Georgia Service Charge Laws: The Facts About Fees, Surcharges, and Gratuity

Whether you’re dining in Atlanta, booking a hotel in Savannah, or shopping online, you’ve probably seen a “service charge,” “convenience fee,” or “automatic gratuity” on your bill. But what does Georgia law actually say about these charges? Are they legal? Do businesses have to tell you about them up front? And who actually gets the money? Here’s a clear, up-to-date look at Georgia’s service charge laws for both consumers and business owners.

What Is a Service Charge?

A service charge is any mandatory extra fee added to your bill by a business. It’s not the same as a tip, and you don’t get to choose whether to pay it—it’s required. In Georgia, you’ll see service charges on restaurant checks, hotel bills, event tickets, and more.

Example: Restaurant adds 18% to bills for large parties as a “service charge.”
Example: A hotel adds a daily “resort fee.”
Example: Online event tickets have a “processing fee.”

Are Service Charges Legal in Georgia?

Yes, service charges are legal in Georgia, but there are some important rules and expectations:

Disclosure is key: Under Georgia’s Fair Business Practices Act (O.C.G.A. § 10-1-390 et seq.), all fees—including service charges—must be disclosed clearly to customers before the transaction is completed. Hidden or “surprise” fees can be considered deceptive and illegal.
No misleading labeling: It’s unlawful to call a mandatory fee a “tip” or “gratuity” if it isn’t voluntary. Customers must understand what is required and what is optional.
Credit card surcharges: Georgia allows businesses to add a surcharge for credit card transactions, as long as it is disclosed before the sale is finalized. Surcharges for debit card transactions are generally not permitted.

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

Georgia law and federal law treat service charges and tips differently, especially regarding employee pay:

Service charges are mandatory fees that belong to the business. Employers may choose to share this money with staff, but it’s not required unless promised. Service charges may also be used to meet minimum wage requirements for tipped employees.
Tips (gratuities) are voluntary payments from customers that, by law, belong to employees. Employers can require tip pooling, but tips can’t be kept by the business or management.
Employers must be clear and transparent on receipts, menus, or booking sites about what is a service charge and what is a tip. Mixing up the two can create legal problems.

Common Service Charges in Georgia

Restaurant service charges: Usually added for large groups, banquets, or catered events. Some restaurants add a “living wage” or “kitchen appreciation” fee—always check the menu or ask if unsure.
Hotel resort/facility fees: Added for amenities such as Wi-Fi, pool access, or parking. These must be disclosed at the time of booking.
Credit card surcharges: Allowed for credit cards with advance disclosure, but not for debit cards.
Convenience/processing fees: Common for online ticketing, delivery services, or bill payments.

Can You Refuse to Pay a Service Charge?

If the service charge was disclosed before you agreed to pay (on the menu, website, booking page, or receipt), you generally must pay it. If you’re surprised by a hidden or undisclosed fee, you can dispute it or contact the Georgia Department of Law’s Consumer Protection Division.

Are Service Charges Taxed in Georgia?

Most mandatory service charges are subject to state and local sales tax in Georgia, just like the main item or service you purchased. Voluntary tips are not taxed as part of the transaction.

Employer Rules: Service Charges and Employee Pay

When a business collects a mandatory service charge, it belongs to the business, not automatically to employees. The business may choose to share it with workers, but is only required to do so if promised in writing. If a service charge is distributed as tips, it must comply with Georgia and federal wage and hour laws.

How to Spot and Avoid Surprise Fees

Read menus, booking confirmations, or bills carefully—look for any mention of extra charges.
Ask before you buy: “Are there any service charges or extra fees?”
If you see an undisclosed fee, ask for clarification or dispute it if you feel it’s unfair.

Helpful Resources

Final Thoughts: Service Charges in Georgia—Legal, But Must Be Clear and Honest

Georgia allows service charges, but only if they are honest and clearly disclosed up front. If you’re a consumer, reading the fine print and asking questions is your best protection. If you’re a business, transparency and accurate labeling will help you avoid customer complaints and legal issues.