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Tip Log: The Legality of Auto-Gratuity
Posted by Kirsten Henri on January 31st, 2008
Yesterday, we discussed the slippery nature of the auto-gratuity. Today, we find out if it’s even legal!
What happens when you’ve received crappy service and an automatic gratuity is applied to your bill? Are you within your rights to refuse to pay the gratuity or to pay a lesser percent? Or are you legally bound to pony up? The answer, in all of its litigious glory, after the jump…
We turned to our favorite food-loving attorney, David “Philafoodie” Snyder (who has had his own auto gratuity issues) for the legal analysis.
The bad news: there is no definitive answer, according to the law. There are only interpretations and negotiating points. Which actually might be good news!
In short, Snyder says that a customer could negotiate his way out of an auto-grat, but a restaurant could also call the cops on the customer for violating PA’s ‘theft of services’ criminal law. Straight from the legal eagle himself:
It’s not illegal to refuse to tip your server. But if the restaurant has a policy of charging an “automatic gratuity†and you refuse to pay it, you could be in trouble.
In September 2004, Humberto A. Taveras dined at Soprano’s Italian and American Grill in Lake George, N.Y. and left only a 10% tip instead of the 18% gratuity the restaurant required for all groups of six or more. Taveras claimed he saw no notice of the policy, but the restaurant claimed it was listed on the menus. Taveras was arrested and charged with theft of services. However, the prosecutor dropped the charges based on her conclusion that all tips and gratuities are voluntary.
We were always under the impression that if a restaurant puts their auto-grat policy on their menu, it means that the customer has been given fair warning and is then legally required to pay it. But Snyder tells us that this is not codified in law. It might make it easier for the restaurant to argue its case, but it’s not actual law. We made it up!
Under the Fair Labor Standards Act… “tip†is defined as “a sum presented by a customer as a gift or gratuity in recognition of some service performed for him.†A tip is distinguished from a service charge, which the restaurant cannot use as a tip credit to offset the minimum wage. The key distinction between the two is that tips/gratuities are within the customer’s discretion, but a service charge is not.
In the Taveras case, the prosecutor decided to drop the case because the restaurant called it a “gratuity†instead of a “service charge.†However, if the restaurant had called a “service charge,†the prosecutor may have pursued the case.
Snyder doesn’t necessarily agree with this prosecutor’s conclusion. Semantics saved the day in this particular situation, but in some cases–like if you had a litigious restaurant or a prosecutor with a hair across his ass–you could be charged:
It’s true that this law was developed under the FLSA, not criminal law. However, as the Taveras case illustrates, prosecutors often look to other areas of the law for guidance. If a prosecutor believes an “automatic gratuity†is not voluntary and a restaurant complains that you failed to pay it, he or she may decide to charge you with theft of services, which is a crime under PA law. If the amount in dispute is $50 or under, it’s only a summary offense. However, if the amount in dispute is above $50, it’s a misdemeanor.
Snyder’s conclusion? “Ultimately, I’d pay the auto-grat, because I tend to be conservative when jail time is involved,” but he’d speak to a manager first and try and negotiate it out of existence. Because he’s a lawyer and he’s good at it.
We agree. It should never get to this point. If your service is that bad, complain to a manager as soon as possible. Any decent restaurant should be willing to negotiate.
Philafoodie [Official Site]
Related Tags: Issues, philafoodie, Tipping
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January 31st, 2008 at 12:08 pm
As a firm believer in the power of talking to a manager (something that arose from being a former retail manager and knowing that the policy is almost always “give in to the crazy demands of your annoying customers”), I think this sounds like an excellent idea.
Of course, my policy is to always tip 15-20% regardless of service and make sure the manager knows if the service has been poor. No reason to stiff someone on a living wage just because they suck at their job, especially since I spend most of the time at my job commenting on sites like this.
April 2nd, 2008 at 11:58 am
No, a 15-20% tip is NOT always required. It is not the customer’s fault that a server does not make at least minimum wage, it is the restaurant’s. Forcing your customers to add a large chunk onto their bill as a gratuity to cover this person’s lack of living wage is rude. A tip is a reward for GOOD SERVICE, not something that you absolutely MUST pay. If someone provides POOR SERVICE, then they’re not deserving of a gratuity. Simple as that.
