Connecticut Service Charge Laws: What Customers and Businesses Should Know

If you’ve seen a “service charge” or “convenience fee” pop up on a bill in Connecticut, you’re not alone. Restaurants, hotels, delivery apps, and even some retail stores may add these extra fees to your total. But what does Connecticut law actually say about service charges? Who gets the money? Are these fees legal? Here’s your straightforward guide to Connecticut’s service charge laws—explained for real people, not just lawyers.

What Is a Service Charge?

A service charge is a mandatory fee added by a business to the price of a product or service. In Connecticut, you might see it as an “automatic gratuity” for large parties at restaurants, a “processing fee” for online ticket sales, or a “resort fee” at a hotel. Unlike a tip, it’s not voluntary—you have to pay it if it’s on your bill.

Example: Restaurant adds an 18% service charge for groups of 8 or more.
Example: A food delivery app includes a “service fee” at checkout.
Example: A hotel bill has a daily “facility fee.”

Are Service Charges Legal in Connecticut?

Yes, service charges are legal in Connecticut, but they must be clearly disclosed and not misleading. Here’s what the law requires:

Truth-in-advertising: Connecticut’s Unfair Trade Practices Act (C.G.S. § 42-110b) requires all fees—including service charges—to be disclosed clearly before purchase. No “surprise” or hidden fees at the end!
No deceptive labeling: It’s illegal to disguise a mandatory service charge as a voluntary tip, or mislead customers about what the fee is for.
Credit card surcharges: Connecticut law prohibits businesses from charging extra for paying by credit card (C.G.S. § 42-133ff). Unlike many other states, if you see a “credit card fee,” the business could be violating state law.

Service Charges vs. Tips: What’s the Difference?

Connecticut treats mandatory service charges and voluntary tips differently:

Service charges belong to the business. The employer decides whether or not to share this money with employees. These can legally be used to meet minimum wage requirements.
Tips (gratuities) are voluntary and belong to the employees who served you (subject to tip pooling rules).
Employers must clearly state on receipts or menus which is which. Mislabeling a fee as a tip when it’s really a service charge can lead to legal trouble.

Common Service Charges in Connecticut

Restaurant service charges: Added for large parties, banquets, or catered events. Some places add a “living wage” or “hospitality” fee—check the menu or ask if unsure.
Resort/facility fees: Added by hotels for amenities—these must be disclosed during booking.
Delivery and convenience fees: Seen on food delivery apps and online ticketing.

Can You Refuse to Pay a Service Charge?

If the charge was disclosed on the menu, bill, or during booking, you generally must pay it. If it wasn’t disclosed or seems misleading, you can dispute it or file a complaint with the Connecticut Department of Consumer Protection.

Are Service Charges Taxed?

Most mandatory service charges are subject to state sales tax in Connecticut, just like the main purchase. Voluntary tips are not taxed as part of the bill.

Employer Rules: Service Charges and Employee Pay

When a Connecticut business collects a mandatory service charge, it belongs to the business. If an employer promises to share some or all of it with staff, that promise must be kept. Otherwise, the charge can be used for payroll, operating costs, or anything else. Employees should check pay stubs and ask questions if unsure.

Spotting and Avoiding Surprise Fees

Read menus, booking confirmations, or receipts for mention of service charges, facility fees, or other added costs.
Ask before buying: “Are there mandatory service charges or extra fees?”
If you’re surprised by a fee, ask for clarification or contact the state’s consumer protection agency.

Helpful Resources

Final Thoughts: Service Charges in Connecticut—Legal, But Only If Disclosed

Connecticut law protects customers by demanding honesty and clarity with all service charges. For businesses, transparency and proper labeling are essential to avoid complaints or fines. For consumers, reading the fine print and asking questions is the best way to avoid surprises.