Last week, news outlets went crazy after a small Bay Area paper reported that servers in San Francisco were demanding a mandatory 25% gratuity on every check. Far from being an organized movement, the sources turned out to be a few servers talking about how that kind of guaranteed tip would sure be nice. (Perhaps the author will do a follow-up on an area man who plans to win the lottery.) But if a bevy of waiters really did start making demands, would that kind of mandatory tip be legal?
The short answer is: It depends where you are, because laws (and case law) vary from state to state. If you haven’t explicitly agreed to a certain percentage fee, there are precedents for refusing a “mandatory,” tacked-on tip, regardless of any restaurant policy written on the menu. But refusing to pay the gratuity, even if you win the battle, could end up costing you a whole lot more in legal fees.
State guidelines on tips are often laid out in tax laws about what is subject to sales tax and what isn’t; mandatory charges often are subject to taxes while voluntary gratuity typically is not—which means making it mandatory is usually more trouble for the establishment. If it’s called a “service charge” rather than a “tip,” the money could go to the establishment, or it could go to the server and be taxed as normal wages. In any case, a “service charge” is typically less negotiable and is particularly sticky when negotiated beforehand.
The key word here is negotiated. If you’re planning a banquet and you agree to a total cost that includes an automatic “service charge of 15%,” that’s much stronger contractually than simply reading a menu edict that “an 18% gratuity will be added to parties of 8 or more.”
In some states, such caveats have proved to mean nothing at all. Take New York, where Humberto A. Taveras ate at Soprano’s Italian and American Grill in 2004. After being less than impressed by a $77.43 meal for nine, he refused to pay the required $13 (18%) tip. The restaurant owners called the police, who then arrested Taveras and charged him with theft. But the district attorney had those charged dropped the following week, saying that any gratuity is by its nature discretionary.
A similar case occurred in Pennsylvania in 2009. A group of six college students went to eat at a pub in Bethlehem and had allegedly lousy service (like having-to-get-their-own-cutlery-because-their-waitress-is-having-a-smoke-lousy). So two of them refused to pay the demanded 18% tip for parties of six or more and were arrested. Again, the district attorney reversed course, saying it wasn’t worth prosecuting because tips are generally voluntary.
And the same sort of legal drama could play out in California or other states, but without such cases, lines often remain murky as to where “mandatory” truly begins.
Of course, the tension produced by the idea of a mandatory tip isn’t just about whether it’s legal. It’s rooted in the patron-provider relationship; servers want more money and customers want more value for every penny. In other words, do servers deserve a 25% tip?
Depending on which state you’re in, your waiter or waitress will rely more or less on their gratuities. Federal law, guided by the Fair Labor Standards Act, states that tipped employees have to be paid at least $2.13 an hour, and the tips have to bring their hourly rate up to the minimum wage of $7.25, or the employer has to make up the difference. Fourteen states don’t go a penny over the $2.13 requirement for their minimum wages. Others demand the same for tipped and non-tipped employees. In Washington, for example, everyone gets at least $8.67 per hour (which means you probably want to set your course for Seattle if you plan on getting into the service industry).
The other inevitable question is whether service suffers when tips are mandatory. If they’re treated like a tax rather than a system to reward good work, will servers get complacent? Many other factors, from geography to customer volume, come into play here. But you can always start the meal with a threat of litigation (and a rousing speech on the legality of gratuities) if you want to try to tip the scales in your favor.