Global Courant 2023-05-17 02:08:29
When Earl Witron took a job as a server at the Thompson, a new luxury hotel in World of Hyatt, in the summer of 2021, he was “excited,” he said, “to be a part of something big in Hollywood.”
He would earn just $17.50 an hour at the hotel’s rooftop restaurant, The Terrace, which offers its well-to-do guests stunning views of the Hollywood Hills. But, he said, managers pledged that he and his colleagues would share in a 5% service charge on every check, “in support of health benefits for our workforce,” as the bill’s statement read.
Still, the 40-year-old said he never saw that money reflected in his compensation. When he questioned management about how the 5% service charge was allocated, he received confusing answers or was simply turned down.
“I just lived paycheck to paycheck,” says 40-year-old Witron, who is now a runner at the Beverly Hilton. “I was behind financially. I still haven’t recovered.”
This 5% service fee tied to customers’ restaurant bills is at the heart of an investigation launched by the Los Angeles Attorney’s Office, and it covers some of the city’s most celebrated restaurants in the United States. adjoining Thompson Hotel, Tommie Hotel, and Citizen News Building: Moeder Wolf, Ka’teen, Mes Amis, Bar Lis, and the Terrace.
The city attorney is investigating whether Ten Five Hospitality — the group that operated the five restaurants at the time of the allegations — violated an ordinance because they allegedly withheld the full 5% service fee they charged customers instead of paying it to employees. according to a letter dated April 6 from the deputy town clerk. Joshua L Crowell.
City officials asked Ten Five Hospitality, the hotels and restaurants for a response and numerous documents, including any evidence that would show workers benefited from the compensation. The city attorney’s office is also investigating allegations that at least two workers at the Terrace were fired after speaking out on service charges.
No Ten Five Hospitality executives were available for comment. A spokesperson issued a prepared statement, which read: “The Wellness Compensation, which is clearly explained on all customer accounts, enables the company to provide an above-average employee package, including a robust medical, dental and visual insurance program, 401 (k) benefits and better benefits for all employees.”
The spokesman declined to answer other questions about the allegations in the city’s letter.
The dining room at Mother Wolf, one of the busiest restaurants in Los Angeles. Mother Wolf is located in the Citizen News building next to the Thompson hotel.
(Mariah Tauger/Los Angeles Times)
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Tips and service charges are becoming a focal point in the restaurant and hospitality industry. Healthcare-related service charges gradually began appearing on guests’ bills over the past decade, but became ubiquitous after the COVID-19 shutdowns. The attached fees arose out of a wave of empathy and gratitude for service employees at a time when the future of restaurants seemed in doubt.
But for diners, the fees have become a source of confusion, leading some to tip less, assuming the flat fee goes directly to their servers. Workers who prepare and serve food and drink and bus tables typically rely on tips as part of their take-home pay.
Where these service costs actually end up has remained unclear.
In California, courts have long held that mandatory expenses cannot be considered tips under the employment law. That changed in 2019, when the service charge law became clearer in the San Francisco case O’Grady vs. Merchant Exchange Productions Inc. In that case, a state appeals court ruled that under California law, service charges belonged to the employees if customers could reasonably believe the charges to be tips. The regulation applies to all food and beverage outlets.
That ruling was not tested until April 19, when a San Francisco judge ruled in a no-jury trial that a Marriott hotel in downtown San Francisco must pay approximately $9 million in withheld service fees to staff who served food and beverages at banquets.
The case revolved around whether such fees are reasonably considered tips by customers. In April 2017, the San Francisco hotel began expressly telling banquet diners that the fees attached did not constitute tips, thereby absolving itself of future liability.
Shannon Liss-Riordan, the plaintiff’s attorney in the Marriott case, said the ruling was the first in California on the matter. “I expect this will now lead to a lot of enforcement and workers now recognizing their rights,” she said.
