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Service Charges: Washington’s
Service Businesses Must Disclose Employee Share
By Amy
H. Pannoni and J.
Riley Lagesen
[October 2007]
As of July 23, 2007, service-oriented businesses in Washington
state, such as restaurants, bars, convention centers and hotels,
must disclose to customers what portion of a “service charge”
goes to the employee(s) serving the customer. This disclosure must
be clearly printed on all itemized receipts and all menus. The law
requires disclosure even if the service charge is not labeled as
such. Service charges include all charges on receipts and menus,
such as “service charge,” “gratuity,” “delivery
charge,” or “porterage charge.”
When a business lists a "service charge" on a bill,
customers often assume that that portion of the bill is going to
the servers; that is not always the case. The new law ensures that
customers know where that money is going.
While the law does not define “serving the customer,”
the definition of “employee” provides guidance as to
the breadth of the new law. An “employee” is a nonmanagerial,
nonsupervisory worker. The definition includes, but is not limited
to, servers, busers, banquet housemen, banquet captains, bartenders,
barbacks and porters. Thus, this new law covers employees providing
both direct and indirect service to customers.
It is suggested that all service-oriented businesses include the
following or similar language on their menus: "A service charge
of __% will be added for parties of __ or more. Of that amount,
__% will be paid directly to your server(s)." The following
language should be included on all itemized receipts: "A service
charge of __% has been added to your bill. Of that amount, __% will
be paid directly to your server(s)."
If this new law affects you or your business,
and you would like to speak to our hospitality group to ensure that
you are in compliance, please contact:
This advisory
is a publication of the Hospitality and Restaurant Group of Davis
Wright Tremaine LLP. Our purpose in publishing this advisory is
to inform our clients and friends of recent legal developments.
It is not intended, nor should it be used, as a substitute for specific
legal advice as legal counsel may be given only in response to inquiries
regarding particular situations. Attorney advertising. Prior results
do not guarantee a similar outcome.
Copyright © 2007, Davis Wright Tremaine
LLP.
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