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Went to a restaurant in LA today and when I got the check I noticed that it was a bit higher than it should be. Then I noticed this 18% service charge. So... We, as customers, need to help pay for their servers instead of the owners paying their servers a living wage. And on top of that they have suggested tip. I called bs on this. I will bet you that the servers do not see a dime of this 18% service charge. [deleted a word so it wasn't a grammatical horror to read]
It's a service charge. That implies the money is going to the staff. So they are already getting approximately what they would have been tipped.
Now, maybe "service charge" is a lie and they aren't actually seeing that money. But if so, then the waitstaff are complicit in that lie, because they handed it to me. And if I'm supposed to assume they are lying then I'm certainly not tipping them.
It sort of is going to them, but not entirely. The restaurant is called Jon and Vinney's. I linked to an article somewhere else in this post about them. The restaurant has explained that they do it because the minimum wage in Los Angeles is $16.04. Basically, as a way to be dicks about it, they decided to add the surcharge to the bill to point out very specifically to their customers how much more they have to pay so they can afford to pay their staff $16.04 / hr.
In their minds, they probably feel like they are villifying the government of CA, but, as you've noted, most people just confuse it as "auto-gratuity" and then stiff the wait staff out of extra money they would have otherwise gotten.