When restaurants charge larger parties an automatic service fee – usually 20% – it’s generally understood that the money goes to the servers as a gratuity. But some restaurants have been keeping the lion’s share of the fee and passing along just a small fraction to the staff. Now a state appeals court has ruled that the practice is as illegal as it is outrageous.
It took a lawsuit brought by the employees of World Yacht, a “luxury dining fleet” that serves food while cruising New York waterways, to bring about the change. The new decision overturns a previous ruling that employers were only required to share voluntary tips with their workers, not automatic service fees for larger groups. The appeals court cited a state law barring employers from any part of an employee’s gratuity. According to the Times:
Workers at World Yacht said they had received few tips because customers were led to believe that the mandatory service fees would go to them as tips. The appeals court said that if restaurants made clear to customers that the mandatory service charges would not be paid to the workers as tips, then they would not have to share those fees with their workers.
The ruling leaves World Yacht owners no choice but to sail into international waters when presenting the bill.
Photo of headless server via World Yacht's website.
