The restaurant empire of Seattle chef Tom Douglas will pay out $2.4 million to more than 1,000 current and former employees after settling a class-action lawsuit.
The suit against the operator of Dahlia Lounge, Palace Kitchen, Brave Horse Tavern and more than a dozen other local eateries accused the restaurants of not disclosing how much of a 20% service fee billed to customers went to the service workers and of not providing substantial rest and meal breaks.
When Seattle increased its minimum wage from $9.19 to $15 in 2015, some restaurants instituted a “surcharge” or “service fee” they claimed would offset the burden of paying their service workers $15. Tom Douglas Seattle Kitchen, the corporate umbrella for more than a dozen restaurants and businesses, implemented a service fee of 20% of a customer’s bill across its restaurants.
“It’s legal for an employer to do that,” said Marc Cote, the lead attorney on the lawsuit. But they’re required to disclose what portion of the charge goes to service workers, “so customers know where the money is going and so employees are fairly paid.”
On some of the menus and receipts in Douglas’ restaurants, the disclosure read, “20% service charge: 100% of these funds are distributed to our team in the form of wages, sales commissions, benefits and revenue share.”
But plaintiffs said in the lawsuit the language wasn’t clear enough. In most of the restaurants that implemented service fees, a tip line was not provided to customers. Front-of-the-house service workers received on average 14% of the bill.
“Customers reasonably believe service charges go to the employees who provide service,” Cote said in a statement. “That’s why Washington law requires employers to disclose in menus and receipts the percentage of service charges actually paid to the employees serving the customer.”
Tom Douglas Seattle Kitchen denied any wrongdoing in the settlement. It said it worked with its legal counsel to write disclosure language that met Seattle Office of Labor Standards’ requirements when the service fee was first implemented.
“In my 40-year career, I have always tried to land on the side of the team when it comes to any business decision,” Douglas said in a statement. “It’s hard to make an error when you put your team first.”
Under the settlement, Tom Douglas Seattle Kitchen restaurants will pay out $2.4 million to plaintiffs, set up a confidential employee hotline for workers to air grievances and train supervisors on employment rights.
“I brought this lawsuit to try to change the culture in restaurants, ensure transparency with regard to distribution of service charges, and seek fair pay,” lead plaintiff Clare Thomas, who worked at Brave Horse Tavern in downtown Seattle, said in a statement.