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Money, also known as a tip, given to one who provides services and added to the cost of the service provided, generally as a reward for the service provided and as a supplement to the service provider's income.

Legend suggests that the term "tip" originated from an innkeeper's sign, "To Insure Promptness." Traditionally, patrons gave gratuity to those providing services in order to ensure faster service. Gratuity has always been defined by local custom and etiquette, never by law. Individuals who work for gratuity include those who provide a wide variety of services, including, for example, waiters and waitresses, bartenders, hotel employees, and cab drivers.

Gratuity is customarily designed to ensure that patrons receive the best service possible. The custom allows service providers to be rewarded for providing good service and lets patrons penalize those who provide poor service. The amount of gratuity depends upon the type of service, though tips are usually determined by the total cost of service provided. Proper etiquette suggests that patrons should tip between ten to twenty percent of the total bill. Without gratuity, service providers may have no incentive to provide a higher level of service than necessary.

The system of tipping has been the subject of extensive commentary and debate. For example, eleanor roosevelt suggested to those Americans traveling in foreign lands, "a fair tip, or one a little on the generous side, will leave a pleasant feeling and respect for you in the one who receives it. A lavish one will create a secret disrespect and add to the reputation Americans have for trying to buy their way into everything." Scholars have focused their attention on many aspects of tipping, including the satisfaction of the patron when he or she leaves a tip for the services provided.

Tips and other forms of gratuity constitute taxable income and must be reported by those who receive them. Although the current federal Minimum Wage for most employees is $5.15 per hour, this number is reduced to $2.13 per hour for most tipped employees. Since these tipped employees generally receive more than $3 per hour in compensation from gratuity, they seldom receive less than the minimum wage paid to other types of employees. However, if the combined amount of tips and wages comes to less than $5.15 per hour, the employer is required to make up the difference under regulations established by the U.S. Labor Department. Employees must claim the amount of tips they receive to the employer and must report these amounts when they file their tax returns.

Patrons have, on occasion, brought suit over the practices of service providers of adding gratuity to bills. For example, in Searle v. Wyndham International, Inc., 126 Cal. Rptr. 2d 231 (Cal. App. 2002), patrons of a hotel ordered room service, which included taxes, a seventeen percent service charge, and a room delivery charge. The bill also provided a line whereby the patrons could add gratuity to the bill, even though the service charge was gratuity paid to the server. The patrons sued the hotel, claiming that the practice was deceptive because it did not indicate that the service charge constituted gratuity and that the service charge constituted obligatory gratuity, which the patrons claimed should be voluntary. The court held that the practice was neither deceptive nor fraudulent, holding in favor of the hotel.

Further readings

Morgan, Daniel L., and Yale F. Goldberg. 1990. Employees and Independent Contractors. Chicago, IL: Commerce Clearing House.


Labor Department; Independent Contractor.


(Bribe), noun corrupting gift, corruption, graft, hush money, illegal gain, influence by a gift, jobbery, kickback, price, price of corruption, protection, rakeoff, sop, subornation
Associated concepts: bribe receiving, emolument, illegal gratuity, official misconduct, tampering with a witness


(Present), noun award, benefaction, bonus, charity, contribution, dispensation, dole, donative, extra, favor, gift, grant, handout, offering, perquisite, premium, presentation, reward, tip, unearned increment
See also: benefit, bonus, bounty, consideration, contribution, dedication, donation, gift, grant, honorarium, hush money, largess, payment, perquisite, present, recompense, remittance, reward
References in periodicals archive ?
If someone feels that he or she needs to provide gratuities to the police in order to receive adequate policing service, then this is reminiscent of the fee-for-service objection proposed by Feldberg.
In fact, one officer informed me that accepting gratuities had been a benefit of working for the police department for the past 15 years and that he did not see any harm in accepting free or discounted items.
Although he obviously did not accept gratuities, the critics still found something wrong with Parks' trip to Vegas - that he had too many bodyguards.
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Gratuities are a part of this script not only because of all the bad reasons associated with corruption, but also because of all the good ones associated with civic friendship.
The rules governing these issues include criminal provisions of bribery and illegal gratuities, applicable Federal Acquisition Regulation (FAR) provisions, and government ethics regulations.
According to The Associated Press, both men have pleaded innocent to one count each of conspiracy to offer illegal gratuities to a public official and paying an illegal gratuity.
Key items to look for are whether or not gratuities are included with your drinks or meals, are you limited to buffets or ordering only from certain restaurants on the resort, or are motorized or nonmotorized sports included," says Dana Taub, a travel consultant for All Inclusive Vacations in Grand Terrace, California.
However, by getting itself declared private, the BSA has defeated its rationale for receiving public support and government gratuities.
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On 31 departures, for example, Cruise Holidays Luxury Cruise Counselors clients will receive a minimum of prepaid gratuities, representing a savings of $260 on a 10-night cruise.