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Automatic gratuities to affect workers comp premiums

August 16, 2023

The controversial trend of tacking on automatic tips, or “service charges,” to customer bills will likely have a trickle-down effect on workers compensation premiums, which are likely to increase for some employers, according to experts.

Automatic gratuities have grown in recent years. For example, a new spreadsheet on the Reddit social media platform tracks restaurants in Los Angeles that are adding extra fees onto bills under such explanations as “wellness fees,” “kitchen love” and “administration.”

The practice is legal and can help employers cover increasing wage and benefits costs, yet there’s an often-overlooked ramification for employers: higher workers compensation premiums.


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