News & Analysis as of

Hospitality Industry Restaurant Industry Service Charges

Davidoff Hutcher & Citron LLP

Service Charges vs. Tips: Ensuring Legal Compliance in New York Restaurants

Understanding the difference between service charges and tips is critical for New York restaurant owners to remain compliant with state and federal labor laws. Misclassifying these charges can lead to legal disputes,...more

Fisher Phillips

How Will the Election and Recent Legislative Trends Impact Tipped Wages? 4 Developments for Hospitality Employers to Watch

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There’s been a lot of buzz about tipped wages as Election Day approaches – and hospitality employers will want to track key proposals that may have a huge impact on pay practices. Former President Trump and Vice President...more

Ogletree, Deakins, Nash, Smoak & Stewart,...

The Beginning of the End of Service Charges? An Examination of California’s SB 478

Starting July 1, 2024, California will make it unlawful for businesses to add any automatic service charges onto consumer bills. Service charges are mandatory fees tacked onto bills (often for the provision of services in the...more

Parker Poe Adams & Bernstein LLP

Eleventh Circuit Confirms That Service Charges Are Not FLSA Tips

The tip wars between hospitality employers and employees continue unabated. Numerous lawsuits contend that restaurants and other employers wrongfully retain or require sharing of customer gratuities, as well as violate Fair...more

Fox Rothschild LLP

Service Charge vs. Gratuity and Why It Matters Revisited

Fox Rothschild LLP on

Back in 2019, I posted about the difference between a Service Charge, an Automatic Gratuity, and a Gratuity/Tip. I explained that a service charge is typically a set amount added to a guest check in lieu of a tip. An...more

Parker Poe Adams & Bernstein LLP

Should Restaurants Treat Service Charges the Same as Tips?

Some restaurants in Atlanta, Charlotte, and other cities have begun adding a service charge to diners’ bills. The trend has grown enough in the District of Columbia, for example, that its attorney general recently warned...more

Ogletree, Deakins, Nash, Smoak & Stewart,...

Eleventh Circuit: Service Charges Are Wages, Not Tips, Under FLSA

On March 18, 2022, the Eleventh Circuit Court of Appeals ruled in Compere v. Nusret Miami, LLC, a collective action under the Fair Labor Standards Act (FLSA), that Nusr-et Steakhouse properly used automatically charged fees...more

Jackson Lewis P.C.

Restaurant’s Mandatory Service Charge Was Not a Tip and May Satisfy FLSA Wage Requirements, Eleventh Circuit Holds

Jackson Lewis P.C. on

A Miami restaurant’s mandatory 18% service charge did not constitute a “tip” under the Fair Labor Standards Act (FLSA) and therefore was properly applied toward satisfying the FLSA’s employee wage requirements, the U.S. Court...more

Littler

Littler Global Guide - Philippines - Q4 2019

Littler on

DOLE Issues Guidelines and Procedures for Work-Related Permits and Visas - New Order or Decree - On October 17, 2019, the Department of Labor and Employment (DOLE) published an order providing guidelines on the issuance...more

Fox Rothschild LLP

Service Charges vs. Gratuities And Why It Matters

Fox Rothschild LLP on

Attention hospitality employers. Is that charge you add to a guest check a service charge (typically a set amount added to a guest check in lieu of a tip)? Or an automatic gratuity (such as a set amount for a party of 8 or...more

Fox Rothschild LLP

Employer Risks That Arise From A Mandatory Service Charge

Fox Rothschild LLP on

A service charge can provide a welcome boost to a business’ bottom line, but employers must manage and mitigate the risk of lawsuits, disgorgement and damages. Recent developments across the nation serve as a reminder that...more

Foster Garvey PC

Tom Douglas Settlement Highlights a $2.4 Million Technicality: Three Steps to Help Avoid Potential Costly Litigation Related to...

Foster Garvey PC on

A recent settlement between Seattle chef Tom Douglas and his restaurant employees highlights the potentially costly technical requirements of Washington’s automatic service charge laws for hospitality businesses. ...more

Littler

Littler Global Guide - Philippines - Q3 2019

Littler on

Beginning September 3, 2019, 100% of the service charges collected by hotels, restaurants and similar establishments shall now be distributed equally among all covered workers, excluding managerial employees, pursuant to...more

Bowditch & Dewey

Getting “Tip”-sy: What Brewers Need To Know About Tip-Pooling Arrangements

Bowditch & Dewey on

Over the summer, news broke that Surly Brewing Co. was found liable by a Minnesota court for violations of the state’s tip-pooling law. The brewery, which operates a large beer hall in Minneapolis, was accused by a former...more

Ervin Cohen & Jessup LLP

Tips, Service Charges & Automatic Gratuities and Why You Should Care

Most employers are familiar with the basics. A tip is a voluntary amount of money a guest leaves for an employee over the amount due for the goods sold or services rendered. ...more

Foster Garvey PC

Reading the Fine Print: Changes in Legal Framework for the Assessment and Display of Service Charges

Foster Garvey PC on

Service charges, administrative charges, surcharges, house fees—whatever you call those charges assessed for food and beverage service in restaurants and in hotels—the rules about how they need to be disclosed to guests and...more

Foster Garvey PC

Are You Adopting a Service Charge Model to Help Raise Wages?

Foster Garvey PC on

As lawmakers continue to increase the minimum wage in states and cities across the country, many hoteliers and restaurateurs are implementing service charges and tip pools in order to meet rising costs and help workers earn...more

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