June 29th, 2008 at 7:34 pm
I think NO the one with the second comment is a greedy underpaid office worker, if you dont know a lot of servers make way more that the minimum wage, do your research and you will find out that some of them make 2 or 3 times more than you. So the fact that someone is waiting tables does not means that they have a lack of leaving wage. Why dont you bitch when you go to tryal for a misdemeanor and you pay your lawyer 30 times the court fee. Because you think they are smarter than you even though they might not be. So dont underestimate just beacuse you think you are too smart. Dont talk about something that you ignore. Simple as that.
November 22nd, 2009 at 9:57 am
This is just moronic. It’s symptomatic from why we elected Obama bin Laden to the complete lack of critical thinking, reason and logic in our culture. You are not entitled just because you exist, you earn based on your actions, your merit and your choices.
April 26th, 2010 at 3:15 am
In my opinion, if you’re either too lazy, too busy, or you wanna be served, you should tip your waitress/delivery person. Most people doing these jobs work really hard and deal with a lot of unnecessary bull. I always give good service but there are many things that are out of my control. Yet I am the person they see so I’m the one who gets the flak. I do believe in speaking with a manager, they’re usually receptive as long as you have a valid reason to complain. Be generous regardless, it’s good karma!
April 30th, 2010 at 1:39 pm
I work in the food service industry as a bar tender and waiter, and I can tell you with out getting too deep into racial biases that there are certain groups of people who do not tip well, no matter how good the service is. I always give my customers the best service I can regardless of how I think they are going to tip, and it always suck when I get 10% or less, and it happens. Some people are just cheap, and some just don’t know proper tipping etiquette. Adding an automatic gratuity to larger parties gives me a certain sense of security, I know that I’m still going to give the same quality service, and I don’t have to worry that my efforts will go unappreciated. And I know that if my customers feel the service exceeds their expectations that they can always leave more than the 18%-20% that is automatically added on, and they have. But do not blame the restaurant owners for not paying servers enough, when the law allows for them to make less than minimum wage. Most small restaurants have a hard enough time making ends meet when the first open, and sometimes don’t show profit for 2-3 years.
September 5th, 2010 at 11:32 am
I have worked in the restaurant business ever since I started working, and I am using it to put myself through college. It makes me really upset when people say they shouldn’t have to tip because it is the restaurants fault the servers make so little. Ok, if you want the restaurant to pay the servers more then that $10 cheeseburger you’re eating now becomes a $15 cheeseburger. So say you go out with 4 people and you order 4 cheeseburgers. Instead of it being a $40 check it is now a $60 check and instead of paying a $6-$8 tip you are now leaving $20. So if what you really want is to not have to leave a tip, then that’s fine, because you will wind up spending more anyway.
I completely agree with Pizza Girl, if you are too lazy to get the food yourself then yes you should tip. I will admit there are a lot of times where I want to go out and get waited on, or I want someone to deliver something to me, but I also tip accordingly. When that pizza delivery person comes, they are using their car, their gas, the wear and tear on their car. All things they have to pay for themselves. If you don’t want to leave at least a 15% tip then don’t go out, because I don’t want you at my table taking up a spot for someone else who is willing to pay. I make, after taxes, about $3 an hour, so if you do not tip me, I don’t make anything. A little food for thought….
February 25th, 2011 at 12:56 pm
So let me get this straight Kaley- it’s our fault you weren’t smart enough to pick a job that pays you what you think you’re worth?? LOL ok.
