Celebrity Chef Hit with Service Charge Lawsuit for Pocketing Tips

Another celebrity chef has landed in hot water over service charges and wage violations, as John DeLucie and his Crown Group Hospitality restaurants face such allegations from their wait staff. The wage and hour lawsuit was filed one year ago, and is now gaining media attention.

John DeLucie and Crown Group Hospitality run some of the most expensive eateries in New York City, with prices starting from $55 for macaroni and cheese, and $66 for rib-eye steak. However, as this service charge lawsuit shows, being popular among the wealthy does not equate immunity from the law. Several members of the wait staff filed the wage and hour lawsuit against the affluent restaurant, alleging unpaid minimum wage and misrepresented service charges.

The plaintiffs allege there were gaps in their paychecks, and that customers were led to believe that the service charge they paid would be distributed among the wait staff as tips. According to the plaintiffs, the service charge actually was distributed to the managers or higher employees, leaving the wait staff with no tips. Under New York law, service charges must explicitly state that they are not classified as tips, and that they will not be given directly to the wait staff.

Customers often are not aware of the distinction between tips and service charges, so a misconception occurs when a gratuity payment is left after the meal. Service charges are compulsory charges to cover additional expenses during the meal, which typically include music and event setup. Tips are left to the customer’s complete discretion, and are not explicitly required by the restaurant. Service charges are automatically left up to the restaurant to distribute, but they are often split among the managers and executives.

Like many restaurants, Crown Group Hospitality applied service charges to customers’ bills, which possibly misled the customers and upset wait staff who were deprived of tips due to the alleged misconception. The plaintiff group in this lawsuit hopes to reclaim their lost wages and seek to enforce service charge regulations. The servers want their customers to know that the service charges are not directly paid to them as tips, but are instead collected by managers.

Overview of Service Charge Violations

In the past few years, the number of wage and hour violation lawsuits has been increasing, leading many lawyers to suspect that these violations have been occurring long before the lawsuits were filed. They believe most of the violations occurred during the recent recession, when employees were more concerned with keeping a steady flow of income and were reluctant to complain about unpaid wages for fear of losing their jobs.

However, now that the job market has somewhat stabilized, employees are starting to fight back against wage violations. Service charge violations are among the most common wage and hour violations, because restaurants lead customers to believe the service charge is actually a tip for the employee. Under the Fair Labor Standards Act (FLSA), service tips are not counted as tips, but rather as a required fee to the house for hosting the customer. Additionally, service charges can also be used to satisfy minimum wage requirements, if needed.

This service charge lawsuit is Ivo Juhani, et al. v. Crown Group Hospitality LLC, et al., Case No. 1:13-cv-03653, in the U.S. District Court for the Southern District of New York.

File a Restaurant Wage Lawsuit Today

If you believe that you were not paid all of the wages you were owed, you have legal options. Please visit the Minimum Wage Lawsuits: Service Charge, Wage & Hour Class Action Lawsuit Investigation. There, you can submit your claim for a free legal review and if it qualifies for legal action, a seasoned service charge lawyer will contact you for a free, no-obligation consultation. You will be guided through the litigation process at no out-of-pocket expenses or hidden fees. The wage and hour attorneys working this investigation do not get paid until you do.