Integrity Ideas are specific actions a leader can consider during the Re-Align step of Integriosity^®–actions that will begin to Re-Align the organization with Biblical beliefs, principles and priorities.  You can find more Integrity Ideas at Integrous | Integrity Ideas (integriosity.com)

INTEGRITY IDEA: Flip the Tip

“Flip the Tip” is about faithful leaders changing their business model to “flip” tipping, returning it to an opportunity for customer generosity rather than an expected customer subsidy for inadequate wages.

Integrity Ideas are practical actions toward implementing a bigger WHY for the organization.  We believe some are critical (and necessary) steps in the RENEW/RE-ALIGN/RE-IMAGINE/RESTORE process.  Others are just ideas to be considered if they feel like a good fit based on what leaders prayerfully discern is best for stewarding the organization toward its WHY.

“Flip the Tip” is in the “if it fits” category. While the obligation to compensate employees justly and fairly is universal, the specific practice of eliminating tipping is prudential and context-dependent. First, it is only an option for businesses in which tipping is customary and represents a meaningful portion of employee compensation. Second, because of the structural bias in the United States toward tips as expected wage subsidization, an organization may discover that implementing “Flip the Tip would jeopardize the sustainability of its business.

The Obligation to Compensate Justly and Fairly

John Maynard Keynes observed that “the difficulty lies not so much in developing new ideas as in escaping from old ones.” That insight applies directly to tipping in the United States. Paying employees justly through honest pricing is not a novel idea. Escaping a system that relies on customer subsidization of wages—and the cultural and legal structures that reinforce it—is the real challenge, especially when those structures have become normalized and largely unquestioned.

Biblically, it is the employer’s obligation to ensure that employees are justly and fairly compensated. As we noted in post #174 (Integrity Idea 024: Optimize Compensation), when it comes to compensation, faithful leaders must remember Malachi 3:5 and Colossians 4:1:

I will be a swift witness . . . against those who oppress the hired worker in his wages.  (Malachi 3:5)

Masters, treat your slaves justly and fairly, knowing that you also have a Master in heaven.  (Colossians 4:1)

Malachi puts the responsibility for just and fair compensation on the employer.  The current model of tipping in the United States shifts that responsibility for justice and fairness to the customer for “front of house” employees and can make it more difficult for employers to justly and fairly compensate “back of house” employees. Justice and fairness are not things a business should hope its customers will provide. Biblically, it is moral work that belongs to faithful leaders.

A faithful leader who requires employees to rely on customers to bridge the gap to just and fair wages, and who perpetuates a system that results in certain employees being generously compensated at the expense of others who are undercompensated, is also failing to recognize fully and prioritize the inherent dignity of the employee and the value of their work–the contribution of their unique gifts to the success of the organization.

In industries where tipping has become customary, customers know that service employees are undercompensated in wages because they are expected to earn tips. United States labor law even permits employers to pay workers in certain industries less than the normal minimum wage in recognition of tip income (but wages plus tips still must meet the minimum wage). State laws vary and may require minimum wage to be paid in addition to tips.

Typically, an employer may not require “front of house” tips to be shared with “back of house” staff. Effectively, under the U.S. tipping system, the allocation of 18-25% of a restaurant’s cash flow is being allocated by customers and unavailable to owners to help cover operating costs or compensate “back of house” employees.

Electronic payment systems in service establishments increasingly prey on customer guilt by presenting tip choices of 20-25% that the customer must opt out of by choosing a “custom” tip or “no tip”.  One survey reported that 66% of consumers say they “sometimes or always feel pressured to tip” when a digital interface asks them to. Customers wanting to be “generous” leave tips that exceed the culturally understood “minimum”, which appears to have crept up from 15% to 18% or even 20%.

In addition to shifting the responsibility for justice and fairness to the customer, the current model of tipping in the United States shifts the risk of injustice and unfairness to the employee.  It is the waiter relying on tips for just and fair compensation who bears the risk of a slow night, bad weather that keeps people away, or a kitchen staff making mistakes or causing delays that lead to unhappy customers. Those who are assigned busy nights or shifts are compensated more generously than those who are assigned slower periods.

