November 1, 2019 / 10:16 PM / 13 days ago

Calif. appeals court says some 'service charges' are tips that must be given to workers

A California state appeals court has said that “service charges” that hotels, restaurants and other businesses impose on customers must be paid out to tipped workers under state law, if customers would reasonably believe that the charge represents a gratuity.

A unanimous three-judge panel of the California Court of Appeal, First Appellate District in San Francisco on Thursday said an employee of banquet catering company Merchant Exchange Productions could proceed with a proposed class action claiming the company violated state law by distributing part of a 21% fee added to customers’ bills to managerial workers who did not serve food and drinks.

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