How to Avoid Paying a Mandatory Gratuity for Bad Service

Gratuity \grə-ˈtü-ə-tē, -ˈtyü-\ Something given voluntarily or beyond obligation usually for some service. – Merriam Webster’s Dictionary

Like most people, I have very strong opinions when it comes to tipping rates for various services that expect them.  For example, I staunchly believe that 15 percent is completely acceptable for good restaurant service.

It used to be that tipping was meant to reward and encourage your server for exemplary service.  Unfortunately, with the advent of socialistic tipping pools and mandatory gratuities, that seems to be the exception rather than the rule.

Indeed, one of my biggest pet peeves with respect to tipping is the mandatory gratuity of usually 18 percent that most establishments now tack on to any bill for large parties.

Mandatory gratuity.  Talk about an oxymoron.

What is the logic behind enforcing a mandatory gratuity, especially for large parties comprised of at least six to eight people, and just how did this practice ever come to be in the first place?  Anyone?  Anyone?

Have rigorous academic studies been conducted that conclusively prove the collective intelligence of large parties drops to such a degree that they become incapable of figuring out a proper tip based upon the service they received?   Bueller?

If so I demand to see them – but I’m not going to hold my breath.

Maybe it’s a sign of the depressed economic climate, but last month one restaurant in Bethlehem, Pennsylvania, actually had two people arrested for refusing to pay a mandatory 18 percent gratuity.

According to the Philadelphia Inquirer, Leslie Pope and John Wagner, “had to find their own napkins and cutlery while their waitress caught a smoke, had to ask the bar for soda refills, and had to wait over an hour for salad and wings.”

That sounds like crap service to me too – and if I were Pope and Wagner (sounds like a songwriting tandem, doesn’t it?), I would have simply walked out 30 minutes after ordering.

It’s hard to believe that these dubious scofflaws had criminal theft charges filed against them for failing to pay a mandatory $16.35 gratuity for lousy service – but they did.

That doesn’t mean they didn’t have options available to them; they just chose the wrong one.

The first thing you need to understand is that, as a customer, you have a lot of leverage – especially with respect to the highly competitive restaurant industry.

Here are several suggestions you can use to help you avoid paying a mandatory gratuity for diabolical service:

1. Request the Mandatory Gratuity Be Waived

As a preemptive move, you can ask the restaurant if they will waive the mandatory gratuity.  Why might they do that?  Because you have a large party and they may not be willing to risk losing your business, that’s why.  Here’s another reason: Some restaurants may jump at the chance to see their servers earn an even bigger payday.  Better than nine times out of ten the service I receive at most bars and restaurants I frequent is good to excellent, which means my servers are routinely scoring between 15 and 20 percent of my bill – sometimes more than that.  As a form of protest, when it comes to mandatory gratuities, I never pay more than what I am forced to pay – even if the service is exemplary. Suggest to the manager that, in lieu of waiving the mandatory gratuity,  your party will tip more than 18 percent for excellent service.

2. Break up Your Party into Separate Tables

Breaking up your party into two or three smaller adjacent tables is another preemptive move that has the added benefit of ensuring you’ll probably get better service. Think about it.  When you are with a large party, a table for eight has to wait longer than a table for four because there are more meals that have to come up. A table of 16 requires an even longer wait.  And let’s face it:  If you are in a party with 16 people, are you really able to converse with Aunt Edna who is stuck at the far end of a chain of four tables?  The reality is, most people are only socializing with the people who are sitting adjacent and across from them anyway.

3. Talk to Your Server

Okay, enough for the preemptive suggestions.  Let’s assume you’ve already sat down with your large party and your server is off to a bad start.  Tell them about it!   Of course, do it tactfully and with a smile (as the saying goes, you catch more flies with honey than vinegar).   In my experience, this step is usually enough to nip any problems in the bud before they get too bad and you are forced to pay good money for bad service.

4. Inform the Manager You’d Like A Different Server

So you’ve talked to your server but you’re still not getting results?  Then talk to the manager about the poor service and request another server.  Although it is doubtful the manager will comply with your request, the odds are you will get him to help ensure the rest of your time at the restaurant goes as smoothly as possible.  Often times, when well-founded, a talk with the manager will result in some sort of compensation for your troubles such as one or two comped appetizers or meals – which often offsets a portion of the mandatory gratuity.

