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(NYPost)   Wolfgang Puck catering firm bills clients 22% service charge. Bartenders and waiters: Uh, what tip?   (nypost.com) divider line 45
    More: Fail, Wolfgang Puck, named plaintiff, Rachel Ray, Live Nation  
•       •       •

3804 clicks; posted to Business » on 21 May 2013 at 9:59 AM (1 year ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



45 Comments   (+0 »)
   
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2013-05-21 10:19:41 AM  
22% profit in the restaurant business is huge.  This guy is quite the capitalist no?
 
hej
2013-05-21 10:20:41 AM  
Can we get rid of this farking 'fail' tag already?
 
2013-05-21 10:21:09 AM  
Well, considering the rag that the article is published in, perhaps one sentence is true?
 
2013-05-21 10:27:32 AM  
"Service Charge" and "Gratuity" are not the same thing.

Although, maybe there's some super special law in New York?
 
2013-05-21 10:29:35 AM  
I am not white knighting Wolfgang here, but I seriously doubt he:
1. Knows about this practice of not giving tip money to staff
2. Ever saw a penny of said "unpaid" tip money

FTFA: "Any charge for 'service' or 'food service,' is a charge purported to be a gratuity and therefore must be paid over to service employees," the legal papers state. Sticking clients with a "service charge" and failing to pass along the fee to servers violates state and federal law.

The minimum wage for tipped employees in NY is $2.13 per hour.  The article clearly states that the staff were compensated at $10-$18 per hour.

Something is not adding up here.  These ex-employees worked for the company for 2-3 years and supposedly were regularly not compensated for 30 hours a week in overtime?  Riiiihgggtt.... I mean, how many hours a week are these folks working?
 
2013-05-21 10:35:56 AM  
Speaking of skimming tips from wait staff, isn't today the grand reopening of Amy's Baking Company? I can't wait to hear how that goes.

/sorry for the threadjack
 
2013-05-21 10:36:24 AM  
"Any charge for 'service' or 'food service,' is a charge purported to be a gratuity and therefore must be paid over to service employees," the legal papers state.

Good luck convincing the courts of that interpretation, guys.

I'm not familiar with the relevant case law, but given the facts presented I wouldn't come to the conclusion that a service fee charged by the caterer to the event organizers is intended as a substitute for gratuities paid by patrons to employees.
 
2013-05-21 10:42:05 AM  
Two questions: Did the service charge go to the waiters and bartenders in the form of a fair hourly wage as opposed to the server's minimum wage? and Couldn't a service charge refer to the work done by the catering firm to organize and manage an event?
 
2013-05-21 10:52:10 AM  

poot_rootbeer: "Any charge for 'service' or 'food service,' is a charge purported to be a gratuity and therefore must be paid over to service employees," the legal papers state.

Good luck convincing the courts of that interpretation, guys.

I'm not familiar with the relevant case law, but given the facts presented I wouldn't come to the conclusion that a service fee charged by the caterer to the event organizers is intended as a substitute for gratuities paid by patrons to employees.


I worked in the restaurant business for YEARS.  When catering events were put on (of course this depended on the employer)...we were paid one of two ways - Either flat rate, usually $150-$250 depending on how long the event was, or a generous hourly rate of like $15-$25 per hour.

Yes there was a "service charge" on the bill that went to cover our pay as well as the Catering Manager's pay.  A portion of that charge went to the CM as a bonus and not a tip.

These disgruntled waiters may have a case when it comes to overtime not  beingproperly paid out, but the rest is not going to stand up in court.
 
2013-05-21 11:02:32 AM  
One of the country's highest earning chefs is nickel and diming his staff, according to a class action lawsuit filed in Manhattan Supreme Court yesterday.

My girlfriend got a settlement from Mario Batali for the same thing.
.
http://www.huffingtonpost.com/2012/03/07/mario-batali-lawsuit_n_1325 30 4.html
 
2013-05-21 11:11:54 AM  
The Austrian-born celebrity chef is worth $20 million, according to Forbes. His food empire is second only to Rachel Ray and Gordon Ramsey.

