Automatic gratuity and restaurant service charges: is it legal, and can you have it removed?
Is an automatic gratuity legal, and can you get it taken off? What the IRS, the FTC and the rules in Florida, California, New York, DC, Massachusetts and Minnesota say, and what you can do before you pay. Checked Oct 22, 2026.
General information, not legal advice; check your state's current law. Every rule below links to the official law or agency page we read, checked Oct 22, 2026. Links on this page are plain links to official sources, not affiliate links.
An automatic gratuity, a "service charge" and a tip can look the same on a receipt, but they aren't the same thing. The short answer to "is it legal?": in the places we checked, a restaurant can generally add a mandatory charge if it tells you the way local law requires, and the rules on how, where and when it has to tell you differ a lot. Here's what the official sources say, and what you can actually do about a charge on your bill.
The short answer
- Usually legal if it's disclosed. None of the federal, state or city sources on this page bans an automatic gratuity outright. They set disclosure rules, and some set limits.
- The FTC's "junk fees" rule doesn't cover restaurants. It covers only live-event tickets and short-term lodging (16 CFR Part 464).
- Disclosure rules vary. Florida, California, New York City, Washington, DC and Massachusetts each say where the charge must be shown. DC also caps it at 20%.
- If it wasn't disclosed, you have more to work with: ask the manager, and if that fails, the agencies listed below.
Is an automatic gratuity a tip?
For federal tax purposes, usually not. Under IRS Revenue Ruling 2012-18, a payment is a tip only if it's made free from compulsion, the customer has the unrestricted right to set the amount, it isn't negotiated or dictated by employer policy, and the customer generally decides who gets it. In the ruling's Example A, a menu says an 18% charge will be added to bills for parties of 6 or more. The IRS says that 18% "is not a tip"; it's a service charge set by the restaurant (Rev. Rul. 2012-18, checked Oct 22, 2026).
Why it matters to you: the restaurant, not you, sets the amount, and where the money goes depends on state law. New York and Minnesota, below, have rules on when a charge has to go to the staff.
Does the FTC junk fee rule ban restaurant fees?
No. The FTC's Rule on Unfair or Deceptive Fees (16 CFR Part 464) applies to a "covered good or service," which it defines as live-event tickets or short-term lodging (eCFR, 16 CFR 464.1). The final rule was published Jan. 10, 2025 and took effect May 12, 2025. Its preamble says plainly that it is "the final rule, which does not apply to restaurants" (Federal Register, 90 FR 2066, checked Oct 22, 2026). Restaurant fee rules come from states and cities.
Rules by state and city
These are the places we checked on official sites, checked Oct 22, 2026. Rules change, so open the source link before you rely on any of them.
| Where | What the rule says | Source |
|---|---|---|
| Florida (since July 1, 2026) | Amount or percentage and the purpose of any "operations charge" on the menu, contract, website or app; notice on the face of the bill; separate receipt lines | Fla. Stat. §509.214 |
| California | A restaurant's mandatory fee must be shown clearly, with its purpose, anywhere the price is shown | Civ. Code §1770(a)(29) |
| New York City | No surcharges on top of listed prices; a bona fide service charge only if disclosed before you order | DCWP checklist, 6 RCNY §5-59 |
| New York State | A "service" charge is presumed to be a gratuity that goes in full to service staff | 12 NYCRR §146-2.18 |
| Washington, DC | Service fee capped at 20% (25% in a negotiated written contract); disclosed on menus, website and an entry sign, with its purpose | D.C. Code §47-2908(b) |
| Massachusetts (since Sept. 2, 2025) | Menus and bills show the total price; a party-size service charge is allowed if clearly disclosed and paid to service staff | Attorney General, 940 CMR 38.00 |
| Minnesota | An obligatory charge counts as the employee's gratuity unless you're clearly told it isn't | Minn. Stat. §177.23 |
Florida: the July 1, 2026 "operations charge" rules
Florida rewrote its automatic gratuity law in 2025 (SB 606), effective July 1, 2026. Section 509.214 now covers any "operations charge": an automatic fee, other than a government tax, that you must pay on top of the food and drinks. The law names service charges, automatic gratuities, credit card surcharges and delivery fees. A restaurant that charges one must:
- put the amount or percentage and the purpose of the charge on the menu, written contract, and website or app where orders are placed, in a font at least as large as the menu item descriptions (or on the menu board or a sign by the register if there's no menu or table service);
- put a notice on the face of the bill that the charge is included, with its percentage or amount;
- give you a receipt with separate lines for gratuity, operations charge and sales tax, with any automatic gratuity stated separately.
Two limits: the law "does not create a private cause of action," and it doesn't apply to a dining plan, package or fixed-price meal whose price was disclosed before purchase (Fla. Stat. §509.214(5), (6); DBPR Advisory 2026-01, checked Oct 22, 2026). Older copies of the law online show the pre-2026 one-sentence rule, so check that the page you're reading is current.
