Can Restaurants Charge Automatic Gratuity? The Basics and Law

If you’re a regular at restaurants, you’ve likely encountered the concept of automatic gratuity at some point.

Automatic gratuities, also referred to as service charges or automatic gratuities, are an additional fee that is automatically included in a customer’s bill.

This fee, which typically ranges from 18-20% of the total bill, is intended to compensate the servers, with the expectation that patrons won’t need to add an additional tip.

But can restaurants charge automatic gratuity legally? What are the rules that govern the automatic gratuity system? Read on to fully understand automatic gratuity charges.

Why Do Some Restaurants Charge Automatic Gratuity?

Diners eating at a restaurant table.
Diners eating at a restaurant table.

Most restaurants in the US operate under a tipping system, where servers earn a large part of their income through tips.

However, not all customers (especially tourists) are aware of the etiquette around tipping, and some may leave very little or no tip at all.

In such cases, servers are left with hardly any compensation, despite providing quality service.

To ensure that servers are fairly compensated for their work, and to avoid misunderstandings around tipping etiquette, many restaurants have begun implementing automatic gratuity policies.

By including the gratuity charge in the bill, restaurants are able to guarantee a certain level of compensation to their servers.

The Legality of Automatic Gratuity Charges

So, is it legal for restaurants to charge automatic gratuity? The answer is, it depends.

The laws around automatic gratuities can vary state by state, and some states have specific rules that govern the practice.

In general, however, most states permit restaurants to charge automatic gratuities, as long as they comply with certain guidelines.

For instance, in some states, such as California and Nevada, any service charge or automatic gratuity must be clearly labeled and separated from the menu price.

Additionally, some states place restrictions on the use of automatic gratuities.

For example: in New York, automatic gratuities may not be charged unless the party is larger than a certain number (usually eight or more).

Tips For Understanding Automatic Gratuity Charges

If you’re dining out and encounter an automatic gratuity charge, it’s important to understand a few key things to avoid any misunderstandings:

  • Check the menu: Before you order, review the menu carefully to see if there is mention of an automatic gratuity or service charge. If it’s not clearly stated, ask your server. You can refuse to pay a service charge if it’s not clearly mentioned.
  • Understand the math: Automatic gratuity charges are typically a percentage of the total bill amount (usually between 18-20%), so make sure you know how much you’ll be paying in addition to the menu items.
  • Don’t double-tip: If an automatic gratuity charge has been added to the bill, you don’t need to leave an additional tip unless you choose to do so.
  • Ask questions: If you have any questions about the automatic gratuity policy or the amount being charged, don’t hesitate to ask your server or the restaurant manager.

This may come in handy: Restaurant Charged Me Twice: What To Do ASAP!

FAQs

What is automatic gratuity in restaurants?

Automatic gratuity is an additional fee that is automatically included on a customer’s bill, typically ranging from 18-20% of the total bill. This fee is intended to compensate the servers, with the expectation that patrons won’t need to add an additional tip.

Can restaurants charge automatic gratuity?

In general, most states permit restaurants to charge automatic gratuities, as long as they comply with certain guidelines. However, the laws around automatic gratuities can vary state by state.

How should I handle an automatic gratuity charge?

Check the menu to see if there is mention of an automatic gratuity or service charge, understand the math, don’t double-tip, and ask questions if you have any.

Summary

While some customers might not agree with the concept of automatic gratuity charges, they are legal and common in many restaurants, especially fine dining restaurants.

It’s important for diners to understand these charges, so they can avoid any misunderstandings and tip appropriately.

By following these tips, customers can ensure that they provide fair compensation to the servers who provide them great service.

Norah Clark

Norah Clark

Norah Clark, the founder and editor of YummyTasteFood! She's a seasoned food writer and editor with over a decade of experience in the hospitality industry as a former pastry chef, sous chef, and barista. When not writing about food, she explores new recipes or travels the world for culinary inspiration.