Rachael Ray and Gordon Ramsey have teamed up?

Endive Wombat: I am not white knighting Wolfgang here, but I seriously doubt he:
1. Knows about this practice of not giving tip money to staff
2. Ever saw a penny of said "unpaid" tip money

FTFA: "Any charge for 'service' or 'food service,' is a charge purported to be a gratuity and therefore must be paid over to service employees," the legal papers state. Sticking clients with a "service charge" and failing to pass along the fee to servers violates state and federal law.

Something is not adding up here.  These ex-employees worked for the company for 2-3 years and supposedly were regularly not compensated for 30 hours a week in overtime?  Riiiihgggtt.... I mean, how many hours a week are these folks working?


I saw an article a few months ago (memory is vague on the specifics) about how restaurants were adding "Service Charges" to bills in NY (IIRC) but because they were calling it a "Service Charge" not a "Tip" or "Gratuity" they weren't required to pass the money on to the staff. There was (IIRC) a class action suit brought against a restaurant (or group of restaurants) that that led to some changes in the interpretation of the law that meant the waitstaff were owed back the tips they were stiffed on. The servers may be suing based on the ruling of that case.

/IANAL and some details may be wrong.
 
2013-05-21 12:22:05 PM  
FTA: The Austrian-born celebrity chef is worth $20 million, according to Forbes. His food empire is second only to Rachel Ray and Gordon Ramsey.

Wait, hasn't he been around longer than Rachel Ray and yet his food empire is behind hers?  He really needs to have better publicists/managers.
 
2013-05-21 12:28:14 PM  

tricycleracer: One of the country's highest earning chefs is nickel and diming his staff, according to a class action lawsuit filed in Manhattan Supreme Court yesterday.

My girlfriend got a settlement from Mario Batali for the same thing.
.
http://www.huffingtonpost.com/2012/03/07/mario-batali-lawsuit_n_1325 30 4.html


Haha apparently they had to cancel their press conference and already got dropped by their PR firm.  http://eater.com/archives/2013/05/21/amys-baking-company-cancels-pres s -conference-after-legal-threats-from-fox.php
 
2013-05-21 12:34:10 PM  

PsyLord: FTA: The Austrian-born celebrity chef is worth $20 million, according to Forbes. His food empire is second only to Rachel Ray and Gordon Ramsey.

Wait, hasn't he been around longer than Rachel Ray and yet his food empire is behind hers?  He really needs to have better publicists/managers.


Food empire?
 
2013-05-21 12:39:57 PM  
Relative does payroll stuff. A mandatory service charge is not legally a tip. For it to be a tip the person giving the tip has to have control over the amount. If a mandatory service charge does go to the wait staff then it has to be paid to the server like their regular income is, and treated as such for tax purposes by both the restaurant and the server.

Puck could say, as was said here earlier, "the 22% covered their salaries" and they would be 100% good to go, especially since the servers were paid way above the total federal/state minimum wage (if their tips didn't cover the difference between server min wage and "real" min wage then the business has to make up the rest, not an issue here at $18/hour).

They may get slammed on the overtime thing, but the service charge rules are pretty clear.

""Any charge for 'service' or 'food service,' is a charge purported to be a gratuity and therefore must be paid over to service employees, "

Just because it is "purported to be a gratuity"  doesn't mean it actually is. Same goes for that "parties greater than 6 will be assessed a 20% gratuity fee". It isn't a tip.
 
2013-05-21 12:43:47 PM  

Spade: Relative does payroll stuff. A mandatory service charge is not legally a tip. For it to be a tip the person giving the tip has to have control over the amount. If a mandatory service charge does go to the wait staff then it has to be paid to the server like their regular income is, and treated as such for tax purposes by both the restaurant and the server.

