Chau v. Starbucks Corp.

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By Pooja Patel and Anthony Zaller

An issue that constantly plagues the service industry is what to do about tips and the challenges that come with mandated tip pooling and mandatory service charges. This week’s post is an update and a general discussion about tipping and mandatory service charges. This simple concept is surprisingly complex…

In O’Grady v. Merchant Exchange Productions, Inc., the California Court of Appeals held that a mandatory service charge could potentially be found to be a gratuity that must be distributed to service employees.  The issue in the case is whether a “service charge” can be a “gratuity” that Labor Code section 351 requires to…