Tipping: Do you understand surcharges and tips at restaurants? Looking at the 'extra line' on your receipt

SAN FRANCISCO (KGO) -- Are you more and more confused with your bill every time you go out to eat at a restaurant? You might have noticed an "extra line" on your receipt. It's probably a service charge, a healthcare surcharge, or a minimum wage surcharge.

7 on Your Side's Michael Finney has taken a closer look at what surcharges and tips really mean for both you and the restaurants.

When the San Mateo City Council increased the minimum wage from $10 to $12, restaurant owner, Brad Goldberg, chose not to absorb the costs, or charge more on his menu. Instead, he added a 3% surcharge. It's a first, for the owner, since opening "Vault 164" in 2012.

"Our competition, be it Burlingame or Belmont, San Carlos, are not facing that. We do not want to have inflated prices," Goldberg said.

He is not against the minimum wage. But when it increased, that meant higher costs across the board. "Over the course of the year, that adds up to over $100,000 a year. Between not just the wages, but payroll taxes, workers comp. insurance."

The Bay Area started seeing a wide spread use of restaurant surcharges, a few years ago, when San Francisco required small businesses to pay for workers' health insurance.

Syndi Seid is an author and etiquette expert at AdvancedEtiquette.com. She says customers may not truly understand the difference between surcharges and tips.

"One has nothing to do with the other. Cause the tips go to the server, whereas the surcharge goes to the restaurant," Seid said.

She continues, "if anything, you are sliding that server, by giving a lesser amount just cause you think it's already been covered by the surcharge. It's not."

Jennifer Piallat is the owner of Zazie in San Francisco. For a long time, the restaurant had a $1.25 surcharge to cover health insurance for her employees. But in 2015, she decided to eliminate that surcharge, and become a "no-tipping" restaurant.

"I think the tipping has gotten so out of control. We don't when or where, how much, we are supposed to tip people. It adds a lot of strain and stress to the service experience. And our goal in a restaurant is to not stress out the client," Piallat said. She says guests have been enthusiastic about the change, and it seems like they are spending the same as before, just simpler.

On the other hand, Brad Goldberg, is sticking with his surcharge. While the response by customers has been "pretty good," he does not think it is fair passing the surcharge costs, to his customers. "We want to continue to be able to provide a place that they like to come. And without it, it's going to affect our ability to stay afloat."

Goldberg said, "The most important thing to me is to continue to employ, the people that I do. To make sure they have jobs. To make sure they can earn a living. To make sure they can continue to live here."

Are you more and more confused with your bill every time you go out to eat at a restaurant? You might have noticed an "extra line" on your receipt. It's probably a service charge, a healthcare surcharge, or a minimum wage surcharge.

Do you know T.I.P.S. is an acronym? Etiquette Expert, Syndi Seid, reveals in the additional video, what it stands for. She also mentions how tipping used to be, when it originated.

Written and produced by Justin Mendoza.