The blowup of the Cafe Gratitude empire, yesterday's biggest food-news story, was ostensibly brought on by the owners' response to several lawsuits that waiters have filed over the restaurants' tip-pooling policies. In recent months, several nationally renowned New York restaurants have also been hit with lawsuits over tip pooling.
Is tip pooling even legal in California? SFoodie posed that question to several San Francisco attorneys specializing in employment law.
The answer, in brief, is yes. Matt Marca, a labor employment lawyer with the San Francisco office of Littler, which is representing Cafe Gratitude,* told SFoodie that California state courts first ruled in 1990 that tip pooling is legal among staff who provide direct service to customers -- waiters, bussers, bartenders.
Stephanie Bornstein, who teaches employment and labor law at UC Hastings, explained to SFoodie in an email, "In general, owners and their 'agents,' including managers or supervisors who can hire and fire other employees or who supervise, direct, or control other employees, cannot share in the pooled tips that were intended for the waitstaff."
There is one way under California state law that restaurants can exert more control over whom tips are distributed: by adding a service charge to the bill -- say, Chez Panisse's 17% -- which the state treats differently than a tip. "To be considered a gratuity under the law, the tip must be 'over and above' what is owed to the business for the food, drink, and services rendered." Whether such a service charge is enough to protect a restaurant from being sued for improperly distributing pooled tips is unknown.
*Clarification: This post has been updated to reflect the fact that Mr. Marca is representing Cafe Gratitude.