All these people trying to play sad violin songs for themselves and these poooor downtrodden restaurant owners just save the bs. The same can be said for a thousand other industries where tipping is not the social norm… the fact is- almost ANY business has a hard time breaking even in the first few years. Boo hoo, I’m sorry I don’t take it upon my own wallet to make sure you fulfill your “right” to be successful in business lol. Give me a break. It makes no sense also to argue that you’d be paying many times more than the tip in raised rates. The price of food definitely WOULD be raised if the company needed to do it to survive- and whether or not they make it will depend on if people think the product is worth it. As it SHOULD be. If they are forced to pay min wage and get greedy and GROSSLY overcharge as a response, well… hope you have amazing food or rich clientele- otherwise, nice knowing ya. Have fun with that bankruptcy. It has nothing to do with being lazy or being served- THAT is the whole point and experience of going to a restaurant. If I wanted to get my own food I’d stay home. That’s what the business model is based on. If the money you’re charging me doesn’t support your ability to run that kind of business, then charge more!! See if the value proposition is still worth it to customers. Bottom line- we should not be paying extra to subsidize greedy companies that don’t want to pay their employees what the job is worth. Period. The job market is exactly that- a market. You are selling your time and labor to someone. If you accept less than you think that’s worth, there is only one person to blame, and it’s not the random guy who doesn’t give you more cash beyond what his meal cost…it’s you. ANY other company- and this would be a different story. Oh- ok Sony, you want me to work in customer service 8 hours a day and pay me 3 bucks an hour? Sorry, NEXT. If they find people willing to do it for that price, then that’s what the job is worth, if not they either pay more or don’t have a customer service department. Tips should be nothing more than kindness, never required or figured in as part of compensation. Restaurants should be forced to pay minimum wage like everyone else. If more potential servers held them to this or else decided on a different job, they’d be forced to pay them what they’re worth or go out of business. That simple. As long as there are people are willing to do the job for cheaper- then that’s what it’s worth in the market. If that’s too low for you, pick a different job, or learn a new skill. Can’t? Tough shit, life is hard. You don’t get to rely on me to make it easier.
February 26th, 2011 at 5:53 pm
Just for the record: in PA, there’s something called “waitress wage”, which means they legally can pay you less than minimum wage. As of 2006, this was $2 less per hour than minimum wage. Theoretically, if they don’t have a table during that hour, the wage goes up. In reality, it never does. In PA, people LIVE OFF OF THEIR TIPS. Waitresses are often either college kids or single moms there.
Automatic gratuity in parties over 6 makes sense only in that that waitperson often ‘loses’ tables or can’t give their other tables good service during that time, so instead of several tables all tipping, s/he only gets your tables’ $. Often more bussers are required as well, and the tip filters down to them. That said, if you’ve got legitimate complaints and want to deliberately tip less, argue it out with the manager, sure!
February 26th, 2011 at 5:57 pm
oh, and as far as tipping goes, I begin assuming I’ll tip 15%. If they stink, I give 10% or less, if they’re great, 20% or more.
For the love of frak, tip on the #s you see before whatever discount/gift certificate you used!! Some people are SO rude!
March 6th, 2011 at 4:03 am
This is in response to “No” on 4/2/2008 and more specifically the IDIOT “Please” on 2/25/2011
Number 1 – Either keep your cheap ass sitting on the futon at home feasting on Ramen noodles or go through the Taco Bell dollar menu drive thru from here on out because apparently you’re too cheap (or incapable due to lack of income) to pony up the additional funds to tip the person SERVING your dinner.
Number 2 – No matter where you work, whether it is Denny’s or Alinea, the owner will take every advantage to pay the minimum wage possible to their servers.
Number 3 – Did you know that some states DO require owners to pay their servers at least minimum wage? Guess what?!?!?! Customers still pay them gratuity for their services. Because that is what gratuity is for – service – regardless of your ability to pay this extra 15% of the bill (let’s mention again the Taco Bell drive through of which you and your attitude are worthy).
***As a side note, did I mention that the bill ( the pre-tax, pre-gratuity portion of your bill) pays for the FOOD, not the SERVICE.
So, in regards to my third comment, I’d be willing to bet that those servers make more than you – so don’t knock them for their “intelligence” and supposed ” bad choice of career. As for the other states, it’s BECAUSE of idiots like you that they have to complain about not getting tipped appropriately (I would too because, hell, you sound like a F’IN douche!!!)
