As a waiter or employee, you would be surprised to find out that mandatory service charges are legal in most states. There are no federal law regulations on this issue so it really depends on state and local law. With a few exceptions, most states allow restaurants and employers to keep this money.

Even though California is the most employee friendly, it does not classify mandatory services chargers as tips. In California, tips belong to employees. Although an employer may require employees to participate in a legal tip pooling or sharing arrangement, it may not take any part of employee tips.

However, mandatory service charges are considered to be a part of the bill, and are not considered to be a gratuity. This means that an employer does not have to distribute any part of these charges to employees.

It’s important to talk to an employment lawyer to check whether your city or state has its own rules about mandatory service charges.

David Payab, Esq. from The Law Offices of Payab & Associates can be reached @ (818) 918-5522 or by visiting


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