Washington Service Charge Disclosure Law: What Restaurants Must Print

On this page 8 sections

1. What the Washington Service Charge Disclosure Law Requires
2. Who RCW 49.46.160 Reaches, From Bistros to Banquet Halls
3. Where the Disclosure Has to Appear
4. Washington Service Charge vs. Tip: Why the Label Changes Who Owns the Money
5. A Worked Example: The Banquet Check and the Bistro Receipt
6. Sales Tax on Service Charges: Confirm Before You Set the Tax Flag
7. Building a Compliant Service Charge Receipt in Washington
8. How Service Charge Violations Come to Light

Key takeaways

• RCW 49.46.160 doesn't make you pay staff any set share of a service charge. It requires the receipt and menu to state the share that actually reaches serving employees.
• Under RCW 49.46.020(3), any part of a service charge that isn't itemized as kept by the business is owed to employees. A missing disclosure can make the whole charge a wage claim.
• Money paid to managers or supervisors doesn't count toward the share you disclose. That includes banquet captains with supervisory duties.
• Workers brought the public cases we found. They alleged either that the disclosed share didn't match what staff received or that the business kept the charge without disclosing it. Check every month that your printed percentage matches payroll.

Washington's service charge disclosure law, RCW 49.46.160, applies to any business that adds an automatic service charge for food, beverages, entertainment or porterage. You have to print the percentage of that charge paid to the employees who served the customer, and it has to appear in two places: the itemized receipt and any menu you give the customer. A related section, RCW 49.46.020, says any part of the charge you don't itemize as kept by the business belongs to those employees. That makes your menu footer and receipt template part of your payroll compliance, so they deserve the same care as your timesheets.

The rules below reflect the statute as published on the Washington State Legislature's RCW site as of October 2026, with history citing 2007 and 2010 legislation. Check the current text before you change templates.

What the Washington Service Charge Disclosure Law Requires

The core rule fits in one sentence. An employer that imposes an automatic service charge "related to food, beverages, entertainment, or porterage" must disclose, on the itemized receipt and on any menu, the percentage of the charge "paid or payable directly to the employee or employees serving the customer."

Three definitions in the statute decide how far that reaches:

• Service charge means a separately designated amount collected from customers for services provided by employees, or described in a way that customers might reasonably believe is for those services. The statute names "service charge," "gratuity," "delivery charge" and "porterage charge" as examples.
• Employee means nonmanagerial, nonsupervisory staff.
• Employer covers establishments including, but not limited to, restaurants, catering houses, convention centers and overnight accommodations.

The statute also says service charges are paid on top of hourly wages, not as part of them.

The most common misunderstanding concerns the split. The law doesn't require you to pay staff any particular share. As Seattle Litigation Group notes in its summary for restaurant workers, a business may keep the entire charge. The violation is staying silent or printing a number that doesn't match what actually happens. And because RCW 49.46.020(3) requires employers to pay employees all service charges except those itemized as not payable to them, a missing disclosure can turn the whole charge into wages owed.

The "reasonably believe" clause matters too. A "staff fee" or "kitchen appreciation fee" suggests the money goes to workers. If a customer could read a fee that way, assume it's covered unless employment counsel tells you otherwise.

Who RCW 49.46.160 Reaches, From Bistros to Banquet Halls

Restaurants and bars run into it most often through automatic gratuities on large parties. Because the statute lists "gratuity" as a service charge label, an "18% gratuity added for parties of 8+" is an automatic service charge, and the receipt has to say what percentage reaches the servers. Restaurants that replaced tipping with a flat service charge carry the same duty on every check. Our restaurant and bar payment page covers the POS side of running either model.

Hotels pick up several triggers at once. Room service delivery charges, bell and porterage charges, and banquet service charges all fit the statute's definition, and overnight accommodations are named in it. Banquet operations deserve the closest look. A 2019 class action complaint filed for banquet workers and posted by the Fair Work Center alleged that the defendants collected automatic service charges, did not pay them to nonmanagerial, nonsupervisory banquet employees, and did not disclose that they kept them. If your hotel payment setup prints banquet checks, those checks are in scope.