“Flip the tip” puts the responsibility for justice, dignity, and provision back with the employer instead of quietly asking the customer to finish the Biblical task that the organization chose not to complete.  It also puts back with a faithful leader the ability to allocate that 18-25% of cash flow in the way that maximizes flourishing and allows faithful stewardship of the organization. And it opens up the ability to re-imagine new generosity opportunities for customers

The Obligation to Institute Transparent and Honest Pricing

“Flip the Tip” also recognizes that the current U.S. system of expected tipping supports deceptively low pricing that is later increased by the expected tip, while the pursuit of faithful integrity through business a better way calls for honesty and transparency in pricing.

In post #194 (Integrity Idea 033: Provide Plain Pricing), we talked about the need for transparent and honest pricing when pursuing faithful integrity in alignment with Biblical beliefs, principles, and priorities. It is prioritizing the “first thing” of Righteousness, which is one of the two key aspects of Integrity.

In 1907, Orison Swett Marden wrote: “The golden rule for every business man is this: ‘Put yourself in your customer’s place.’”  Transparent and honest pricing puts the Golden Rule into action and reinforces to employees that integrity and honesty are core values of the organization.  It also signals those values to customers and forms the foundation for the organization and its people to be trusted.

The current U.S. model of expected tipping permits business owners to set deceptively low prices. A $20 burger is really a $24 burger when the expected 20% tip is added. The U.S. sales tax system also encourages this deception–imposing sales tax on the portion of the burger price expressed as the menu price but not on the portion covered by the expected tip.

In addition to tipping, restaurants are increasingly adding special charges to compensate their staff instead of increasing the menu item prices enough to pay fair wages. Sometimes these are intended to be in lieu of tips and in other cases they are presented as additions to the expected tip.

These charges raise three integrity concerns. First, they preserve deceptively low menu prices while shifting the true cost to the bottom of the bill. Second, when labeled with moral language such as “Benefits and Equity Charge” or “Wellness Fee,” they can function as manipulative virtue signaling rather than honest pricing. Third, because they are mandatory, they leave little room for genuine generosity.

For these reasons, we believe such charges—especially when disclosed only in small print—constitute deceptive pricing inconsistent with the pursuit of faithful integrity in alignment with Biblical beliefs, principles and priorities.

The European Model

Before considering how generosity opportunities might be re-imagined, it is instructive to consider the European model of tipping. As a general matter, the price is considered to include the service, and tipping is not expected. Customers wishing to recognize truly exemplary service can leave a nominal amount, confident that the server will feel valued.  A customer who does not leave a tip does not feel guilty and the absence of a tip is not considered an insult by the employee.

The price of a product or service is set to allow the employer to accept responsibility for just and fair compensation of employees without needing disguised customer subsidization. The employees do not bear the risk of factors out of their control that can impact tipping. Without the hustle of trying to earn a tip to survive, hospitality can be more genuine and service a craft (of course, hospitality and service can also suffer when income is not at stake).

Menu prices that fully cover service costs do not seem comparatively high when all establishments are pricing on a similar basis. Culturally, it is expected and accepted by customers and staff.

Opportunities for Generosity

“Flip the Tip” can return tipping to be an opportunity for generosity, because the customer is helping ensure the employee is compensated justly and fairly by patronizing the business and paying a price that includes service.  “Tipping” or tipping alternatives can be introduced as a truly voluntary opportunity for generosity.

Opportunities for generosity can return tipping to a recognition of exemplary service as is the custom in Europe or they can engage the customer in the organization’s mission through, for example, charitable donations in lieu of tips.

Because both the culture and the tax system in the United States create a structural bias toward tips as expected wage subsidization, implementing “Flip the Tip” can lead to objections from customers (e.g., seeing higher prices compared to other establishments and feeling a loss of control over incentivizing servers) and “front of house” employees (e.g., believing they can earn more through tipping).  Successfully implementing “Flip the Tip” within a biased (and Biblically misaligned) U.S. tipping system requires aligning employees and customers with a bigger WHY–a WHY big enough to overcome that bias.

CONTINUUM: Practices

The Integriosity model organizes “heart change” along six Covert-Overt Continuums.  There is nothing magic about these categories, but we believe they are helpful in thinking about practical execution of a Re-Imagined Purpose, Re-Imagined Values and a Re-Imagined Culture.  The Continuums are Prayer, Proclamation, Policies, Practices, Products, People.

