Thank you to everyone who helped contribute to this investigation. Unfortunately, at this point, attorneys working with ClassAction.org have decided to close their investigation into this matter. If you have questions regarding your rights, please reach out to an attorney in your area. Most offer free consultations.
The information below was posted when the investigation began and exists for reference only. Our open list of investigations can be found here.
At A Glance
This Alert Affects:
Food service employees in the hospitality industry.
What's Going On?
Attorneys have reason to believe some hotels, banquet halls and resorts may be ripping off their food services workers by pocketing the service/gratuity charge tacked onto customers' bills.
Can I Get Fired?
Employers are prohibited by federal law from retaliating against employees who report potential labor law violations.
If you work in the hospitality industry as a waiter, bartender or other food service employee, attorneys want to hear from you.
Attorneys have reason to believe some hotels, banquet halls and resorts may be ripping off their workers by pocketing the “service charge” usually tacked onto customers’ bills. In several states, the money from this fee – which many assume essentially serves as a gratuity – should be distributed to employees performing the service work.
Attorneys believe that workers who did not receive their fair share of the fee may be able to start a class action lawsuit.
What Does the Law Say About Service Charge Distribution?
Unfortunately, there is no federal law that says a hospitality company can’t keep the service charge fee. Some states, however, have recognized the problem and tried to address it with their own legislation.
For instance, in Hawaii, any restaurant or hotel that adds on a service charge must distribute that money in full to its workers. Massachusetts has a similar law that extends to the entire hospitality industry and, in Washington, clients’ receipts must show how much of the service fee is actually going to the workers. Montana, New York and Minnesota also have enacted their own laws to protect food service employees in the hospitality industry.
Have There Been Lawsuits Over This?
Yes – and several have already been successful.
Here are some examples of lawsuits that were filed on behalf of food service workers:
Catering employees who worked at the U.S. Open in New York sued the concessionaire they worked for, alleging the company pocketed their 21% service fee. The case settled for $600,000.
A Montana woman filed a lawsuit after management at the Hilton Garden Inn stopped distributing the automatic gratuity to its waiters and bartenders. Management allegedly renamed the charge a “service” or “setup” fee.
Beer and hot dog vendors at Yankee Stadium sued after the concessionaire allegedly pocketed the majority of the fee being tacked on to orders taken in the arena’s luxury boxes. The company was jointly owned by the Yankees, Goldman Sachs and the Dallas Cowboys.
How a Class Action Can Help
Taking a cut – or all – of a service/gratuity charge essentially translates to a pay cut for food service employees. A class action lawsuit could help these workers get their money back and help ensure that businesses in the hospitality industry are paying their employees properly.