Can Restaurants Force Customers to Tip? Photo of 'No Tip' Option Resurfaces

Restaurants across the United States frequently add automatic gratuities to bills, particularly for large parties. While some diners appreciate the convenience, others question whether they are legally required to pay these charges. The practice of tipping is deeply ingrained in American dining culture, but its application varies significantly from other parts of the world, where service charges often replace tips entirely.

This topic recently gained attention due to a viral Reddit post featuring a photo of a sticker placed over the "no tip" option on a digital payment terminal. Using TinEye, a reverse image search, Newsweek traced the image back to May 2024. Even so, the viral post hints at some customers' feelings of frustration that tipping has gotten out of control.

Why It Matters

Tipping is a controversial issue in the U.S., with some customers feeling pressured to pay mandatory service charges while others argue that tipping should remain voluntary. With inflation and "tipping fatigue" becoming more prevalent, consumers are increasingly scrutinizing the practice of automatic gratuity.

While some believe tipping should be purely voluntary, many service industry workers depend on gratuities as their primary source of income. The debate over tipping resurfaced during the 2024 election campaign when both President Donald Trump and former Vice President Kamala Harris promised "no taxes on tips," bringing renewed attention to the role of gratuity in workers' livelihoods.

What To Know

There is no federal law requiring customers to tip, but automatic service charges added by a restaurant are legally enforceable in many states.

"No, they can't force you to tip if you make it optional," Bruce McAdams told Newsweek. McAdams is an associate professor for the School of Hospitality, Food and Tourism Management at the University of Guelph.

"But if you state there is a service charge and add it to the bill, it is legal and the customer is required to pay. Adding a 'service charge' has been common in the industry since the early 2000s for larger parties, usually six or more."

Service charges are not classified as tips but rather as revenue for the restaurant, meaning the business is not necessarily obligated to pass them on to employees, according to Reader's Digest.

The IRS defines a tip as a voluntary payment that the customer decides to give and determine its amount. A mandatory service charge does not meet these criteria and is instead considered a wage that can be taxed accordingly, according to Salon.

Automatic gratuity is typically applied to large parties, often six or more guests, as McAdams said, and is usually around 18 percent to 20 percent of the bill. Restaurants must disclose these charges clearly to customers, either on the menu or verbally before the meal is ordered.

What People Are Saying

McAdams also told Newsweek: "In Canada and the USA there is currently no legislation about what companies can ask for tips, and for how much. Additionally, there is no law about placing an automatic 'service charge' on a bill. With an increase in more businesses (non-traditional) asking for tips, and with digital payment machines being set higher, there is a growing sense of fatigue from consumers in regards to tipping. We are now seeing the majority of consumers in Canada wanting to move away from tipping."

Ryan McCall, principal attorney with McCall Sweeney & Silva, told Newsweek: "Mandatory tipping is a relative gray area from the standpoint of the federal government. Barring individual state laws saying otherwise, restaurants are well within their power to charge automatic gratuities (which from a consumer perspective is often treated as a tip) for large parties or even solo diners, and this is somewhat common in the United States. With that being said, most states have guidelines that require restaurants to disclose mandatory gratuities as well as service charges prior to someone dining at their establishment."

Ben Farrow, LegalShield Provider attorney, told Newsweek: "While it might seem like they are "forcing" a tip, the legality is a bit nuanced. There's no law requiring customers to leave a tip. A true tip is defined by the IRS as something optional and determined solely by the customer. What restaurants often do is add a mandatory service charge, sometimes called a "gratuity," to the bill. This is perfectly legal. It's not technically a "mandatory tip" because it's not considered a tip at all; it's considered revenue for the restaurant."

What's Next

The debate over tipping and service charges is likely to continue as more businesses experiment with alternative models, such as increasing base wages and eliminating tips altogether. Some restaurants have tested "service-included" pricing, where gratuity is factored into menu prices, but this model has not gained widespread acceptance.