Bay Area restaurants Bar Agricole, Trou Normand, Comal, Camino, as well as New York restaurant groups and chefs including David Chang and the Momofuku group, Daniel Humm of Eleven Madison Park, and famed restaurateur Danny Meyer are all among those named in a new proposed class action lawsuit being brought over the relatively new practice of including a service charge on restaurant bills in lieu of gratuities. The complaint, as Eater reports, was filed in federal court in San Francisco on October 6, and alleges that the no-tipping practice is part "sophisticated unlawful conspiracy to put that money into [restaurant owners'] own pockets."
The practice has been controversial over the last several years, but it's been pushed by restaurateurs who say that it's the only economically feasible way to share the wealth of the gratuity pool with the least paid workers on staff, typically the cooks and dishwashers who work in the back of the house and are often paid minimum wage especially as minimum wages have risen in San Francisco and New York.
Servers, who have always been some of the highest paid workers in the industry, have not all been thrilled with the policy, for obvious reason, though in San Francisco those same servers have seen their wages rise in step with their unpaid counterparts in the back of house, without any corresponding change in how much they're being tipped.
You can see the full text of the suit here, but legal experts are already suggesting that it probably doesn't have legs. Restaurants are within their legal rights to either force servers to earn a salary instead of hourly wages and tips, or to accept wages without gratuity, as Michael Whiteman of NYC-based restaurant consultancy group Baum & Whiteman tells Eater. Also, he says, "there are so few restaurants that have gone no-tipping that I doubt one could make the case for collusion."
The suit alleges that people like Meyer and Chang have held "secret meetings" to collude on the practice, and they are doing so at the expense of employees and customers.
Most of the restaurateurs have so far declined to comment.
Restaurants have always been a low-profit-margin enterprise, and restaurant owners have been seeking new ways to make wages more equitable for kitchen staff without impacting their own bottom lines, often saying that these "hospitality charges" are key to them staying in business.
It remains to be seen if this complaint will go anywhere, or whether a judge will certify a class in the case.
Nevertheless, customers have not always taken kindly to the practice, and some local restaurants have instituted no tipping only to reverse themselves a few months later.