All on all, based on your last line of, *ahem*, wisdom:
“pick a different job, or learn a new skill. Can’t? Tough shit, life is hard. You don’t get to rely on me to make it easier”
Sounds like you’re the one really having problems, because buddy, I GUARANTEE no sane person in this world is “relying” on you to make their life better. Shit, you can barely afford a few bucks gratuity!
March 30th, 2011 at 9:27 pm
Let me start off by saying I generally tip 20% rounded up to nearest dollar no matter what because the math is easy. With that said…
… I completely agree with the notion that a gratuity is a sign of gratitude, not a service fee. It should never be required. Laws allowing servers to be paid under minimum wage arose because 1. people voted for them and 2. Americans’ generous dispositions gave good support for a move in that direction. Can I just say I’ve eaten all over Europe where tipping is not expected. Besides touristy areas, most receipts don’t even have tip lines. However, across the board, hands down, service in every restaurant from the lowliest to the most prestigious have had phenomenal and professional service, better than most I would get in the states. The food is more expensive, but it equates to about what I would expect to pay here plus a measly 10%. Why is that relevant? We’ve moved from defining servers as a service based career to more of a gambler’s paradise. Service, in my opinion, has suffered severely, along with the security and stability of those positions. Most servers around the us tend to be snot nosed kids that don’t do much to earn their keep.
I hate when people complain about how much servers make on an hourly basis. People go in to those positions knowing that with the additional knowledge that they have potential to make extravagant tips. That’s a choice they made. They should know there’s a risk of only making minimum wage. If they don’t account for that, well, that’s why the job’s a gamble. Deal with it, or go out and make a change. I doubt you’ll have any luck with wage reform though.
As far as added gratuity, I never pay any extra tip on those bills. I find it offensive to treat a “gratuity” as the server’s right and not at my discretion. Really I want to just negate the tip all together, but I don’t. Seriously though, if the service is not worth 15-20%, I shouldn’t have to pay it.
The “service” argument gets old too. Do you tip your mechanic because you don’t want to change your oil yourself? Do you tip the exterminator because you don’t want to spray the yard yourself? Do you tip the cashier at target because you don’t want to use the self checkout and scan your own groceries? That is their job. That is what they chose to do for a living. That is the service industry.
Finally, just because I’m this far in the rant already, please don’t talk about tipping “etiquette”. Tipping etiquette shouldn’t go any further than “if you feel your service was deserving of gratuity, feel free to leave a tip.” tipping etiquette is confusing, convoluted, pompous, and downright stupid. Do I tip the bag boy? How much per bag? By weight? Do I tip the cab driver? How much? What’s the normal tip for a valet?
(P.S. I equate required gratuity to mandatory valet. Why should I have to pay for a valet when I am perfectly capable of and would much prefer to park my own damn car and keep my keys?)
And I am not cheap. It’s out of principle, which people these days are completely lacking.
March 30th, 2011 at 9:28 pm
Let me start off by saying I generally tip 20% rounded up to nearest dollar no matter what because the math is easy. With that said…
… I completely agree with the notion that a gratuity is a sign of gratitude, not a service fee. It should never be required. Laws allowing servers to be paid under minimum wage arose because 1. people voted for them and 2. Americans’ generous dispositions gave good support for a move in that direction. Can I just say I’ve eaten all over Europe where tipping is not expected. Besides touristy areas, most receipts don’t even have tip lines. However, across the board, hands down, service in every restaurant from the lowliest to the most prestigious have had phenomenal and professional service, better than most I would get in the states. The food is more expensive, but it equates to about what I would expect to pay here plus a measly 10%. Why is that relevant? We’ve moved from defining servers as a service based career to more of a gambler’s paradise. Service, in my opinion, has suffered severely, along with the security and stability of those positions. Most servers around the us tend to be snot nosed kids that don’t do much to earn their keep.
I hate when people complain about how much servers make on an hourly basis. People go in to those positions knowing that with the additional knowledge that they have potential to make extravagant tips. That’s a choice they made. They should know there’s a risk of only making minimum wage. If they don’t account for that, well, that’s why the job’s a gamble. Deal with it, or go out and make a change. I doubt you’ll have any luck with wage reform though.
