Mario Batali to Pay $5.25M in Tips Lawsuit - Free Enterprise
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Mario Batali to Pay $5.25M in Tips Lawsuit

Mario Batali has agreed to settle a lawsuit filed by waiters, bussers, bartenders, runners and other employees working at a number of his New York restaurants. The $5.25 million class action settlement, which involves approximately 1,100 employees, covers accusations the celebrity chef and his partner illegally confiscated employee tips.

Plaintiffs in the Batali tips lawsuit claim the practice was widespread, and that it was in place at all of the chef's Manhattan eateries.

That practice involved taking between 4 and 5 percent of tips from employee wine sales, explains the Hollywood Reporter. Management apparently claimed the money went to “research wines and replace broken glasses.” It really went to the house and supplemented profits.

The restaurateurs likely agreed to settle the Batali tips lawsuit because, on its face, the practice appears to violate the federal Fair Labor Standards Act. Department of Labor regulations specifically state that “all tips received by the employee must be retained by the employee.” Valid tip pooling arrangements are the only exception to this rule.

The DOL may soon begin to crack down on employers who violate tips rules. In May 2011, the agency clarified the regulations, and ordered employers to notify tipped employees of their legal rights. This includes information about the “tip credit” and hourly wages.

So while you may not be engaging in the type of behavior at issue in the Batali tips lawsuit, you might be violating labor law in other ways. Take a look at the clarified rules and adjust accordingly.

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