Puck could say, as was said here earlier, "the 22% covered their salaries" and they would be 100% good to go, especially since the servers were paid way above the total federal/state minimum wage (if their tips didn't cover the difference between server min wage and "real" min wage then the business has to make up the rest, not an issue here at $18/hour).

They may get slammed on the overtime thing, but the service charge rules are pretty clear.

""Any charge for 'service' or 'food service,' is a charge purported to be a gratuity and therefore must be paid over to service employees, "

Just because it is "purported to be a gratuity"  doesn't mean it actually is. Same goes for that "parties greater than 6 will be assessed a 20% gratuity fee". It isn't a tip.


If they are charging me a 20% gratuity fee, then that's an automatic tip.  Gratuity = tip.
 
2013-05-21 12:44:44 PM  
the closest ive ever gotten to giving Puck any money was in the grocery aisle for canned soup and even then I never did.  Puck himself is probably ignorant of some of this (other than he probably knows about the lawsuit) but as he is a 'brand' and not just a guy, eff his brand (and subsidiary companies) in the ay.
 
2013-05-21 12:49:58 PM  

Target Builder: The Austrian-born celebrity chef is worth $20 million, according to Forbes. His food empire is second only to Rachel Ray and Gordon Ramsey.

Rachael Ray and Gordon Ramsey have teamed up?

Endive Wombat: I am not white knighting Wolfgang here, but I seriously doubt he:
1. Knows about this practice of not giving tip money to staff
2. Ever saw a penny of said "unpaid" tip money

FTFA: "Any charge for 'service' or 'food service,' is a charge purported to be a gratuity and therefore must be paid over to service employees," the legal papers state. Sticking clients with a "service charge" and failing to pass along the fee to servers violates state and federal law.

Something is not adding up here.  These ex-employees worked for the company for 2-3 years and supposedly were regularly not compensated for 30 hours a week in overtime?  Riiiihgggtt.... I mean, how many hours a week are these folks working?

I saw an article a few months ago (memory is vague on the specifics) about how restaurants were adding "Service Charges" to bills in NY (IIRC) but because they were calling it a "Service Charge" not a "Tip" or "Gratuity" they weren't required to pass the money on to the staff. There was (IIRC) a class action suit brought against a restaurant (or group of restaurants) that that led to some changes in the interpretation of the law that meant the waitstaff were owed back the tips they were stiffed on. The servers may be suing based on the ruling of that case.

/IANAL and some details may be wrong.


I wonder if this is the article you saw, but I doubt it since it's only from April, but I think the idea is the same.  To me it seems like these two suits are going the same route based on a 2008 NYS Court of Appeals decision in Samiento v. World Yacht.  In that case, it was ruled that "any charge purported to be a gratuity" and charges that customers believe will go to staff cannot be kept by the company.  So there are two major questions:  "Is a 'Service Charge' a gratuity?" and "Do customers believe the 'Service Charge' will go to the staff?"
 
2013-05-21 12:55:43 PM  
Service Charge != Tip

Service charge is a fee for the convenience of having a service on site.
 
2013-05-21 12:57:44 PM  

PsyLord: Wait, hasn't he been around longer than Rachel Ray and yet his food empire is behind hers?  He really needs to have better publicists/managers.


Wolfgang's point of view is "I will give you a food experience you can't replicate at home by yourself".

Rachael's is "I'll show you how to make food that's marginally better than the crap you'd otherwise be feeding your family."

Guess which is more compelling during a recession.
 
2013-05-21 01:02:39 PM  

PsyLord: Wait, hasn't he been around longer than Rachel Ray and yet his food empire is behind hers? He really needs to have better publicists/managers tits.


meanmutton: "Service Charge" and "Gratuity" are not the same thing.


Lawsuit over.

Also, maybe Puck was just getting back at LiveNation for charging him a service fee on his Pitbull or Coldplay tickets.

