Introduction to the Amendment
A Miami-Dade legislator filed an amendment to a bill on Wednesday that would prohibit restaurants from adding automatic gratuities or service charges to parties with fewer than six people and be clearer about where the money was going.
The amendment to HB535 was filed by Florida Rep. Demi Busatta (R-District 114).
Reason Behind the Amendment
“In Miami, we’ve seen a growing circumstance where all the restaurants are automatically including a 20% gratuity… or service charge or service fee or tip, not just on regular sit down meals, but on takeout as well, at fast casual establishments,” Busatta said.
She said there was also a concern that there was no transparency about where the tip was going to.
Concerns About Transparency
“Then it was brought to the attention that a service charge doesn’t necessarily go to the actual servers or the bussers,” Busatta said. “It’s going to the restaurant for other costs… because they don’t want to increase the prices on their food menu and have transparency with the customer.”
She said in Miami, she once received a receipt that used all three terms: service fee, tip and gratuity.
Opposition to the Amendment
Samantha Padgett, the vice president of government relations for the Florida Restaurant and Lodging Association, spoke in opposition to the amendment.
"First, I do want to specify that we do support the transparency and notice provision that the representative has included in this amendment," she said.
But, she said service charges included not just credit card and delivery fees, but sometimes, yes, the income provided to the staff. Padgett also clarified that there’s a difference between gratuity and service charges. A gratuity is voluntary while a service charge is not. Service charges are also taxable while gratuities are not.
Impact on Restaurants
"That service charge that you’re experiencing on your ticket is the basis of their pay," Padgett said. "If this amendment is to take place, you will remove the option to have this commission-based pay system for every restaurateur in the state of Florida."
Busatta replied later: "The unfortunate reality is sometimes you have to increase the prices on your menu if you need to to accommodate all these costs instead of sticking it to the consumer after the fact."
Outcome of the Amendment
The amendment was accepted without objection.
Conclusion
The amendment filed by Florida Rep. Demi Busatta aims to bring transparency to the service charges and gratuities added by restaurants in Miami-Dade. While the Florida Restaurant and Lodging Association opposes the amendment, citing the potential impact on the commission-based pay system for restaurant staff, Busatta argues that restaurants should increase menu prices instead of adding hidden charges.
FAQs
- Q: What is the purpose of the amendment filed by Florida Rep. Demi Busatta?
A: The amendment aims to prohibit restaurants from adding automatic gratuities or service charges to parties with fewer than six people and to be clearer about where the money is going. - Q: Why does the Florida Restaurant and Lodging Association oppose the amendment?
A: The association opposes the amendment because it believes that service charges are sometimes used to provide income to staff and that removing this option would affect the commission-based pay system for restaurateurs in Florida. - Q: What is the difference between gratuity and service charges?
A: A gratuity is voluntary, while a service charge is not. Service charges are also taxable, while gratuities are not.
