How to disclose a restaurant service charge in DC without misleading diners

Why diners feel ambushed by a fee they technically saw

Many service charge complaints are not really about the amount; plenty of US diners already expect to add a tip on top of menu prices. The anger often comes from discovering a mandatory charge at the end, after the decisions about where to eat and what to order were made. In an r/Waiters discussion about how service charges work, one participant described a family dinner in Salt Lake City where a 20 percent service fee appeared on the check with no notice on the menu or door, which left them feeling there was nothing they could do by then (Reddit discussion). Another diner, on r/restaurant, asked why a mandatory fee is not simply built into menu prices (Reddit discussion).

Those are individual accounts from recorded excerpts, not surveys. They describe the problem a disclosure has to solve: the guest must know about the charge early enough that it is part of the decision, not a surprise on the receipt. In DC, that is also roughly what the Attorney General's office has said the law requires.

Fee, tip and gratuity are not interchangeable words

Wording problems start with vocabulary. Under federal tax guidance, the Internal Revenue Service says a payment is a tip only if the customer voluntarily decides to pay it and determines the amount, and it lists automatic charges added to a bill, such as a mandatory 18 percent charge for large parties, as service charges rather than tips (IRS tip recordkeeping). For federal wage purposes, the US Department of Labor's Fact Sheet 15 says a compulsory charge for service is not considered a tip under the Fair Labor Standards Act (DOL Fact Sheet 15).

That matters for disclosure because calling a mandatory charge a gratuity or an included tip can suggest something that is not true, for example that the full amount goes to the server. A mandatory charge is part of the price. A tip is optional and set by the guest. Choose the label that matches what the charge actually is and how it is actually used, and keep it identical everywhere it appears. Wage, tax and tip-pooling consequences of the charge are separate questions that need payroll or legal advice; the related article on where the service charge goes covers distribution.

What the DC Attorney General's advisory asks restaurants to do

The DC Office of the Attorney General's 2023 business advisory, Restaurant Fee Disclosure Requirements in DC, explains how the District's Consumer Protection Procedures Act applies to restaurant fees (DC OAG advisory). It states that the Act does not prohibit restaurants from adding fees to bills but does prohibit hiding fees, obscuring them in fine print or disclosing them only after diners place their orders, and prohibits deceiving or confusing consumers about why fees are charged and how they are used. The advisory cites D.C. Code § 28-3901(e), (f) and (f-1); codes are amended over time, so confirm the current text with the DC Council code site or counsel.

Its compliance list says restaurants should clearly and prominently disclose at the beginning of the ordering process the type and amount of all fees that may be charged, for example orally by servers and/or in bold large print on a menu; accurately describe the reason for the fee, by naming it clearly or adding text explaining how it is used or distributed; and use fees exclusively for the purposes disclosed, for example by ensuring service fees go fully and directly to service workers unless other uses are prominently disclosed. Restaurants should not bury fee information in fine print, withhold the amount or percentage until the bill arrives, use fees contrary to what was disclosed, or use ambiguous language such as an unexplained restaurant recovery fee.

The advisory says these rules apply to in-person and online platform sales, and that if OAG finds a violation it may seek a court order requiring refunds, penalties of up to $5,000 per violation or $10,000 per violation for a repeat offender, attorneys' fees and changed practices. It also states that compliance must be evaluated case by case, so treat it as guidance on enforcement priorities, not a safe-harbor template.

Menu, host and server wording that meets the beginning-of-ordering test

The phrase that changes practice is beginning of the ordering process. A note on the last line of the dessert menu does not meet it. Put the disclosure where guests first see prices: the top of the first menu page or directly beneath the restaurant name, in type at least as prominent as the item descriptions. If you use table tents, chalkboards or QR menus, the same sentence belongs on each.

The advisory gives oral disclosure by servers as an example. A short host or server line at greeting, before orders are taken, covers guests who do not read menus closely. The words should be the same as the printed version, so staff are not improvising explanations that differ from the menu.

Online ordering and delivery: the same rule, different screens

Because the advisory applies to online platform sales, the fee must appear early in the online flow, not first at checkout. Practical places include the menu header on your ordering page, the item list before add-to-cart and the cart summary, with the same name and amount as in the dining room. If a third-party platform adds its own fees, be clear in your own materials about which fees are yours and what they are for, and review how the platform displays any fee you set.

Test it as a guest would. Open the ordering page on a phone, start an order and note the first screen where the fee and its amount are visible. If that screen is the payment page, the disclosure is too late under the advisory's beginning-of-ordering language.

Worked example: moving a disclosure from the receipt to the first page

Hypothetical example, for illustration only. A DC restaurant adds an 18 percent service charge to all checks. Its only notice is a small line at the bottom of the back page of the menu, and the check reads Gratuity 18% followed by a blank tip line. An eight-person table with a $640 subtotal sees a $115.20 charge for the first time when the check arrives, because 0.18 times $640 is $115.20.

Reviewing the advisory, the owner finds three problems: the disclosure is buried, the label gratuity suggests a tip although the charge is mandatory, and the menu says nothing about how the money is used. The fix: move a bold sentence to the top of page one naming the charge, its amount and its use; add the sentence to the host script, website, booking confirmation and online ordering header; rename the check line Service charge 18% with the same use description; and confirm with the payroll provider that distribution matches the sentence before printing it. The tip line question is handled separately, as described in the related article on check design.

Outside DC, start from a different rulebook

The advisory applies to restaurants doing business in the District. States and cities have their own consumer protection statutes, attorney general guidance and in some places fee-specific laws, and they can differ in timing, wording and penalties. Check with your state attorney general's consumer protection office or local counsel rather than assuming DC's approach applies.

At the federal level, the Federal Trade Commission's Rule on Unfair or Deceptive Fees, effective May 12, 2025, covers businesses that offer, display or advertise live-event tickets or short-term lodging, according to the FTC's own FAQ (FTC fees rule FAQ). Restaurants are not in that scope, so that rule does not supply restaurant fee requirements, though general prohibitions on deceptive practices still apply.

Disclosure audit checklist and evidence to keep

Run this audit before introducing a fee and whenever the amount, name or use changes. Keep dated copies of each version of the menu, website, scripts and check template so you can show what guests saw on any date.

• Fee name, amount and use appear at the top of the first menu page in prominent type.
• Host or server script states the fee before orders are taken.
• Website, booking confirmations and online ordering header show the same sentence.
• Check label matches the menu wording and does not call a mandatory charge a tip or gratuity.
• Actual use of the money matches the disclosed use, confirmed with payroll records.
• Any change to amount or use is reflected everywhere before the new fee is charged.
• Dated copies of each disclosure version are archived.