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. We still routinely counsel restaurant clients on the intricacies regarding tips, mandatory tip pools, and service charges. This simple concept, which should be relatively easy, becomes complex under
tip pools
Tips and Tip Pools In California
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…
Case Holds Mandatory Service Charge May Be A Gratuity That Must Be Distributed to Employees
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…
Recent case provides five reminders about tip pools under California law
Plaintiff Jacob Davis brought a putative class action against International Coffee and Tea, LLC (the company that operates Coffee Bean and Tea Leaf) alleging that the company’s tip pooling policy violated California’s Labor Code section 351. The trial court sustained Coffee Bean’s demurrer to plaintiff’s second amended complaint without leave to amend. Plaintiff appealed the…