As far as added gratuity, I never pay any extra tip on those bills. I find it offensive to treat a “gratuity” as the server’s right and not at my discretion. Really I want to just negate the tip all together, but I don’t. Seriously though, if the service is not worth 15-20%, I shouldn’t have to pay it.
The “service” argument gets old too. Do you tip your mechanic because you don’t want to change your oil yourself? Do you tip the exterminator because you don’t want to spray the yard yourself? Do you tip the cashier at target because you don’t want to use the self checkout and scan your own groceries? That is their job. That is what they chose to do for a living. That is the service industry.
Finally, just because I’m this far in the rant already, please don’t talk about tipping “etiquette”. Tipping etiquette shouldn’t go any further than “if you feel your service was deserving of gratuity, feel free to leave a tip.” tipping etiquette is confusing, convoluted, pompous, and downright stupid. Do I tip the bag boy? How much per bag? By weight? Do I tip the cab driver? How much? What’s the normal tip for a valet?
(P.S. I equate required gratuity to mandatory valet. Why should I have to pay for a valet when I am perfectly capable of and would much prefer to park my own dang car and keep my keys?)
And I am not cheap. It’s out of principle, which people these days are completely lacking.
July 12th, 2011 at 1:25 pm
hahahaha, you are hilarious dude. I guarantee you no waitress is making more than me. Not being able to afford a charge and thinking the charge is illogical are two different things.
Let’s address some of YOUR illogical crap now though, shall we?
1) already covered
2) How is that my problem. All you did there was make my point for me…
3). First, try to realize there is a difference between minimum wage and what the position is worth, lol. First off, they ALL pay minimum wage dumbass! If not they’re breaking the law… secondly, you think if any large well known company tried to pay their CFO minimum wage they would take that job? Then turn around and complain about how it’s unfair and the customers should supplement their income? Again, it’s peoples own responsibility to accept or turn down jobs they think don’t pay what the work is worth. You idiot, it’s the JOB of the wait staff to serve people!! They don’t cook the food, they don’t do the company’s finances, they serve. That’s what the company IS paying them to do. If not, what the he’ll do you think they get a check for??
To add to your tired point- there are several other jobs in the world where people are served that we don’t tip for, some we do. Those people in other states are tipping because it’s the social norm- several studies have already been done on why people tip…
The funny thing about how you tried to “get me” there is, I actually DO tip, and I usually tip well. I’m ok with the idea of tipping to show personal appreciation. This is about adding MANDETORY automatic gratuities. To the same point- You mention there are many people who do get paid what they think they are worth, and don’t “rely” on our tips to supplement their income to make it livable. And my answer to that is…. So? Obviously those aren’t the people I was responding to- the argument was a counter to those who DO make the argument that servers don’t get paid enough for their job and so they need tips. If that’s not the case- then great! They are getting paid what they are worth to do the job they were hired to do. So why do we need to give them more of our own hard earned money?? So again… “please….”
July 12th, 2011 at 3:17 pm
Also- great points by Tony there. I forgot about how there are tons of other places in the world (many places in Europe and Asia for example) where there is just no such thing as tipping. Somehow they manage to function just fine.
to the point:
“***As a side note, did I mention that the bill ( the pre-tax, pre-gratuity portion of your bill) pays for the FOOD, not the SERVICE. ”
This is just stupid. The bill is the bill…it’s what I pay for the entire value proposition offered by the restaurant. How they choose to apply those funds to business expenses is absolutely none of the customers concern. When you got o McDonalds to you think you’re paying only for the food, not for the service at the till, the service of the people who cleaned the table before/after you left, McDonalds operating expenses, etc? Damn, I guess you better give them a big ass tip to cover that stuff then! lol. For ANY business, they set the prices they want to charge for the value they offer (both goods AND services), and divide that revenue how they see fit to pay their expenses (including buying the food from their sources, paying employees, and all other operational expenses). It’s none of my business if they aren’t offering enough of that to their employees, and it shouldn’t have to be.