Liss-Riordan, also the plaintiff’s attorney in the 2019 San Francisco case that set the precedent in California, has won similar cases in Hawaii and Massachusetts. She has lawsuits pending against other hotels in San Francisco and other places in California.
In LA, city prosecutors seem to be focusing their investigations on extra service charges for restaurants in hotels, where current laws are more clear about tipping. The definition of “hotel” in the LA ordinance refers to restaurants that are contracted or leased and associated with or operated in hotels, such as the Terrace or Mother Wolf.
LA’s regulation states that service charges cannot be withheld by a hotel employer, but must be paid in full to the hotel employee who performs services for the customers from whom the service charges are collected. The regulation also stipulates that no part of these amounts may be paid to supervisory or managerial employees and that the service charges must be paid equitably to hotel employees.
Steve Garrett, Jae Redlich and Jazelle Merritt, all former clerks at The Terrace, said when they brought up the discrepancies and asked questions about the 5% service fee at employee meetings, management gave them answers that made no sense. An employee representative told them it offset the cost of health insurance premiums for full-time employees, the workers said. Dan Daley, director of Ten Five Hospitality, told them that the service charge was to offset losses in the restaurants due to the COVID-19 pandemic.
Daley did not respond to requests for comment.
Garrett, Redlich and Merritt would subsequently file an unfair labor practice suit with the National Labor Relations Board, alleging that management fired or forced them to resign after asking questions about the application of the service charge. An indictment is a request for the government administration to investigate and decide whether the evidence is sufficient to bring a case against the employer.
No lawsuit or charges have been filed at this time; the allegations are still under investigation. Unite Here Local 11 helps the Hollywood employees continue their business.
It’s unclear whether the celebrity chefs most associated with the restaurants named in the city’s letter — including Evan Funke of Mother Wolf, Wes Avila of Ka’teen, and Lincoln Carson, formerly of Mes Amis — knew of the workers’ concerns or tried to solve their questions. Funke and Avila, two of LA’s best-known and most admired chefs, did not respond to multiple requests for comment.
Even before the allegations, the restaurants were caught in a messy tug of war between Ten Five Hospitality and Relevant, the developer of the hotels and the adjacent Citizen News building that houses Mother Wolf, known for its Roman-style pastas and one of the most sought-after reservations in the city. At one point, both entities claimed control of the properties, according to a report in Eat LA.
Chef Carson, who left Mes Amis in December, said he was aware of the service charge at the restaurant but believed “the money was properly distributed.”
Carson contracted with Ten Five Hospitality to develop the acclaimed French restaurant and also worked on the terrace for some time before Mes Amis opened. He said he served as a consultant and was not there for the day-to-day financial accounting of the restaurants.
“I’m disappointed for all the people who put so much of their hard work into building what should have been something really special,” he told The Times. “It’s disappointing that this is what’s coming out.”
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The city attorney’s office declined to discuss Crowell’s letter. The office also declined to disclose whether it has sent letters to other restaurant groups in the city about service charges.
The Thompson Hollywood, seen on the left, is next to the Citizen News building, which houses Mother Wolf.
(Irfan Khan/Los Angeles Times)
In interviews, several former and current Ten Five Hospitality employees said they were in a harrowing financial loop. Many employees were not eligible for the company’s medical program because they were not working full time. And, they said, if they qualified, the program would be financially out of reach for them.
Witron, Redlich, Merritt and Garrett said they are still dealing with the aftermath of working on the patio. They all described mental anguish and financial loss – falling behind on bills and rent. Three out of four said they are unlikely to return to the restaurant industry.
“It’s horrible. It’s so inhumane,” said Redlich. “Everything on the surface was kept to a certain prestige. It’s like putting all the dirt in the house, all that junk, under the rug. And yes, it looks clean, but just don’t look under the rug, that’s what it was like to work there.”
Ten Five Hospitality faced a May 12 deadline to respond to the requests in the April letter from the deputy city attorney. Both entities said on Monday they were in contact, but declined to elaborate.
