Have you recently paid a "service fee" or "delivery fee" and figured that you didn't have to tip the person who served or delivered your food? In many places, you figured wrong—Dave Jamieson reports that
companies are pocketing those fees to pad their profits, while service and delivery staff get shafted:
As HuffPost reported in 2011, beer and hot dog vendors at New York's Yankee Stadium claimed they were victims of a similar scheme. The stadium's concessionaire, Legends Hospitality, was attaching a 20 percent service fee to the drink and food orders in the stadium's luxury boxes, but the vendors who sold those orders were only taking in 4 to 6 percent in commission. According to a lawsuit filed by the vendors, the remainder of that 20 percent fee was going to Legends, which, at the time, was jointly owned by the New York Yankees, the Dallas Cowboys and the investment bank Goldman Sachs. (After it was sued, Legends made clear on its menus that only a small portion of the fee went to servers.)
The practice has even made its way into the pizza delivery business. As HuffPost reported last year, Pizza Hut, Papa John's and Domino's now commonly tack nominal "delivery fees" onto the tabs of delivery orders. Those fees, which are usually between $1.50 and $3 a pop, do not go to the drivers, even though many customers forego a driver tip believing that they do. Many career drivers told HuffPost they believe the practice has helped depress wages in their field.
This practice is illegal in several states—Hawaii, Massachusetts, Minnesota, Montana, New York, and Washington state—where service fees are required to go to the workers providing the service or receipts are required to clearly explain how much of the fee the workers actually get. Those are common-sense laws that should apply everywhere, for the benefit of workers and of customers who are being tricked into thinking they've tipped when they haven't. But since we're talking about whether money goes into corporate profits or workers' pockets ... well, you know how that goes.