Service charges, administrative charges, surcharges, house fees—whatever you call those charges assessed for food and beverage service in restaurants and in hotels—the rules about how they need to be disclosed to guests and how they must be allocated are propagating. More and more cities, municipalities and other local legal bodies are taking on service charges in detailed laws, and we expect more to come.
Interest in this issue at all levels of lawmaking seems to be increasing as living wage/minimum wage raise efforts become more and more popular throughout the country. Many such efforts result in laws that also affect how service charges may be collected, distributed and how they must be disclosed to consumers. In other words, the locus for relevant law in this area has shifted significantly from the state to the county or city level.
Oregon is making history, once again. The new minimum wage law (signed by Governor Brown on March 2, 2016) brings two new titles: 1.) the first state to implement a tiered minimum wage (the amount paid is dependent upon the location of the business); and 2.) the state with the highest minimum wage. The passage of the new law has brought a mixed response. The cheers have emanated from the employees and the advocates for a livable wage. The jeers have emanated from businesses trying to figure out how they are going to keep their doors open. While the law is effective immediately, the first increase goes into effect July 1, 2016. So, without further ado, let’s get to the details so you can determine which camp you are joining.
Greg Duff founded and chairs Foster Garvey’s national Hospitality, Travel & Tourism group. His practice largely focuses on operations-oriented matters faced by hospitality industry members, including sales and marketing, distribution and e-commerce, procurement and technology. Greg also serves as counsel and legal advisor to many of the hospitality industry’s associations and trade groups, including AH&LA, HFTP and HSMAI.