ES.A.12 Tips, Gratuities, and Service Charges Page 3 of 6 3/6/2019
B. Service charges
1. What are service charges?
Service charges are a type of automatic charge added to a customer’s bill for services related to
food, beverages, entertainment, or porterage. An automatic charge is a service charge when it
is a separately designated amount collected from customers that is described in such a way that
the customer might reasonably believe that the charge is for the service provided by an
employee. Service charges often appear to replace a tip or gratuity, or might discourage a
customer from leaving the same amount of tip or gratuity.
Types of service charges may include charges identified as “service charge,” “mandatory
gratuity,” “delivery charge,” or “porterage charge.” A mandatory gratuity that is automatically
added to a bill, such as a restaurant charge for service for a party of more than a certain
number, is a service charge.
Other types of charges or surcharges that are not described in such a way that the customer
might reasonably believe that the charges are for the service provided by an employee, such as
a fuel surcharge, late fee, cancellation fee, or parking fee, are not service charges under RCW
49.46.160 and are not subject to this policy. For guidance on other types of surcharges, see the
Surcharge Guidelines provided by the Washington Attorney General’s office.
2. What are the requirements for service charges?
Employers must disclose the percentage of the service charge that is paid to the employee or
employees serving the customer. This information must appear in an itemized receipt and in any
menu provided to the customer. See RCW 49.46.160.
For the purposes of this policy, the percentage of a service charge that is retained by the
employer is referred to as the employer portion of the service charge. Employers are expected
to accurately reflect actual service charge distributions to employees in their disclosures.
If any portion of a service charge is not clearly designated as being retained by the
employer, it is due to the employee or employees serving the customer.
For the purposes of this policy, the percentage of a service charge that is due to the employee
or employees serving the customer is referred to as the employee portion of the service charge.
The employee portion of a service charge must be paid to the employee. See RCW
49.46.020(3). The employee portion of service charges are in addition to hourly wages paid or
payable to the employee or employees serving the customer. RCW 49.46.160(2)(c).
If an employee files a complaint with the department alleging that their employer failed to pay to
the employee all service charges due to the employee under RCW 49.46.020 and 49.46.160,
the department will investigate the complaint. The department will investigate the complaint
pursuant to the procedures outlined in the Wage Payment Act, RCW 49.48.082 through
49.48.087. See WAC 296-128-820.