NYC mandatory gratuity and surcharge rule for parties of eight or more

New York City is one of the few places where a restaurant owner can read the exact party size at which a mandatory gratuity is acceptable. The Department of Consumer and Worker Protection adopted an amended restaurant surcharge rule in 2026, and it names a party of eight or more. It also repeats a ban that catches owners who add a percentage to every menu price. This guide, checked in November 2026, reads the department's notice of adoption and the state tip law and regulation that the rule leaves in place. It is general information, not legal advice. The rule text and the department are the authority.

What does the city rule ban?

Subdivision (a) of the rule, section 5-59 of Title 6 of the Rules of the City of New York, says a seller serving food or beverages for consumption on the premises may not add surcharges to listed prices. The rule's own example: a restaurant may not state at the bottom of its menu that a 10 percent charge or a $1.00 charge will be added to all menu prices. The rule says a surcharge does not include tax, so sales tax on the check is not affected. The amended rule is listed on the city's rules portal as adopted, effective April 19, 2026.

What is a bona fide service charge?

Subdivision (b) lets a seller impose a bona fide service charge if the charge is conspicuously disclosed to the consumer before food or beverage is ordered. A bona fide service charge is a fee charged for services requested by a consumer, over and above what is included with the purchase of a menu item, including, but not limited to, an added charge for two persons splitting one meal, a mandatory gratuity for parties of eight or more, or a per person minimum charge. The department's notice says the party of eight example codifies its longstanding interpretation, and that the examples are not exhaustive.

Can you set a different party size?

The department heard a trade group argue for a mandatory gratuity at varying group sizes and declined to change the rule. It also said a restaurant may impose charges for services requested by a consumer, over and above what is included with a menu item, as long as they are clearly disclosed, and that such charges may be based on the circumstances of the restaurant. So eight is the named example, and other charges for requested services may qualify, but a charge that is not for a requested service is a surcharge on listed prices. Ask the department or a lawyer before you set a number other than eight.

What does conspicuous disclosure before ordering mean?

The rule says the charge must be conspicuously disclosed to the consumer before food or beverage is ordered. Putting it only at the bottom of the check is too late. Print it on the menu, on your reservation page and in any large party confirmation, and say it when the party sits down. Use the same words everywhere, naming the percentage and the party size.

What about a charge set by a union agreement?

Subdivision (c) allows a seller to impose a charge required by a written agreement, including a collective bargaining agreement, between the seller and its employees, if the charge is conspicuously disclosed before ordering and the full amount of the proceeds is provided to the seller's employees. The subdivision says it does not change any provision of the New York Labor Law, including section 196-d and the state wage order's rules on gratuities. Without such a written agreement, a mandatory gratuity must fit the bona fide service charge test above.

Who gets the money?

New York Labor Law section 196-d bars an employer from demanding or accepting any part of the gratuities received by an employee, and from retaining any part of a gratuity or of any charge purported to be a gratuity. The state wage order adds that a charge purported to be a gratuity must be distributed in full as gratuities to the service employees or food service workers who provided the service. It presumes, subject to rebuttal, that any charge in addition to food and drink, including a charge for service, is a charge purported to be a gratuity. And employers who make such charges must keep records of the charges and their dispositions for at least six years and make them available to employees in the tip system.

How does sales tax treat it?

The city rule leaves tax alone. For the state's sales tax treatment of service charges, see our existing guide on sales tax on restaurant meals and service charges.

What should you do next?

Print your menu and your reservation page and read every added charge. Is it described as a service charge, a gratuity or a surcharge? Does each one fit subdivision (b) or (c)? Is the full amount of any gratuity paid to staff, with records kept for six years? Fix the wording before the next large party books.

More guides for your business:

• New York sales tax on restaurant meals and service charges
• New York tip pooling rules for restaurants
• New York tip credit, minimum wage and fair workweek for restaurants

More in the US guides for food businesses.