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Recently, while on vacation in Washington, D.C., I sat down at a restaurant and was instructed to order via a QR code—unless I preferred a physical menu, which I requested. I didn’t notice any mention of an 18% service charge on the menu, but I certainly noticed it when the check arrived. To make matters more confusing, a line for a suggested percentage tip was still printed at the bottom of the bill. Was this a mandatory gratuity for my server, or just a hidden price increase?
When I returned home to Texas, I ran into the same pesky 18% service charge after ordering a drink at a movie theater bar.
Driven by frustration, I looked into the legalities surrounding these charges. As it turns out, whether a service charge functions as a tip or simply defrays corporate labor costs is open to debate. Legally, businesses can apply mandatory fees as long as a footnote or notice is provided. But legal technicalities aside, this raises fundamental questions for every diner:
When you see a mandatory 18% service charge on your bill, do you consider that the tip? And if not, how much extra are you supposed to leave?
If it’s 18% I assume it’s the tip. Right, wrong or indifferent, what I do in those situations is I don’t tip more. This is primarily because I don’t like automatic / mandatory tips. I tip 20% standard, so if they want to set it at 18 then they get less.
Restaurant meals and food/beverage services in D.C. are taxed at a 10% restaurant sales tax rate and the mandatory gratuity added to your bill was also subject to that same 10% sales tax. Rules on sales tax on mandatory gratuities may vary by location.
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