Automatic tip or service charge? New state law requires restaurants to tell diners before they order

People dining out in Florida should see fewer surprises when their check arrives beginning July 1. A new state law requires restaurants to clearly disclose mandatory fees and service charges before customers even place their orders.

The updated law expands existing requirements beyond automatic tips to cover a broader category of an "operations charge" — including service charges, credit card surcharges, delivery fees and other mandatory charges added to a customer's bill, excluding taxes.

Restaurant that impose those charges must disclose the amount or percentage of the fee and explain its purpose on menus, websites, mobile ordering platforms and, when applicable, written contracts. The information also must appear on customers' bills, according to details of the law. 

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The change is meant to give diners a clearer understanding of what they'll pay ahead of time.

"Restaurants today are navigating rising costs and evolving customer expectations, particularly around tipping and service charges," Ashley Chambers, communications director at the Florida Restaurant & Lodging Association, told Fox News Digital.

"We support increasing transparency around restaurant charges, and we believe it can enhance trust and understanding between restaurants and their guests — provided it is implemented in a way that is clear for consumers and practical for operators."

Eric Douglas, a partner with BOL Hospitality Group, which operates several South Florida restaurants, said transparency benefits both restaurants and diners.

"Anything that's good for the customer is good for us," Douglas said. "We're in the customer service business at the end of the day. We want to make sure there's transparency with any charges that we might have."

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His group plans to implement an 18% service charge at one of its restaurants, Douglas said, with all proceeds going directly to employees. He believes restaurants should be equally clear if any portion of a service charge is used for operational expenses.

"If I'm going to be charged a service charge, and it's not going to be used 100% toward the staff, I think I deserve to know where it's going," he said.

Douglas said automatic gratuities also serve a practical purpose for larger parties, helping to ensure servers are fairly compensated for the additional coordination and service those tables require.

Not every restaurant relies on service charges.

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Vicki Parmelee, owner of Jumby Bay Island Grill in Jupiter, said her restaurant has long favored building costs into menu prices rather than adding fees at the end of a meal.

"We have always been straightforward with our guests at Jumby Bay Island Grill in regard to what they are paying for," Parmelee said. "A diner should not have to decipher the bill at the end of the meal with extra fees. Transparency is always much more appreciated."

While she supports being upfront with customers, Parmelee said she worries the new law could unintentionally leave some diners wondering whether restaurants have been misleading them.

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"I think this new law will unfortunately confuse diners, as they now may assume they have been being 'duped' in some way when they dine out," she said.

Instead of adding service charges to offset rising costs, restaurants should simply price menu items accordingly, said Parmelee.

"If expenses have increased for the restaurant, the menu prices should accurately reflect 28–35% food and beverage cost, not an added service charge," she said. "It's an honest way to present pricing to our customers and still make a marginal profit."

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Parmelee said she has encountered restaurants that replace traditional tipping with mandatory service charges, a practice she believes often creates confusion for both diners and employees.

"I would never adopt this fee structure," she said. "Tipping is voluntary and earned by the staff."

The new law in Florida does not prohibit restaurants from adding mandatory service charges or automatic gratuities. 

Rather, it requires restaurants that choose to impose those charges to clearly disclose them before customers order.