/did those ticket sellers get the service fee?
 
2013-05-21 01:07:50 PM  

skrame: PsyLord: Wait, hasn't he been around longer than Rachel Ray and yet his food empire is behind hers? He really needs to have better publicists/managers tits.

meanmutton: "Service Charge" and "Gratuity" are not the same thing.

Lawsuit over.

Also, maybe Puck was just getting back at LiveNation for charging him a service fee on his Pitbull or Coldplay tickets.

/did those ticket sellers get the service fee?


If that's the case, whar Nigella Lawson/Giada De Laurentiis? Whar?

ennvy.com
i.imgur.com
 
2013-05-21 01:25:27 PM  
Oh you work for less than minimum wage?
find a better gig.
When I was a chef, the wait staff showed up after I did, ate free food, got paid more, and left before me.
What can I say. It was a classy joint.
 
2013-05-21 01:28:43 PM  
Not necessarily relevant to the article, but Wolfgang owns 10% of the company while Compass Group owns 90%.

http://www.google.com/finance?cid=13339140

/Compass Group is huge, worked for a small division
 
2013-05-21 01:36:40 PM  

vudukungfu: Oh you work for less than minimum wage?
find a better gig.
When I was a chef, the wait staff showed up after I did, ate free food, got paid more, and left before me.
What can I say. It was a classy joint.


No one in the article was getting less than minimum wage.
 
2013-05-21 01:45:14 PM  

Whatthefark: Speaking of skimming tips from wait staff, isn't today the grand reopening of Amy's Baking Company? I can't wait to hear how that goes.

/sorry for the threadjack


too bad this tornado is taking all the attention away from that.  that disaster was much more fun to watch.
 
2013-05-21 02:36:05 PM  
His food empire is second only to Rachel Ray and Gordon Ramsey.

As far as I know Rachel Ray and Gordon Ramsey aren't working together, so wouldn't that be third to?
 
2013-05-21 02:58:06 PM  

PsyLord: If that's the case, whar Nigella Lawson/Giada De Laurentiis? Whar?


Ahem, we were talking about "gratuities", not "great titties."

Now proceed.
 
2013-05-21 02:59:01 PM  
I assume the "service charge" is an additional charge to the venue for all the work it takes to set up, bring portable equipment, and everything else that goes on that would be above and beyond just having the party at his restaurant?

The only catered event I've been to was drinks during a convention we we had a booth at.  We still tipped the bartenders.
 
2013-05-21 04:03:01 PM  
The only ones that get tipped by me?...cows.

25.media.tumblr.com
 
2013-05-21 04:14:32 PM  

PsyLord: Spade: Relative does payroll stuff. A mandatory service charge is not legally a tip. For it to be a tip the person giving the tip has to have control over the amount. If a mandatory service charge does go to the wait staff then it has to be paid to the server like their regular income is, and treated as such for tax purposes by both the restaurant and the server.

Puck could say, as was said here earlier, "the 22% covered their salaries" and they would be 100% good to go, especially since the servers were paid way above the total federal/state minimum wage (if their tips didn't cover the difference between server min wage and "real" min wage then the business has to make up the rest, not an issue here at $18/hour).

They may get slammed on the overtime thing, but the service charge rules are pretty clear.

""Any charge for 'service' or 'food service,' is a charge purported to be a gratuity and therefore must be paid over to service employees, "

Just because it is "purported to be a gratuity"  doesn't mean it actually is. Same goes for that "parties greater than 6 will be assessed a 20% gratuity fee". It isn't a tip.

If they are charging me a 20% gratuity fee, then that's an automatic tip.  Gratuity = tip.


Legally, no.

If you, the tipper, don't have discretion over the amount, then legally it is not a tip. There is no such thing as an "automatic tip".
 
2013-05-21 04:23:14 PM  
Given that Puck food is on par with McDonalds, why is it no surprise that the servers don't get tips?