Each Continuum represents an area in which leaders can begin to think about, plan and institute Re-Alignment changes to the heart of the organization.

“Flip the Tip” is on the Practices Continuum. It is a practice an organization can adopt to affirm its commitment to pursuing a WHY, and curating and reinforcing an organizational culture, that prioritizes justice, fairness, dignity, transparency and honesty, aligning with Biblical beliefs, principles and priorities.

By creating generosity opportunities for employees and customers to align with a bigger WHY, it also involves practices the organization can adopt to affirm its commitment to Biblical flourishing and the Biblical principles of Imago Dei, the Golden Rule and love your neighbor, to reflect and reinforce a culture that prioritizes relationships, community, human dignity and flourishing, and the bigger WHYs of Humanizing People Beautifying the World and Glorifying God.

COVERT-OVERT RATING: Highly Covert

The Integriosity model breaks the Covert-Overt Continuums into six gradations–from Highly Covert to Highly Overt–that we believe are helpful in beginning to pray and think about what is most appropriate for an organization at a particular moment in time.

Most Integrity Ideas will have one place on the scale.  Some can vary depending on how they are implemented.  We identify “Flip the Tip” as Highly Covert (An action that would be taken by a secular company) because even a secular organization can see the value in fairly compensating its employees and engaging customers in generosity opportunities that make the organization look benevolent.

“Flip the Tip” can be moved toward the Overt end of the Continuum by explaining the Biblical foundation for adopting different tipping practices and generosity opportunities or tying them to a business a better way culture aligned with Biblical beliefs, principles and priorities.

STAKEHOLDERS SERVED: Employees, Customers/Clients, Owners

When we categorize faith-based actions, we also consider the stakeholders principally impacted by the action: Employees, Customers/Clients, Owners, Suppliers/Vendors, Community and Kingdom.

“Flip the Tip” principally serves Employees, Customers/Clients and Owners.  It serves “front of house” Employees by shifting back to the employer the business risk of factors outside the control of employees that can impact tip income; it serves “back of house” employees by giving Owners the ability to more justly and fairly compensate them; it serves  Customers/Clients by shifting back to the employer the responsibility for paying just and fair wages; and it serves Owners by giving them the ability to allocate revenue in the way that maximizes flourishing and allows the most faithful stewardship of the organization.  It also serves Customers/Clients by creating opportunities for genuine generosity rather than forced wage subsidization and by making pricing more transparent and honest.

IMPLEMENTATION

Implementing “Flip the Tip” in the United States can be difficult, because both the culture and the tax system in the United States create a structural bias toward tips as expected wage subsidization.  But difficult does not mean impossible.  Any attempt by the faithful leader to implement “Flip the Tip” must be done prayerfully to ensure that it is the most faithful stewardship of the organization given the realities of the broken business as usual world in which the organization operates.

The U.S. Structural Bias

Just focusing on the restaurant industry, there are cultural and legal forces that push toward customer subsidization of wages and work against implementing “Flip the Tip” in the United States.

• As noted above, the way sales tax is structured creates tax inefficiencies in substituting higher product prices for customer subsidization of employee wages through tips.  Higher product prices result in higher sales tax, while tips are not subject to sales tax.  This means customers could pay more through increased sales tax if “Flip the Tip” is implemented.

• Starting in 2025, some amount of employee tip income will not be subject to Federal income tax, while paying higher wages in lieu of tip income would be subject to income tax.  This means employees could pay more income tax if “Flip the Tip” is implemented.

• Because the U.S. tip culture results in lower “menu prices”, an organization that implements “Flip the Tip” by increasing pricing to justly and fairly compensate its employees while eliminating tipping will have menu prices that appear more expensive. Because people are used to tipping and used to artificially low prices, $20 burger still seems like a better deal than a $24 burger, even if the $20 burger comes with the expectation of a $4 tip. A 2025 report by the James Beard Foundation reportedly found that restaurants raising prices by more than 15% saw profits and guest retention decline.