Event venues and caterers are covered through the mention of catering houses, convention centers and entertainment.

Online and delivery orders count as well. "Delivery charge" is one of the statute's named examples, so a delivery fee on your own online ordering site that pays for your drivers needs the same disclosure on the digital menu and the e-receipt.

Money paid to managers and supervisors doesn't count toward the percentage you disclose, because the statute defines employees as nonmanagerial and nonsupervisory staff. If a banquet captain with supervisory duties takes part of the pool, the disclosed percentage has to leave that share out.

Where the Disclosure Has to Appear

The statute names the itemized receipt and any menu provided to the customer, and both are required. Seattle Litigation Group's reading is that a disclosure missing from either one, or one that doesn't state the amount employees receive, entitles employees to the full charge.

The statute doesn't list websites, QR menus, apps or catering proposals by name. Our recommendation is to treat any menu a customer sees before ordering as a menu, whether it's printed, posted online or opened from a QR code at the table. For banquets and catered events, put the same disclosure on the event order and the proposal that list menu prices. It costs nothing and removes an argument. Hotels and ticket sellers face separate federal price-display requirements, covered in our explainer on FTC total price rules for hotels and tickets.

Multistate operators shouldn't copy one state's wording into another. California regulates restaurant fees through its own pricing law, covered in California SB 478 and restaurant service charges.

Washington Service Charge vs. Tip: Why the Label Changes Who Owns the Money

A tip is money the customer chooses to give, and RCW 49.46.020(3)(a) requires employers to pay employees all tips and gratuities. A service charge is set by the business. Whatever share the business has itemized as retained stays with the business, and the rest goes to the serving employees.

Payroll tax and reporting differ too, as we break down in service charge vs. tip tax and payroll differences. If you pass card processing costs through on tips, read whether you can deduct card fees from employee tips before you apply the same logic to service charges.

The label also shapes what the guest does. A receipt that shows a service charge and then a blank tip line invites double tipping, followed by complaints and sometimes chargebacks. If a service charge applies, say plainly whether it's a tip and whether more is expected.

A Worked Example: The Banquet Check and the Bistro Receipt

These figures are illustrative. They aren't data from any real business.

Assumptions for the banquet: a Tacoma hotel hosts a 40-guest dinner with $4,000 in food and beverage. It adds a 20% banquet service charge, which comes to $800. The hotel pays 65% of the charge to the nonsupervisory servers and bartenders working the event, which is $520, and keeps 35%, which is $280, for event administration.

The proposal, event order and final invoice would all carry a line such as: "20% service charge ($800.00). 65% ($520.00) is paid to the banquet servers and bartenders serving your event. 35% ($280.00) is retained by the hotel for event administration and is not a gratuity."

Suppose the banquet captain, a supervisor, takes $80 of the $520. The servers and bartenders then receive $440, which is 55% of the charge, and the invoice that says 65% is wrong. Suppose instead that the proposal menu carried no disclosure at all. Under RCW 49.46.020(3), the hotel would face a claim that the full $800 belonged to the staff.

Assumptions for the restaurant: a Seattle bistro adds an 18% service charge to a $120 food and drink subtotal, which comes to $21.60. It pays 70% ($15.12) to the servers, bussers and bartenders on the shift and keeps 30% ($6.48), which it puts toward kitchen wages. The receipt line could read: "Service charge 18% ($21.60). 70% ($15.12) is paid to the servers, bussers and bartenders who served you. 30% ($6.48) is retained by the restaurant. This charge is not a tip." The menu footer would carry the same percentages.

The bistro reports the kitchen share as retained because the statute measures what goes "directly to the employee or employees serving the customer." Whether cooks count as serving the customer, or whether benefits can count toward the employee share, is a judgment call to make with counsel. The 2018 case described below involved a disclosure that listed benefits and revenue share among the ways the money was distributed.