Just because idiots with no taste buds are willing to pay more for his crap does not make it good food.
 
2013-05-21 05:25:46 PM  

Fatty McFatcheeks: Service Charge != Tip

Service charge is a fee for the convenience of having a service on site.


you know what I call a fee for having a service?  THE PRICE.

They can't open a farking restaurant without waiters, nor would they house the waiters at some other location if they weren't paid the "service charge, and they don't single out the waiter's salary on the bill as a "service charge".

The service charge was just a fancy way of mandating the tip amounts so that management could take oversee it instead of waiters pocketing it unreported.  Knowing what people are tipping is good metric data I'd bet.

A service fee is the price.  a service charge at a restaurant should go to the waiters.
 
2013-05-21 05:33:25 PM  
They should just get rid of tipping all together and demand restaurants pay wait staff at least minimum wage. that would clear up this mess quick enough.
 
2013-05-21 05:39:15 PM  

Playinodds: A service fee is the price.  a service charge at a restaurant should go to the waiters.


A catering company is not a restaurant.
 
2013-05-21 05:43:40 PM  

Spade: PsyLord: Spade: Relative does payroll stuff. A mandatory service charge is not legally a tip. For it to be a tip the person giving the tip has to have control over the amount. If a mandatory service charge does go to the wait staff then it has to be paid to the server like their regular income is, and treated as such for tax purposes by both the restaurant and the server.

Puck could say, as was said here earlier, "the 22% covered their salaries" and they would be 100% good to go, especially since the servers were paid way above the total federal/state minimum wage (if their tips didn't cover the difference between server min wage and "real" min wage then the business has to make up the rest, not an issue here at $18/hour).

They may get slammed on the overtime thing, but the service charge rules are pretty clear.

""Any charge for 'service' or 'food service,' is a charge purported to be a gratuity and therefore must be paid over to service employees, "

Just because it is "purported to be a gratuity"  doesn't mean it actually is. Same goes for that "parties greater than 6 will be assessed a 20% gratuity fee". It isn't a tip.

If they are charging me a 20% gratuity fee, then that's an automatic tip.  Gratuity = tip.

Legally, no.

If you, the tipper, don't have discretion over the amount, then legally it is not a tip. There is no such thing as an "automatic tip".


I get that, but does the restaurant still have to give the server every cent of the 20% it automatically added to my party of 8, just like the server gets to keep the 20% I leave for a party of 4?  Or did the restaurant just figure out a way to charge me a 20% large group tax and screw over the server?
 
2013-05-21 06:47:24 PM  
Revenue Ruling 2012-18 clarifies that the IRS believes a tip to be what you and I would leave our server in addition to the bill. An amount that is calculated for you is considered a service charge. For tax reasons, there's a big difference. So what exactly is the difference? The IRS says that if any of these criteria aren't met, it's not a tip, it's a service charge:

The payment must be made free from compulsion;The customer must have the unrestricted right to determine the amount;The payment should not be the subject of negotiation or dictated by employer policy; andGenerally, the customer has the right to determine who receives the payment.
So those fixed charges for catering? Service charge. Autograt? Service charge. The extra $5 you leave on the table after your dinner? Tip.

 http://www.forbes.com/sites/kellyphillipserb/2013/02/01/pastor-who- ref used-to-pay-applebees-service-charge-becomes-unwitting-poster-child-fo r-server-pay-and-tax-issues/

Quote is near the end of the article.
 
2013-05-21 07:19:51 PM  

Spade: PsyLord: Spade: Relative does payroll stuff. A mandatory service charge is not legally a tip. For it to be a tip the person giving the tip has to have control over the amount. If a mandatory service charge does go to the wait staff then it has to be paid to the server like their regular income is, and treated as such for tax purposes by both the restaurant and the server.

Puck could say, as was said here earlier, "the 22% covered their salaries" and they would be 100% good to go, especially since the servers were paid way above the total federal/state minimum wage (if their tips didn't cover the difference between server min wage and "real" min wage then the business has to make up the rest, not an issue here at $18/hour).