5. Dispute the Tip with Your Credit Card Company

Let’s assume the manager has been unsympathetic to your plight, your meals were delivered cold, you never got those drink refills, and the server had an attitude.  Now you’re looking at an 18% mandatory gratuity for the, um, fine service.  Calmly pay for the entire bill, including the mandatory gratuity, using your favorite credit card.  Do not, I repeat, DO NOT pay for the bill in cash.  When you get home, immediately send a polite letter to the offending restaurant complaining of the poor service you received and requesting your tip money back.  After that is done, call your credit card company and dispute the mandatory gratuity.

Pope and Wagner aren’t the first people this has ever happened to.  In fact, a similar event occurred several years ago in Lake George, New York, but charges were dropped when the District Attorney said the man could not be forced to pay a gratuity even though the restaurant said tips of 18 percent were mandatory for parties of six or more.

Meanwhile, the Philadephia Inquirer reporter who reported on Pope and Wagner’s story told me via email that charges against the two, “were supposed to be dropped.”  He noted that the prosecutor refused to prosecute because it was a civil dispute.

Just remember, whenever you’re faced with having to reward incompetent servers with an 18 percent gratuity for pitiful service, you don’t have to make yourself a martyr and expose yourself to a potential criminal conviction or a costly civil trial over a little chump change. 

There are plenty of other options available to you – and they’re more effective too.


29 comments to How to Avoid Paying a Mandatory Gratuity for Bad Service

  • These are great tips! My hubby is a chef, and for parties over 8 they put on the gratuity. I think it’s 18%. BUT it is a 4 star restaurant, and if someone got bad service I am sure they would complain about it. Personally I think the added on gratuity is kind of crappy, but that’s just me.
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  • Here’s a tip I would add: vote with your feet by avoiding restaurants that charge a mandatory gratuity.
    Susan Tiner´s last blog ..Financial Organizing Soap Opera Episode #5: Paris Shoot My ComLuv Profile

  • Is just walking away not good enough Len? Is this a guilt thing people have that we are always supposed to tip?
    Financial Samurai´s last blog ..The Public Loves Wall Street Again! My ComLuv Profile

  • @Mrs. Money: I would think that wait staff at a four-star restaurant – where I would expect the service to be 4-star as well – would really be upset with the mandatory gratuity because it puts a cap on their tips by a lot of people who think like me.

    @Susan: In a perfect world, I agree. But sometimes that is easier said than done, especially if you have no control over who the location.

    @Sam: I know where you are coming from, but I was addressing so-called “mandatory gratuities.” Simply walking away from a restaurant that advertises a mandatory gratuity risks costly civil litigation or potential criminal prosecution, as I illustrated in the article. :-)

  • An even bigger pet peeve of mine is when places that do not even have waiters still hand you a receipt to sign that has a tip line.
    Credit Card Chaser´s last blog ..New ‘Square’ Mobile Payment Service: Swipe Credit Cards via Smartphone My ComLuv Profile

  • MLR

    If you go the last route, I would add one thing:

    Sign, but circle the tip and draw an arrow down below your signature and write “Under protest of mandatory gratuity for subpar service.”

    That will give you a lot more leverage when you go to dispute the charge. You won’t look like a person just trying to get a few bucks back that you aren’t due.

  • carlye

    have you ever been a server? i agree that you should not HAVE to tip for bad service, but i used to be a server at the air port… i worked in the international terminal, i would get large parties from different parts of the world, (ive made a lot of money being a server because of my great service…) anyway, in china and the UK i guess they just dont tip, or they always think its included… i was very thankful for the gratuity in cases like this :) but unfortunately many times when there was only a party of 4 and they all ordered the most expensive steak and drank alot of beer, i didnt get a penny from them, because there werent 6 or more of them…. not fun at all busting your butt for a table that didnt leave you a penny :( if you get bad service you should tell the manager, enough complaints on someone they will eventually get fired

  • As a former server I’ll say that after a few occasions of…
    - providing impeccable service to large parties
    - getting screwed on the tip, sometimes no tip at all
    - paying out of my own pocket to serve them (servers owe a percentage of their total sales to others regardless if you tip)
    …I decided something is always better than nothing and I’d rather grat to ensure I got the something. The people who appreciated good service were going to take care of me even if I grat’ed them. The ppl who were cheap or felt I should pick another profession to get paid weren’t going to leave a tip unless it was added on the bill. Just my 2 cents.