Sales Tax on Service Charges: Confirm Before You Set the Tax Flag

Whether sales tax applies to the service charge is a separate question from the wage rule, and your POS needs an answer. Many states tax a mandatory charge as part of the sale and leave a truly voluntary tip untaxed, but don't assume Washington works that way. Check the Department of Revenue's current guidance for restaurant and lodging sales, or ask your CPA, before you decide whether the service charge line is taxed.

Seattle operators who deliver should review destination rules for Seattle delivery orders at the same time, so tax settings change in one pass.

Building a Compliant Service Charge Receipt in Washington

Most modern POS systems let you rename charges, add receipt footers and edit online menu text. Work through it in this order:

1. Rename the line item to what it is. "Service charge 20%" is clear. "Fee" or "Admin" is not, and a label that suggests the money goes to staff brings in the statute regardless.
2. Add the percentage to the receipt. State the share paid to serving employees, the share retained if there is one, and whether the charge is a tip. Check that it prints on customer copies, emailed receipts and itemized reprints.
3. Match every menu. Use the same percentage and wording on printed menus, table tents, the website menu, QR menus and third-party menu feeds you control.
4. Fix online ordering. Delivery charges for your own drivers need the disclosure on the checkout page and the e-receipt.
5. Update banquet and catering templates. Proposals, event orders and invoices should all carry the same line.
6. Review the tip prompt. If a service charge already applies, consider turning off or relabeling the terminal's tip screen for those checks. Servers using pay-at-the-table handhelds should see the same prompt logic.
7. Reconcile monthly. Compare service charge revenue in your POS reports with what payroll actually paid nonsupervisory staff. Our guide to monthly credit card reconciliation shows how to tie POS data to deposits, and the same reports serve this check.

Keep the service charge separate from any card surcharge or cash discount line, which carry their own card network rules.

How Service Charge Violations Come to Light

Workers brought the public cases we found. They alleged either that the disclosed share didn't match what staff received or that the business kept the charge without disclosing it. In a December 2018 class action described in a JD Supra alert, a former employee of a large Seattle restaurant group challenged a receipt and menu disclosure that read, in part, "100% of these funds are distributed to our team in the form of wages, sales commissions, benefits and revenue share."

The plaintiff argued the disclosure was inadequate because service employees did not receive 100% of the charge, and the alert reports the case ended in a large settlement. Banquet workers brought the 2019 complaint too, but it made a different allegation: that banquet service charges were kept and no disclosure was made at all.

Whether it's a Seattle restaurant service charge or a Tacoma banquet program, the percentage you print is a promise to customers and a wage commitment to staff. Keep payroll records showing where each period's service charge revenue went.

This article is general information, not legal or tax advice. Confirm your disclosures with a Washington employment attorney and your CPA. When your wording is final, MannyPay can help you set up your POS, receipts and terminals to match. Request a free quote and a specialist will respond within one business day. Start tonight by pulling one receipt and one menu from each location. Check that both show the same employee percentage and that it matches what payroll actually paid.

Sources

1. RCW 49.46.160: Automatic Service Charges (Washington State Legislature)
2. RCW 49.46.160 (PDF, Washington State Legislature)
3. RCW 49.46.020: Minimum Hourly Wage, Including Subsection (3) on Tips and Service Charges (Washington State Legislature)
4. Restaurant Workers: Your Service Charges, Your Earnings (Seattle Litigation Group)
5. Employer Risks That Arise From a Mandatory Service Charge (JD Supra)
6. Class Action Complaint, Banquet Employees (Fair Work Center)

AR

About the author

Adrian Reyes

Adrian Reyes is Senior Payments & Fintech Editor for Beyond the Swipe, covering credit card processing, merchant accounts, payment technology and processing fees.

This article is for general educational purposes and is not legal, tax or financial advice. Card network rules and state laws change; confirm current requirements for your business.