California Lawsuit alleges Tipless Restaurants Colluded
California Lawsuit alleges Tipless Restaurants Colluded with One Another to Fix Price
According to a class action lawsuit filed at the federal court in California, restaurants that have done away with tips and raised prices have allegedly colluded with one another to fix high prices without passing down the benefits or increased profits to their employees. Residents of San Francisco would be aware that many restaurants decided to do away with the practice of tipping the wait staff. In exchange, these restaurants increased their prices of foods and drinks. The proposed lawsuit essentially alleges that there is a price fixing conspiracy with the tip-less model.
The defendants in the suit include Trou Normand, Bar Agricole, Comal, Duende and Camino among others. Some of the defendants have apparently reversed their policies and have gone back to the old ways of allowing tips. It is unclear if such a reversal was influenced by the lawsuit or if the restaurants found it fitting to revert to the old practice. The suit alleges that some restaurants in the Bay Area and hospitality groups based in New York got together and as a group decided to abolish tipping and instead increased their prices by as much as twenty percent, which is often what is recommended as a reasonable tip. The suit alleges that the restaurant owners are making windfall gains at the cost of the customers and their own employees as the proceeds of such price increase are not being passed onto the staff.
The lawsuit is still a proposed legal action and is inviting more people to come aboard with their complaints. The original complaint was filed by a diner Timothy Brown and he was quickly joined by many fellow diners. Brown’s lawyer, David Lavine is seeking not only threefold of the actual damages but also legal fees. One of the primary focal points is on Union Square Hospitality Group which is based in New York City. The lawsuit alleges that the founder and chief executive of Union Square Hospitality Grou, Danny Meyer has led the campaign, colluded with other restaurateurs and brought about the new policy whereby it is only the owners who would gain. All these restaurants have cited inequality and income gap among their staff to justify such a move.
The restaurateurs have said that the wait staff does not get tipped uniformly. Some accrue much more in tips than others. The wait staff in many cases is not compelled to share their tips with chefs or cooks and back of the house staff. This creates a further disparity among the employees working in different sections of the restaurant business. By doing away with the tips and increasing the prices, the restaurants can apparently pay all their staff uniformly and can also provide better career progression. The restaurant business is not known for being a generous payer and hence tips have always been a substantial part of the income for the wait staff.
The lawsuit states that the policy is only aimed at filling the coffers of the owners and that no employee will effectively benefit in the long run. The plaintiffs are arguing that such a policy violates the Sherman Act, California Unfair Competition Law, California Cartwright Act and New York Donnelly Act.