They may get slammed on the overtime thing, but the service charge rules are pretty clear.

""Any charge for 'service' or 'food service,' is a charge purported to be a gratuity and therefore must be paid over to service employees, "

Just because it is "purported to be a gratuity"  doesn't mean it actually is. Same goes for that "parties greater than 6 will be assessed a 20% gratuity fee". It isn't a tip.

If they are charging me a 20% gratuity fee, then that's an automatic tip.  Gratuity = tip.

Legally, no.

If you, the tipper, don't have discretion over the amount, then legally it is not a tip. There is no such thing as an "automatic tip".


They shouldn't call it a "gratuity fee" then since the definition of a gratuity is: A favor or gift, usually in the form of money, given in return for service. (source: http://www.thefreedictionary.com/gratuity) therefore it is a tip.  Like I said, if they are going to call it a gratuity, then I am going to assume that it is going to the server.  In fact, I had this happen to me recently at a restaurant.  They charged a 18-19% gratuity.  There was also a space for the tip.  I just drew a line through it since they already assessed the gratuity.
 
2013-05-21 07:47:44 PM  
Any normal person would think that a service fee or charge or anything like that is going to the wait staff. I've waited tables in 4 star restaurants but never a place that charges fees like this, I would assume it goes to the wait staff especially as expressed as a percent because of guests not leaving tips. We had a lot of old, old guests who still thought a dollar was sufficient for a fine dining experience.
 
2013-05-21 08:44:23 PM  

47 is the new 42: I wonder if this is the article you saw, but I doubt it since it's only from April, but I think the idea is the same.  To me it seems like these two suits are going the same route based on a 2008 NYS Court of Appeals decision in Samiento v. World Yacht.  In that case, it was ruled that "any charge purported to be a gratuity" and charges that customers believe will go to staff cannot be kept by the company.  So there are two major questions:  "Is a 'Service Charge' a gratuity?" and "Do customers believe the 'Service Charge' will go to the staff?"


It  all depends on the customers' perceptions.  "Am I free to refuse to  pay this 'service charge?'  Do I believe the money will go to the staff?"  Customers are being defrauded; they should be suing.

I suspect servers brought this situation upon themselves.

"Boss, I'm getting big parties and they're leaving shiat tips!"
"Waddya want me to do?"
"Add an automatic tip to each check for 6 or more people."
"But they'll biatch that tips are optional."
"OK, then call it a service charge."
"Fine. We'll see how that goes."
"Boss, where are my tips for those parties of 6 or more?"
"No tips; service charges."
"Wait, wat?"
"In fact, everybody's gonna get a service charge from now on."
 
2013-05-21 08:53:52 PM  
In the name of transparency and eliminating consumer confusion, we need a universal law that every restaurant bill shall include this language:

"Tip________ (optional)
"If you leave a tip, it will all go to your server.
"If the tip isn't at least X%, please explain why:
"___________________________________
"If we disagree, we still look forward to serving you again.
"However, this will be the last meal you enjoy here."
 
2013-05-22 12:13:26 AM  
What's the punkest thing at a Green Day show?
-The caterer is stealing the tips.
 
HBK
2013-05-22 01:11:48 AM  

rosebud_the_sled: Given that Puck food is on par with McDonalds, why is it no surprise that the servers don't get tips?

Just because idiots with no taste buds are willing to pay more for his crap does not make it good food.


Having eaten at Wolfgang Puck brick-and-mortar restaurants and their airport restaurants, I thought the same thing. But I recently attended a wedding catered by Wolfgang Puck. Surprisingly, it was some of the best wedding-food I've ever had.
 
2013-05-22 02:26:07 PM  
There is no way in hell that I'm going to tip at a catered event.
 
2013-05-22 05:27:26 PM  
Greed, greed, greed.
 
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