California: the restaurant exception to the hidden-fees law
California's hidden-fees law (SB 478, operative July 1, 2024) makes it illegal to advertise or list a price that leaves out mandatory fees, other than government taxes and shipping (Civ. Code §1770(a)(29)(A)). SB 1524 then carved out restaurants, bars and food concessions, but only on a condition: the mandatory fee must be "clearly and conspicuously displayed, with an explanation of its purpose, on any advertisement, menu, or other display that contains the price of the food or beverage item." The carve-out doesn't apply to third-party food delivery platforms (Civ. Code §1770(a)(29)(D); California Attorney General, checked Oct 22, 2026).
Two more California points from state agencies:
- Sales tax. When a menu prints a statement like "An 18% gratuity [or service charge] will be added to parties of 8 or more," the amount added to the bill is a mandatory charge and subject to sales tax (CDTFA Publication 115, checked Oct 22, 2026).
- Who gets it. The Labor Commissioner's office says a mandatory service charge "in some cases" could be a gratuity, citing a 2019 appeals court case (DLSE tips FAQ, checked Oct 22, 2026). The hidden-fees law itself doesn't affect tips you leave voluntarily (California AG).
New York City and New York State
New York City: the Department of Consumer and Worker Protection's inspection checklist says restaurants can't charge a surcharge or other fee on top of listed food or drink prices. Its examples include a "5% living wage fee," a "20% administrative charge" or a "15% mandatory gratuity." A bona fide service charge, such as "a mandatory gratuity for parties of eight or more," is allowed only if it's conspicuously disclosed before food is ordered, for example on a sandwich board, menu or sign. Putting the disclosure on the back of the menu or hiding it in the menu design is a violation (DCWP checklist, 6 RCNY §5-59, updated 06/2026, checked Oct 22, 2026).
New York State: under the state's hospitality wage order, there's a rebuttable presumption that any charge beyond food, drink and other specified items, "including but not limited to any charge for 'service' or 'food service,'" is a charge purported to be a gratuity, and it must be distributed in full to the service staff. A banquet or special-function administrative charge has to be identified as such, with a statement on the contract, menu and bill that it isn't a tip, in no smaller than 12-point type (12 NYCRR §146-2.18 and §146-2.19, checked Oct 22, 2026).
Washington, DC: the 20% cap
Since May 21, 2024, a licensed DC restaurant may charge a service fee of no more than 20% of the sale, or up to 25% when the fee is a term of a written contract negotiated with the customer, such as for a banquet. The fee must be clearly disclosed on all menus, the website and a sign visible on entry, and the disclosure must explain how the fee is used, including the share for base operating costs and the share paid as compensation above minimum wage. The restaurant must use the fee only for the purposes it discloses (D.C. Code §47-2908(b), checked Oct 22, 2026).
The DC Attorney General's restaurant advisory says fees must be disclosed before diners place their orders, and gives "A 20% service fee will be added to all guest checks." as a non-compliant example because it doesn't say how the fee is used (DC OAG advisory, checked Oct 22, 2026).
Context for why DC menus explain their fees: from July 1, 2026, DC's tipped minimum wage is 56% of the full minimum wage (D.C. Code §32-1003(f)), which the Department of Employment Services lists as $10.30 an hour against a $18.40 minimum wage (DOES notice, checked Oct 22, 2026).
Massachusetts: the 2025 fee rules
The Attorney General's fee regulations (940 CMR 38.00) went into effect Sept. 2, 2025. For restaurants, the AG's office says all fees must be built into the total price wherever prices are shown on menus and bills. Mandatory service charges for wait staff serving large parties are allowed if the amount and conditions are clearly displayed on the menu (its example: "18% tip added to parties of 6 or more"). Taxes can be added on the bill (AG tips for restaurants). The AG's guidance adds that a party-size service charge must be paid only to wait staff, service employees or service bartenders under G.L. c.149 §152A (AG guidance on 940 CMR 38.00, checked Oct 22, 2026).
Massachusetts also says a separate "administrative" or "house" fee must make it evident to customers that it isn't a gratuity, tip or service charge and won't go to the wait staff (mass.gov pay and recordkeeping, checked Oct 22, 2026).
Minnesota
Minnesota's wage law counts as a "gratuity" any obligatory charge a customer might reasonably see as payment for an employee's personal service, unless the employer gives clear and conspicuous notice that the charge isn't the employee's property (Minn. Stat. §177.23, subd. 9). A gratuity is the employee's sole property (§177.24, subd. 3, checked Oct 22, 2026).
Other states
We haven't checked other states for this page. That doesn't mean they have no rule. Your state attorney general or consumer protection office is the place to ask.
Can you refuse it or have it removed? What you can actually do
There's no blanket rule that lets you refuse a charge that was properly disclosed before you ordered. Whether you have a complaint depends on whether it was disclosed, and how, under the rules where you ate.
- Ask before you order. "Is there an automatic gratuity or service charge, and what is it for?" This matters most for large parties; the official examples above use 6 or 8 guests.
- Read the menu, website or app, and in DC, the sign at the entrance. A photo of the disclosure (or its absence) helps if there's a dispute later.
