Legal Question in Employment Law in California

According to CA Labor Code, a restaurant or bar can charge something called a "mandatory service charge" which is defined as "an amount that a patron is required to pay based on a contractual agreement or a specified required service amount listed on the menu of an establishment." This service charge is NOT considered a gratuity or tip.

In Samiento v. World Yacht, Inc., 2008 WL 382346 (Feb. 14, 2008), the NY Court of Appeals found that mandatory service charges, previously excluded from gratuity treatment may now be considered a gratuity and should not be retained by employers.

My question is whether mandatory service charges listed as "service charge" or "service commission" are fees which an employer can retain (in CA)? If they can be retained, are there any rules or guidelines an establishment must follow in order to make a patron aware the "service charge" is not the gratuity?

Thanks so much!!!


Asked on 3/31/10, 11:32 pm

1 Answer from Attorneys
Herb Fox Law Office of Herb Fox

The California Supreme Court is currently considering this question. See Grodensky v. Artichoke Joes (2009) 91 Cal.Rptr.3d 732; Supreme Court case no. S172237. See http://appellatecases.courtinfo.ca.gov/search/case/mainCaseScreen.cfm?dist=0&doc_id=1905501&doc_no=S172237

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Answered on 4/06/10, 8:16 am


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