• In the U.S. tip culture, employees who bear the risk of a slow night also reap the reward of a busy one. Some employees focused only on income will choose to work in a “tip” environment rather than one in which their work is justly and fairly compensated by wages because those wages are capped. In 2016, WaiterPay conducted a survey of restaurant workers and found 94% of respondents thought they would earn less and were opposed to a no tipping policy. 38% believed that the absence of tips would “significantly reduce” the quality of service they provide to customers.

• Some surveys suggest a significant percentage of American consumers are opposed to no-tipping models because they like the control that tipping gives them to incentivize and reward good service.

Some restaurants have tried to move toward a “no tipping” model and abandoned it after a short period of time.

Joe’s Crab Shack.  In 2015, this restaurant chain conducted an experiment at 18 of its 100+ locations.  It eliminated tipping, raised employee wages and increased prices 12-15%.  They reported that 60% of customers disliked the policy. Some wanted to be able to incentivize service through tips.  Others were skeptical that the restaurant was actually paying employees well. Tipping was re-established at 14 of the locations within less than a year.

Union Square Hospitality Group. Also in 2015, Danny Meyer announced that tipping would be eliminated at USHG restaurants.  They created a new “Hospitality Included” model to mirror the European model of tipping. Part of the impetus was that under New York law tips could not be shared with “back of house” employees, resulting in significant disparities in income between waiters and chefs.  He wanted to factor liveable wages for all workers into pricing. The no tipping policy was eliminated in 2020.

Restaurants are increasingly adding 15-22% mandatory service charges to bills in lieu of tips.  It is reported that approximately 15% of restaurants in the U.S. have added service charges which allows them to more fairly compensate all staff. Presumably, restaurants add service charges rather than increase menu prices because of the U.S. tipping culture and the desire to show menu prices that are comparable to restaurants that expect tipping.

While service charges move closer to “Flip the Tip” by not imposing moral pressure on customers to bridge a wage gap, they feel more like a mandatory tip, leaving little room for generosity opportunities. In addition, unless they are disclosed honestly and transparently, service charges can also constitute deceptive pricing.

Aligning Customers and Employees with a Bigger WHY

We believe “Flip the Tip” has its greatest potential to overcome the U.S. structural bias toward tipping (or equivalent service charges) and support the pursuit of faithful integrity toward the maximization of Biblical flourishing when an organization can present the change in a way that aligns employees and customers with a bigger WHY–a WHY big enough to overcome those biases. Here are two examples

Lawson’s. We have seen an example of this working at a secular company–Lawson’s Finest Liquids.  Lawson’s is a brewery in Vermont that has a restaurant Taproom attached to their brewery.  Lawson’s website explains how they “Flip the Tip” with their “Sunshine Fund”:

Our team earns generous wages with hospitality included in the Taproom guest experience. In lieu of tips, guests are invited to donate to our Sunshine Fund where 100% of donations support local nonprofits.

Every two weeks, Lawson’s designates a different local charity to be the recipient of guest donations in lieu of tips.  The charity sets up a table where guests can learn more about their cause. Taproom employees tell guests about the charity, and guests can learn more from the charity directly. Lawson’s creates a generosity opportunity for guests and their employees, aligning both with the bigger WHY of “Helping Local Communities Thrive”.

It may be the case that Lawson’s is able to implement their no-tipping policy with very reasonable prices because the “generous wages” in the Taproom are subsidized by the brewery operations–a benefit most restaurants do not have.

Zazie’s. Zazie’s is a French bistro in San Francisco.  They instituted a no-tipping policy in 2015, raising prices by 25% and instituting a revenue sharing model with their staff as well as generous benefits. They reportedly saw an increase in guests and sales.  Zazie aligns employees and customers with a bigger WHY of caring for their employees.  Their menu proudly explains the mission:

Zazie is Proud to be Tip Free!  
All of our menu prices include revenue share, 75% funded health & dental insurance, 
paid sick leave, and a 401(k) with employer match for all of our hard working employees.  
~No Tips Expected~

Like Lawson’s, the prices are the prices–no hidden surcharges. Customers understand that through paying a higher price they are generously supporting just and fair compensation and benefits for the people who are serving them. Through revenue sharing, the “upside” of busyness that usually only goes to “front of house” staff is still a component of compensation but is shared by all employees.

As with all Integrity Ideas, “Flip the Tip” requires prayerful discernment by faithful leaders.  Prayer for wisdom. Prayer for creativity.  Prayer for courage. Prayer for a heart of generosity. Prayer for authenticity.

