Service charges

Service Charges

refer to additional amounts collected by establishments (like hotels, restaurants, or similar businesses) from customers, which are added to the customer’s bill for servicesrendered by the employees.

Who is covered?

All employees working in establishments that collect service charges are covered, except managerial employees (as defined by law). This applies regardless of the employee’s job position, title, or employment status (full-time, part-time, etc.).

Wage Payment Method

It doesn’t matter how the employees are paid (hourly, salary, etc.); if they work in an establishment that collects service charges, they are entitled to share in the distribution of those charges.

All collected service charges

must be shared equally among the covered employees.

The distribution should be based

on actual hours or days worked. This means that the amount an employee receives from the service charge depends on the time they actually worked.

The service charge should be

distributed to employees once every two (2) weeks or twice a month, with the distribution interval not exceeding sixteen (16) days.

If the minimum wage is increased by law or wage order

the service charges will not be counted as part of the wages to determine whether an establishment meets the new minimum wage requirement. In other words, service charges cannot be used to satisfy the legal minimum wage increase.

Summary

• Service charges are collected by establishments (like restaurants or hotels) and shared among employees (except manage rial staff).

• The distribution of these charges is based on actual work hours or days and happens every two weeks.

• Service charges are not included when calculating compliance with minimum wage increases.