Service Charge

A service charge is a non-negotiable fee automatically added to your bill, typically for services rendered. Unlike tips (which are voluntary), service charges are mandatory and must be paid.

Common Service Charges:

• Restaurants: 15-20% automatic gratuity for large parties
• Hotels: Resort fees, daily facility fees ($20-50/night)
• Catering: Service fee for events (18-22%)
• Venues: Service charges for private events
• Delivery Apps: Delivery fees ($2-8) separate from tip

Service Charge vs. Tip:

• Service Charge: Mandatory, set by business, goes to business (may or may not reach workers)
• Tip: Voluntary, set by customer, goes directly to service worker

Important Distinction: Just because a service charge is added doesn't mean workers received a tip. Some restaurants add a mandatory service charge but it goes to the business, not staff. When in doubt, ask if the service charge includes gratuity.

Legal Considerations:

• Service charges must be clearly disclosed
• In some states, businesses can keep service charges
• Tips must legally go to employees
• Automatic gratuity for large parties is considered a service charge for tax purposes

When Service Charges Apply:

• Banquets and catered events
• Large group reservations (6+ people)
• Room service (15-20%)
• Private dining rooms
• Resort amenities

Should You Tip on Top? If a mandatory service charge is already applied, additional tipping is optional but appreciated for exceptional service. Confirm with staff if you're unsure whether workers benefit from the service charge.