Is a service charge a tip?

No, and the difference decides who gets the money. Under federal wage rules, a tip is a voluntary amount the customer decides to leave. A mandatory service charge(an automatic 18% for large parties, a “hospitality fee,” a “kitchen appreciation fee”) is not a tip. Under federal law, that money belongs to the business, which may keep it, split it, or pass it on. Several states go further. In New York, any mandatory charge beyond the food and drink (whatever the label) is presumed to be a gratuity that must be paid in full to the workers who provided the service, unless the business clearly tells customers it is not a tip. Massachusetts law requires the full proceeds of a service charge to go to wait staff, service employees, or service bartenders. Washington law requires an automatic service charge to be disclosed on the menu and the receipt, showing what share reaches the employee; without that disclosure, the employee is entitled to the entire charge.

Practical translation: when you tip 20% on the line, that money is generally the worker's (or the tip pool's). When the receipt already includes a percentage, where it goes can depend on your state: in New York, Massachusetts, and Washington the law leans toward the worker; elsewhere, the only way to know is what the business discloses, on the menu, the receipt, or when you ask.

What's worth noticing

• A percentage added before you choose anything is a service charge, not a tip.
• Fee names like “wellness fee” or “living-wage fee” describe where the business says the money goes; the label alone doesn't make it reach workers.
• If a receipt shows a service charge and a tip line, the two amounts can go to different places.

This page describes U.S. federal rules and a few state examples; laws vary further by state and province (in Canada, tip handling is governed provincially), and it isn't legal advice: for your own situation, contact your local labor authority or an attorney.