Eater Investigative Report: Getting to the Bottom of Mandatory Services Charges

Following the recent hubbub over mandatory service charges at restaurants around the city, we've received a number of queries from readers wondering what's legal and what's not. Meanwhile, we noticed that both Apotheke and the Box add a 20% charge for table service, something especially troublesome given the high pricepoint, how unlikely it is to notice small print on a menu at bars (if you even get a menu), and how likely it is for guests to pay while inebriated.

Enough is enough. We decided it was time to do some digging and figure out what's illegal, what's merely frowned upon, and how any of the tipping rules can be enforced:

Before we get to the actual Dept. of Consumer Affairs rules, we'll hand it over to our expert, Carolyn Richmond, Co-Chair Fox Rothschild's Hospitality Practice Group, to explain:

"...the provision that has suddenly created an uproar in NYC's restaurant community is not actually a 'law' but rather a 'Rule'—an important distinction. In addition, nowhere in the Rule does it reference 10 point font, 15% or 8 party limitations. [Eds: as mentioned here]. Those specifics came about as an "interpretation" from the Department of Consumer Affairs."

So let's take a look at this "Rule," excerpted from the official "Rules of the City of New York":

§5-59 Restaurant Surcharges.
(a) A seller serving food or beverages for consumption on the premises may not add surcharges to listed prices. For example, a restaurant may not state at the bottom of its menu that a 10 percent charge or a $1.00 charge will be added to all menu prices.
(b) A seller may impose a bona fide service charge (such as an added charge for two persons splitting one meal, or a per person minimum charge), if the charge is conspicuously disclosed to the consumer before the food is ordered.(c) In this section, the term "surcharge" does not include tax.

Basically, restaurants can charge for things like splitting meals, corkage, service, etc. as long as the policy is conspicuous (read, written on the menu or a board). Following this Rule, the DCA issues this "interpretation":

"Our Department interprets these provisions to mean that:
1) The charge may not exceed 15%;
2) The charge is not imposed except for parties of eight or more persons;
3) The fact that such a charge will be added to the bill is conspicuously disclosed on the menu in at least 10 point font, in a box or an open area of the menu.

What all this means, according to our experts: It's not technically against the law for restaurants to add service charges. Since what we're dealing with is a rule and an interpretation (not a law passed by the City Council), restaurants are simply asked to voluntarily comply with the above suggestions. If a restaurant does not comply, the DCA has the option of bringing a lawsuit against it, which happens very rarely.

None of this means, however, that you can't file a complaint with the DCA (which they will maybe look into) or complain to us about it. And there's always one effective tried and true tactic when faced with sneaky restaurants and bars: taking your money elsewhere.
· Sneaky Foul Tips [NYP]
· Le Gamin Among Restaurants Adding Service Charges [~E~]