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The Tipping Point: NYC Restaurants Face Lawsuit Over Automatic Gratuities Added to Receipts

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Big Chain Restaurants in NYC Duping Diners?

Going to your favorite restaurant may be more costly than it used to be, but not because of rising food costs.  Some restaurants in New York City are facing a class action lawsuit for including an “automatic gratuity” line on customer receipts, in addition to another blank line for an optional tip.  New York City law states that an automatic gratuity cannot be included unless a dining group consists of 8 or more people.  However, some of the restaurants that have included the automatic gratuity on customer receipts say that the practice is not illegal and that they are merely doing so as a convenience to their customers who can opt out by crossing off the line.

The Big Chains Aren’t the Only Ones Trying to Get Diners’ Dollars

The big restaurant chains aren’t the only ones guilty of adding an automatic gratuity.  Smaller restaurants like Per Se, Lavo and Morton’s in NYC also do so, and the class action lawsuit could affect up to 2,000 restaurants in the city.  Ted Dimond, a tennis professional who brought the lawsuit, says that NYC’s Department of Consumer Affairs doesn’t have the staff to enforce the rule of an automatic gratuity for only those parties 8 or larger.  He says that’s why he decided to take up the cause, and stated that he wants to see every consumer who ate at the named restaurants to receive $50 plus $1,000.

Tip=Reward+Choice?

Experts like CBS travel editor, Peter Greenburg, argue that the definition of a tip is about a “reward” for good service and a choice to determine what that reward should be.  Although the chain restaurants in NYC are the first to add the automatic gratuity, hotels have been doing this across the country for years.  For those like Dimond who filed the $5.5 million suit, the automatic gratuity is just another method of restaurants attempting to sock it to consumers and squeeze them of their hard earned dollars, often without their realization.

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  1. Christina says:
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    What I think is ridiculous is that you actually think the gratuity goes to the restaurant. How dense can you be? The gratuity goes to the hard working server, the one who actually pays out 3 to 3.5% of what the actual check is to other staff . Being a server myself, I work very hard and only making $2.13 an hour. It really sucks when people are unaware of how this industry works. You are paying for a service to the one serving you. If you don’t want to pay for the service go through to go or have fun at McDonalds.