Celebrity chef turned talk show host Mario Batali is in the mood to negotiate. The Croc-wearing (orange, ugh) restaurateur has agreed to pay $5.25 million to settle a lawsuit brought by approximately 1,100 employees.
The Mario Batali lawsuit accuses the Italian cook of illegally confiscating employee tips. The money was supposed to go to "wine research" and to replace broken glasses.
It just went into Batali's pockets.
As employees tell it, Batali and business partner Joseph Bastianich had a company-wide policy of skimming tips. Managers confiscated 4 to 5 percent of all tips made from wine sales, explains The Hollywood Reporter.
Though the Mario Batali lawsuit has settled, this practice would have likely been found illegal if it went to trial. This is because the Fair Labor Standards Act limits the ways in which an employer can use tips.
Tips are the property of the employee. They "are to be retained by the employee except for a valid tip pooling arrangement." A valid tip pooling arrangement only includes employees who regularly receive tips, such as waiters, bartenders and bussers. Chefs, dishwashers and management cannot be part of the arrangement.
Chefs, dishwashers and management are only eligible to receive a portion of mandatory service charges. These charges are not tips, according to the Department of Labor. They can be distributed as the employer sees fit.
So, if you learn anything from the Mario Batali lawsuit, it should be to always read the terms of any tip pooling agreement closely. It's your money, so you need to protect it.