    Also Len, you’d be surprised how many people tip poorly at nice restaurants.
    Ashley´s last blog ..Bankruptcy: Filing Chapter 7, 13, 11, and 12 My ComLuv Profile

  • carlye

    totally agree with you ashley… thats why i asked him if he had ever been a server :)

  • Just to be clear, the point of this post was how to avoid paying mandatory gratuities for bad service. Not how to avoid tipping your server, period. :-)

    @Carlye: Nope, I’ve never been a server – but does it really matter anyway? It looks like you and I are in complete agreement that imposing mandatory gratuities on people is wrong. :-)

    @Ashley: If you were my server I’d always give you 25%! Promise! :-) I take it that you aren’t bothered by mandatory gratuities? I do completely understand that even servers who perform flawlessly will get shafted on occasion – so I completely sympathize with servers in that regard. I just don’t think the fact that there are poor tippers among us justifies the restaurant industry practice of imposing mandatory gratuities on the rest of us.

  • @CCC: Yes! Very very deceptive!

    @MLR: Didn’t think of that! Good idea!! Your suggestion is a quick and dirty way to document your dissatisfaction that people might find more palatable that my more formal suggestion to write a formal letter. If you ultimately protest the charges, the credit card company will ask if you have first tried to resolve the problem with the merchant – they usually won’t start an investigation unless you say yes. I’m not certain, but I suspect both avenues (formal letter and protest message on receipt) should be adequate to meet that requirement.

  • carlye

    i would just like to add, that if you had ever been a server you would probably LOVE the mandatory gratuities! :) thats why i asked, because i dont know one server that would say they didnt agree with it haha

  • carlye

    oh and i do agree with the mandatory gratuity… if you had bad service THEN dispute it :)

  • I just want to say, before everyone here decides to start whining and complaining about “bad service” and getting the mandatory grat taken off the bill – The service is NEVER as bad as people make it out to be, however, when one thing goes wrong in a meal that suddenly snowballs into everything and every part of said meal being horrible, meaning it’s time to screw the server.

    Keep that in mind when you’re thinking just how horrible your service really was!

  • Is it still a gratuity if it is mandatory, Carlye? Or should it be considered a customer subsidy of the server’s wages?

  • carlye

    if you left it up to the customers how much to leave as a tip when you have a big party you risk getting screwed… i agree with your suggestions if you are really that against the gratuity of course if you are willing to tip fairly….i promise just ask any server what THEY think, you should do a poll, you would be surprised :)

  • Carlye, I realize 95% of servers would agree with you – but don’t you think they’re just a bit, um, biased? ;-) LOL

    Let me give you the same analogy I gave to Ashley off-line…

    Most people don’t donate their “fair share” of their income to charity. Let’s say “fair share” is defined as 10 percent of your salary. Should the US government take 10% of your pay – and everybody else’s too – and give it to charity to ensure the charities don’t get stiffed? To argue for mandatory gratuities because not everybody tips like they should is to also argue for government confiscation of some amount of of our pay on the grounds that most people don’t give their fair share to charity.

    Think about it. :-)

  • Well, I agree and disagree, Ribeye. Sometimes, the service can be really bad. But generally, I have to agree with you – most of the time, things aren’t as bad as they may seem. The “bad” service most people receive is very rarely worthy of handing out a 0% – 5% tip. Ten percent, yes. Zero, no.

  • carlye

    the people that donate to charity arent actively seeking a service, if you sit down at a restaurant your expecting to be served, your analogy doesnt have to do with this situation, its your perception…. think about it :)

  • carlye

    amen ribeye!

  • I don’t follow. Both are examples of forcing people to pay for something they feel they shouldn’t have to, be it rotten wait-staff service or a charity. In fact, the more subtle point I was trying to make was that mandatory gratuities are essentially “server charity.”