In post #082 (Culture and Capital), we suggested that an organization aligning its culture with Biblical beliefs, principles and priorities must steward its capital in accordance with three key principles, Sustainability, Mutuality and Generosity.

• Sustainability.  Sustainability applies across all aspects of an organization, including its utilization of all forms of capital that drive the business and its relationships with the stakeholders related to those forms of capital.  This includes ensuring that the organization can attract and retain qualified people. It also includes ensuring that it will have customers to sustain the business.

• Mutuality. Mutuality is about an organization extending its culture of Shalom to all people it touches by managing all capital from a Biblical view of relationships, community, human dignity, human flourishing and the common good.  Mutuality is about ensuring that transactions are “fair” to both parties, regardless of bargaining leverage.  It embodies the Golden Rule (Luke 6:31). Mutuality includes not taking advantage of employees and not deceiving or manipulating customers.

• Generosity.  Integriosity comes from the words Integrity and Generosity.  Generosity embodies the first principles of Love and Humility, which are the people-focused priorities that a leader needs to “keep first” in leading an organization with faithful integrity.  As explained in post #044 (Righteousness–Living Generously), faithful integrity requires more than “giving generously”–it requires the “vertical integration” of generosity by “living generously”.  Living generously is about operating the organization (and, in the process, generating wealth) in a way that generously loves others and stewards creation.  Living generously is living sacrificially–choosing to give something up or to forego a benefit because it benefits the common good–because it represents faithful integrity.  In this respect, generosity is closely tied to mutuality–treating vendors, employees and customers more fairly than you might need to based on your bargaining leverage is living sacrificially–and it is faithful stewardship.

Discerning whether and how “Flip the Tip” might work for an organization pursuing faithful integrity needs to take into account these three principles.  It is an opportunity to exemplify Mutuality and promote Generosity, but it can’t be at the expense of Sustainability.

PERSONAL NOTE (from PM):  This post was inspired by a recent trip to Stowe, VT.  One element of inspiration came from a small coffee shop that added a 10% service charge to all purchases. It was only disclosed in small print at the bottom of their menu sign.  I couldn’t understand how two $3.95 coffees and a croissant came to over $17. Only when I asked was I told about the service charge. I will not go back there.

The second and more inspirational moment came visiting Lawson’s.  The bartender proudly told us about the no tipping policy and then told us about the charity they were supporting. I felt good about having my tip “flipped” to generosity for a cause. I will go back every chance I get.

ESSENCE:  Integrity Ideas are specific practical actions a faithful leader can consider in leading faithfully through business a better way.

INTEGRITY IDEA: Flip the Tip

“Flip the Tip” is about faithful leaders changing their business model to “flip” tipping, returning it to an opportunity for customer generosity rather than an expected customer subsidy for inadequate wages. It recognizes that it is the employer’s Biblical obligation to ensure that employees are fairly compensated and that the current model of tipping in the United States shifts responsibility for justice to the customer, shifts the risk of injustice to the employee, and deprives a faithful leader of the ability to allocate capital to maximize flourishing and allow the most faithful stewardship of the organization.    By contrast, “Flip the Tip” puts the responsibility for justice, dignity, and provision back with the employer, rather than quietly asking the customer to finish the Biblical task the organization chose not to complete. It also recognizes that the current U.S. system of expected tipping supports deceptively low pricing that is later increased by the expected tip, while the pursuit of faithful integrity through business a better way calls for honesty and transparency in pricing. Opportunities for generosity can return tipping to a recognition of exemplary service as is the custom in Europe or they can engage the customer in the organization’s mission through, for example, charitable donations in lieu of tips.  Because both the culture and the tax system in the United States create a structural bias toward tips as expected wage subsidization, “Flip the Tip” requires aligning employees and customers with a bigger WHY–a WHY big enough to overcome that bias.

COVERT-OVERT CONTINUUM (six Continuums for action): Practices

COVERT-OVERT RATING (several levels from Highly Covert to Highly Overt): Highly Covert

STAKEHOLDERS SERVED: Employees, Customers/Clients

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Photo credit: Original image by Paul Michalski using ChatGPT (photo cropped)