- Check the bill. Is the charge itemized, and does it match what was disclosed? In Florida, since July 1, 2026, the bill needs a notice and the receipt needs separate lines.
- Talk to the manager if the charge wasn't disclosed, doesn't match the disclosure, or you have a real service problem. Taking it off is up to the restaurant; nothing here guarantees it will.
- Card dispute, only for a charge that was never disclosed or doesn't match the disclosure. Not for a disclosed charge you simply don't like. Keep the receipt and your photos.
- File a complaint with your state attorney general or consumer protection office, or in New York City with DCWP. Florida's law says it doesn't create a private cause of action; in Massachusetts, the AG's office notes consumers have a private right of action under chapter 93A. We're not telling you to sue; that's a question for a lawyer.
Do you tip on top of an automatic gratuity?
That's your call. The charge is already a service charge for tax purposes, so the useful question is what the disclosure says it's for. California requires a restaurant's mandatory fee to explain its purpose, and DC requires the disclosure to say how much goes to operating costs and how much to pay above minimum wage. If the disclosure says the fee isn't a tip or doesn't go to your server, you'll know what an extra tip would do.
Sources (checked Oct 22, 2026)
- Federal: 16 CFR Part 464 (eCFR), FTC final rule, 90 FR 2066, IRS Rev. Rul. 2012-18
- Florida: Fla. Stat. §509.214 (2026), DBPR Advisory 2026-01
- California: Civ. Code §1770, Attorney General hidden fees page, CDTFA Publication 115, DLSE tips and gratuities FAQ
- New York: NYC DCWP restaurant surcharges checklist, 12 NYCRR Part 146
- Washington, DC: D.C. Code §47-2908, OAG restaurant fee advisory, D.C. Code §32-1003, DOES 2026 minimum wage notice
- Massachusetts: 940 CMR 38.00, AG tips for restaurants, AG guidance, pay and recordkeeping
- Minnesota: Minn. Stat. §177.23, §177.24
General information, not legal advice; check your state's current law. For a charge at the register instead, see overcharged at checkout? price scanner laws by state.
Quick answers
Is automatic gratuity legal?
In the places we checked, generally yes if it's disclosed the way local law requires. Florida (Fla. Stat. 509.214), California (Civ. Code 1770(a)(29)(D)), New York City (6 RCNY 5-59), Washington, DC (D.C. Code 47-2908(b)) and Massachusetts (940 CMR 38.00) set disclosure rules, and DC caps service fees at 20%. Checked Oct 22, 2026. General information, not legal advice.
Can I refuse to pay an automatic gratuity?
There's no blanket right to refuse a charge that was properly disclosed before you ordered. If it wasn't disclosed, or doesn't match the disclosure, ask the manager; removal is the restaurant's choice. In New York City, a service charge must be conspicuously disclosed before food is ordered (6 RCNY 5-59), and in DC, on menus, the website and an entry sign (D.C. Code 47-2908(b)). Checked Oct 22, 2026.
Is an automatic gratuity a tip?
For federal tax purposes, usually not. IRS Revenue Ruling 2012-18 says an 18% charge a menu adds for parties of 6 or more is a service charge, not a tip, because the customer didn't freely choose the amount. Checked Oct 22, 2026.
Does the FTC junk fee rule apply to restaurants?
No. 16 CFR Part 464 covers only live-event tickets and short-term lodging, and the Federal Register notice (90 FR 2066, effective May 12, 2025) says the final rule does not apply to restaurants. Checked Oct 22, 2026.
What changed in Florida's automatic gratuity law in 2026?
Since July 1, 2026, Fla. Stat. 509.214 covers any operations charge, including service charges and automatic gratuities. The amount and purpose must be on the menu, contract, website or app in a font at least as large as the menu descriptions, the bill must carry a notice, and the receipt needs separate lines. The law does not create a private cause of action. Checked Oct 22, 2026.
Are restaurant service charges legal in California?
Yes, if the mandatory fee is clearly and conspicuously displayed, with an explanation of its purpose, on any advertisement, menu or other display that shows the price (Civ. Code 1770(a)(29)(D), added by SB 1524). Checked Oct 22, 2026.
How much can a DC restaurant charge as a service fee?
No more than 20%, or 25% when it's a term of a negotiated written contract such as a banquet, and it must be disclosed with its purpose on all menus, the website and an entry sign (D.C. Code 47-2908(b)). Checked Oct 22, 2026.
Do Massachusetts restaurants have to include fees in menu prices?
Since Sept. 2, 2025, the Attorney General's rules (940 CMR 38.00) require the total price on menus and bills. A clearly disclosed party-size service charge paid only to service staff is allowed. Checked Oct 22, 2026.
Who gets the service charge money?
It depends on the state. In New York a service charge is presumed to be a gratuity for the service staff (12 NYCRR 146-2.18), in Minnesota an obligatory charge counts as the employee's gratuity unless you're clearly told otherwise (Minn. Stat. 177.23), and in DC the disclosure must say how the fee is used. Checked Oct 22, 2026.