  • carlye

    what you dont seem to understand is that like ashley said, when you dont get tipped or you get a horrible tip, you still have to tip out bartenders and bussers a percentage of your sales…. why is it ok for a server to have to pay them out of their pocket because of all the bad tippers out there? like i said its perception, you havent been a server so you couldnt truly understand

  • I do understand that Carlye. Is it fair servers have to tip out bartenders and bussers a percentage of their sales? No. (Why isn’t it a percentage of their tips, by the way?) But it’s also not fair to ask customers to pay an 18% mandatory gratuity when they are given crappy service.

  • Amanda

    I have been a server and I am biased in that regard… but my argument is not considering that.

    The fact of the matter is: if it says it in the menu then you have to pay it. You are CHOOSING to enter into a contract that is clearly stated on the menu prior to you ordering. That part is your prerogative.

    I mean, would you walk up to a kid at a lemonade stand selling cups for 25 cents and drink one and then tell the kid “there wasn’t enough sugar in it so I’m going to give you 10 cents because that’s all it’s worth.” No. It would be absurd. The reason I chose such a silly analogy is because refusing to pay the server for unfortunate circumstances (I’ve never seen a server be rude of their own will; they are, after all, working for tips and are not stupid) would hit them as hard as it would the kid at the lemonade stand.

    There are set prices in restaurant menus. When you order a hamburger at the menu price of 7 dollars, you are agreeing to pay the 7 dollars for the hamburger. If you don’t like the price then you don’t enter the contract. Now, if the hamburger is sub-par, then you may negotiate with the manager for a discount or some consolation… but you don’t just get to say “I’m only paying 4 dollars for this hamburger.” And… a restaurant discounting you is no skin off their backs. But to a server to take a “discount in their tip” it makes a world of difference.

    What if your boss decided to dock you pay for a day because you had a bad day and made a mistake?

    If you have a problem with mandatory gratuity then you have a problem with the restaurant, or the culture who accepted the custom, but not the server. The servers are not the ones who made the choice to lay the burden of paying their wages on the consumer, so don’t punish them for your distaste of it.

    Deny the restaurant your patronage if you see it printed in their menu. Be mad at the masters if that’s how you feel… but don’t kick the cat over it.

  • Amanda: Thanks for your passionate comments! :-)

    I never penalize a server for errors out of their control – like a slow kitchen. Usually, my tips come down to quality of service provided.

    I’ll agree that it is rare for a server to have a bad attitude. But you can’t assert that there is no such thing as a server who is rude of their own will simply because you’ve never seen one before. That is a purely anecdotal argument; I know for a fact you’ve never seen my dog before either, but I assure you he exists. ;-)

    Maybe you just haven’t been around long enough to encounter a server who happens to be having a rotten day and they, either consciously or unconsciously, end up being rude to their patrons. I have. Believe me, it happens – we’re all human beings, after all. So on the rare occasion it does happen, why should I reward a server for a bad attitude (who also manages to ruin what was supposed to be a pleasant night out for me)? Simply because it would hit them as hard as it would hit a kid at a lemonade stand? That is absurd.

    You believe servers are “entitled” to be paid a subsidy by the customer, regardless of the level of service provided: “The servers are not the ones who made the choice to lay the burden of paying their wages on the consumer…”

    But if I can negotiate the price of a $7 hamburger down to $4 when its quality is below par, why can’t I negotiate an oxymoronic “mandatory gratuity” from 18% to 10% or 5%? After all, aren’t tips (mandatory or otherwise) paid in expectation of decent service – just as I pay money for a hamburger with the expectation that it will be of decent quality? Of course, they are!

    You can’t have it both ways, Amanda. You can’t argue that it is okay to renegotiate “a contract” for a $7 hamburger, but not okay to renegotiate “a contract” for an 18% mandatory gratuity simply because the poor server would be “hit hard.”

    Nobody forced servers into their jobs – at least I hope not. If they don’t like the fact that there are customers out there like me who absolutely refuse to give an 18% tip for poor service, then maybe they should be mad at themselves for agreeing to become a server in the first place.

    But maybe that’s just me. :-)

    Thanks again for your comments. I do know servers work very hard for their money.

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