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Auto Gratuity: The “Convenience” Of Having Your Tip Included

A growing number of restaurants, hotel bars, and nightclubs are stripping the patron of all discretion in determining the appropriate tip for wait staff by automatically including a generous gratuity in the bill. While this auto gratuity, as the practice is known, has been in use by some restaurants for some time for large parties of eight or more, it is now being applied to smaller parties and even individuals. Auto gratuities seem to be more prevalent in upscale bars, restaurants, hotels and clubs where food and beverages are already expensive, and establishments frequented by a large numbers of foreign tourists who, it is claimed, may not be familiar with American tipping customs. 

While local laws may permit restaurants and bars to include an auto gratuity, typically the practice must be disclosed.  For instance, Title 6, §5-59 of the Rules of the City of New York permit bars and restaurants to impose a “bona fide service charge,” if the charge is “conspicuously disclosed to the consumer before the food is ordered.” While the widely-known practice of including auto gratuities for large parties may be satisfactorily disclosed in fine print at the bottom or end of the menu, it is questionable whether that type of disclosure would be sufficient for auto gratuities applied to individuals or small parties, a practice neither widely-known, nor widely-accepted. Indeed, such disclosure would be, at the very least, entirely ineffective for those who order food and/or drinks without the use of a menu, or order a “special” not found on the menu. 

If you have paid an auto gratuity that was not conspicuously disclosed prior to the services being performed, please contact us immediately to discuss your legal options.

  • Louie Feher-Peiker

    I just ate at a Mexican restaurant that I had eaten at a few days prior. Same order ,now had gratuity. This time I ordered without menu, I added more than 20% the prior times, this time I was offended. They said that it was part of the software. I dind’t know I would get this. Is there a problem here?
    please call me at 720-291-5021 .
    thank you

  • Zin

    Many guests have a problem with an auto gratuity. As a
    former restaurant owner I have charged auto gratuity at some of my restaurants
    and not at others. One of the ways an owner can keep prices to guests at a
    reasonable price is to charge an auto gratuity. Let me explain. In Florida , we
    have to pay servers $4.78 an hour plus all their tips. That means a small restaurant
    (20 tables, opened dinner only 6 nights per week) may pay-out over $900 per
    week in minimum wages to servers. Add another 12% to cover FICA, State
    Unemployment Insurance and Federal Unemployment Insurance.  An owner that
    charges an auto gratuity still pays the servers all the tips and still pays the
    above taxes, however avoids the minimum wage. My previous servers years ago
    made between $40,000 to $60,000 per year with auto gratuity. That works out to
    about $25 per hour. It was conspicuously displayed on the menu and on the bill.
    If the guests had wine that was over $25 per person we lowered the gratuity to
    12% on the wine over $25 per person. Personally in Europe auto gratuities have
    been the norm for at least 40 years and they charged it on the entire bill,
    including wine.
    I would greatly appreciate your comments.
    Thank you,