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
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
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
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
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
For years, Kentucky has been one of the few outlier states that further complicated tip pooling by requiring all tip pools to be voluntary. While federal regulations have flipped and flopped with the tide of the changing...more
In the current battle to hire and retain good workers, employers have developed creative ways to balance employees’ increased compensation expectations against the costs of running a business. In addition, restaurants using...more
Ohio- Substantially compliant acknowledgment clause WWSD, LLC v. Woods, 10th Dist. Franklin No. 20AP-403, 2022-Ohio-952- In this appeal, the Tenth Appellate District affirmed the trial court’s decision, agreeing that...more
On March 18, 2022, the U.S. Court of Appeals for the Eleventh Circuit upheld a district court’s decision that an 18% service fee charged at the upscale Miami steakhouse of celebrity chef Nusret Gökçe was not a “tip” and was...more
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
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
Agreeing with the district court, the Court of Appeals for the Fourth Circuit has concluded that the mandatory service charges imposed by a restaurant on dining parties of six or more were not “tips” under the FLSA. However,...more
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
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
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
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
Country clubs and other private clubs have traditionally utilized service charges on food and beverage sales to supplement their revenue. In most cases, this supplemental revenue is used to pay higher wages to all employees...more
- IRS Will Begin Taxing a Restaurant's Automatic Gratuities as Service Charges Many restaurants include automatic gratuities on the checks of guests with large parties to ensure that servers get fair tips. This method...more
Restaurants and other employers in the hospitality industry are reminded that, as of January 2014, the Internal Revenue Service (IRS) will expect businesses to comply fully with its Revenue Ruling 2012-18. Among other things,...more