Can a restaurant charge a service charge and not give anything to the servers?

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Can a restaurant charge a service charge and not give anything to the servers?

I work at a fine dinning restaurant that pays a little over minimum. They add a service charge to the bill so the members and guest don’t tip. Is it legal for them to present it as a service charge if the servers never receive it?

Asked on December 20, 2011 under Employment Labor Law, Florida

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

It may constitute a form of consummer fraud or an unconscionable commercial practice if it is not made clear that the service charge is not a tip, since ordinarily, it is. From what you describe, it is actually a surcharge or price increase on the meals masquerading as a tip, and that is what may make it illegal.

If it were fully and properly disclosed, it would be legal--though then, the restaurant would have to pay at least minimum wage and could not claim the "tip credit."


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