Service charges can be complicated. You may hear them referred to as service fees, booking fees, or customer service fees. And once you have decided what to call them, they don’t always get easier to understand. Washington state’s rules regarding tips and service charges can be hard to navigate and federal rules add another layer of complexity to the requirements for employers. Class-action lawsuits targeting hospitality businesses are on the rise but the Washington Hospitality Association has tools to help your business stay compliant.  

This toolkit compiles important and up-to-date resources for operators with questions about service charges. Need some guidance on current tip pooling policies as well? We have also updated the tip pooling toolkit with new information.  

 

Overview:

For some quick background and common issues operators are facing check out this article. 

Automatic service charge RCW

The law regarding service charge disclosure in WA state

Do you have disclosures on the receipt and the menu? 

This is the law addressing service charge disclosure – the code says you must disclose the percentage of the fee that goes directly to employees on the menu AND on the receipt. Failing to meet this requirement is a common mistake for businesses. RCW 49.46.160: Automatic service charges. (wa.gov). 

HERO manual coverMembers: Our HERO manual is a world-class resource. 

The HERO manual has hundreds of pages with guides to help you navigate Washington’s hospitality climate. The HERO manual has new updates for 2021 in its service charge section and has all the information members need to understand service charge requirements. Log in to the members only hub to view it online. 

Members: This webinar with an employment law attorney takes a deep dive.   

You can replay this webinar that looks at common service charge, tips, and tip pooling errors that can easily trigger liability and cost employers money. Presented by employment law attorney Catharine Morisset of Fisher Phillips, this webinar provides members with a refresher on the rules and offers some tips to avoid common mistakes. Log in to the members only hub to watch it here. 

 

Questions, answers, examples 

For federal and state laws on service charges, Q&A, and example disclosure forms check out our guide to service charges in Washington.  

 

L&I policy guidance 

We have an article here where you can read about the most recent policy guidance from Labor and Industries addressing employer requirements and employee rights on tips, gratuities and service charges.  

L&I also has information and rules regarding tips and service charges where they encourage employees to file a complaint if they feel they are not getting paid service charges as required by law. 

 

Tips and service charges – definitions, differences. 

We also have information on how tips differ from service fees, as well as tip pooling information and best practices for tipping policies and procedures for hospitality businesses. For more on tip pooling, you can check out our recently updated toolkit. 

 

In addition to the statewide L&I guidance, the Seattle Office of Labor Standards has published their own service charge fact sheet.