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  • 2016-12-27 (xsd:date)
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  • Are Diners Obligated to Pay Mandatory Gratuity or Tip Charges? (en)
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  • To tip or not to tip can be a source of contentious debate, but at some point nearly every diner has been presented with an unexpected (and perhaps unwarranted) mandatory gratuity or service charge. In the United States, people in service industries (such as waitstaff) often rely heavily on tips. Although mandatory gratuity or service charge fields once were rare and reserved only for very large parties, the party size required to incur them has apparently grown smaller. The public still widely perceives tipping as a reward for good service rather than an obligation; claims exist that the word tips is an acronym for to insure prompt service, which is a backronym, unsubstantiated by the word's etymology: Whether a gratuity is legally enforceable is not part of any law we could find, but disputes over tipping can and do make their way to courtrooms, such as one instance in 2004 where a New York judge deemed such a charge unenforceable: In 2009, diners were arrested on a similar charge after refusing to pay a $16 service charge in Pennsylvania. An aggrieved diner said that after she was subjected to excessive waits and had to fetch her own silverware and drink refills, she was not inclined to tip her server: Several days later, a judge sided with the diners and dropped the charges: In some cases, judges have not sided with diners seeking an end to a mandatory gratuity, which became an issue when diner Ted Diamond sued Darden restaurant group in 2013: A 2014 ruling favored Darden restaurants in the suit: Further muddying the waters is that as of 1 January 2014, the Internal Revenue Service decided that any form of mandatory gratuity is paid not to the server but to the restaurant (as a measure to ensure taxes are paid on tips): That creates a legal gray area, in which an objecting diner could potentially be arrested for theft of services for declining to pay the fee (although the 2004 and 2009 cases came before the IRS rule change), and it is common for the issue to be parsed as one of taxation rather than obligation. (Although the IRS classifies a service charge as taxable income, it did not extend its reach into the enforcement of such charges.) The legality of enforcing mandatory surcharges, service fees, and tips appears to fluctuate from state to state, or even situation to situation. In many cases, the practice was upheld by the lack of laws forbidding it: Over the years, the subject of mandatory tips or service fees has been debated, legislated, argued in court, written about extensively, and addressed by the IRS. Most information on the topic was semantic, as nearly all case law we could find rested on whether a gratuity is a tip (voluntary) or a service fee (potentially enforceable by law). In many cases, restaurants impose such fees in the absence of laws prohibiting them. The firmest legal information on mandatory service fees comes from the IRS, but that entity provides no guidance on whether the fee is legally enforceable. (en)
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