is a political statement and it's the choice of the restaurant to make it.
                      However I will not be going back to 2223 Market in SF as they force the servers to
                      make a political speech about the health care surcharge. Also they have taken part in the worst kind of vicious rumor in order to make a political statement
                      I hope people vote with their dollars and do not eat at restaurants who are turning this into a political war hoping the diners will take sides.

                      1. there is always a cost of doing business. Where I work we get health insurance after 90 days of employment. Should my boss add this charge to her patients' bills? After all they are paying for it, and her electricity, and all the other costs involved in running a business.

                        The one I do not like to see if fuel surcharge costs which delivery drivers are now adding to their invoices. Just put the price up.

                        1 Reply
                        1. re: smartie

                          i'm a corporate beverage director and when fuel started rising really sharply 2 years ago, many liquor wholesalers added a fuel surcharge to the delivery bills. their thinking was to discourage people from making lots of small orders over the course of the week.

                          that didn't work. and everybody just complained about the charge. so they dropped the charge and raised their prices. every invoice now, at least 2 items increase in price.

                        2. I live in SF; two reasons why it's sometimes done this way:

                          1) including it in menu prices (eg raising menu prices) increases the amount you'd tip, basically constituting a raise to servers and costing you 15%-20% more.

                          2) in many cases, given SF's unfair minimum wage law (servers are paid $9.36/hour + tips, since there's no tip credit), servers are paid very well. In many cases, especially if it's worded as a 'partial service charge', it's permissible to deduct some of it from the tip (or at least take it into consideration)--eg tipping 15% vs 20%.

                          1 Reply
                          1. re: xanadude

                            I don't buy this.

                            Do the restaurants that tell you to do it this way also tell you in writing and on the menu, "We are doing a surcharge instead of raising prices so that you won't have to add to the tip of our already well-paid servers"? I don't think so. (not talking about Incanto's surcharge for non-wait staff, which is a slightly different issue, but still done for statement reasons, IMO. just a slightly different statement)

                            I suspect most diners tip on an amount that includes the surcharge, and I believe that is what the restaurant is hoping you will do. Otherwise, why not just add a tip disclaimer to the text about the surcharge?

                            If the true intent of the surcharge is only to have any extra money go only to the health insurance, (and that is the reason that prices just aren't raised) the text about the surcharge could and would address the tip as well. I think it is done separately in order to make a statement (and if as a result more tip money is gathered, well, that may make it more palatable to wait staff that the cost of business related to health care for wait and other staff is being pointed out to diners, where as other rising costs of doing business aren't).

                            Of course, the obvious way to deal with this is to eliminate tips and pay everyone a fair living wage, with benefits, to begin with.

                          2. Maybe they should add on the food the staff eats for meals. After all, it's a cost of doing business.

                            This is even more hilarious than some of the tipping threads on this forum.