11 Circ. says 'Salt Bae' steakhouse's service fee wasn't a tip

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REUTERS/Andrew Kelly

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  • Tips are up to customers, but fee was mandatory, court says
  • Chef known for meme, expensive fare, beat back workers' wage claims

(Reuters) - An 18% service charge added to customers' bills at an upscale Miami steakhouse owned by the celebrity chef known as "Salt Bae" was not a tip, and the restaurant properly used the money to pay workers' hourly wages, a U.S. appeals court said on Friday.

Ruling on an issue of first impression, a panel of the 11th Circuit said the key feature of a tip is that it is entirely within a customer's discretion, but the fee charged by Nusr-Et Steakhouse was mandatory.

Under federal wage law, tips are not part of a worker's regular rate of pay, and cannot be used to offset employers' obligations to pay the minimum wage.

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Friday's ruling came in a collective action by two dozen Nusr-Et employees who said the restaurant's service charge was a tip that should have been paid to them on top of their hourly wages.

Nusr-Et is named for its owner, Nusret Gokce, who is best known for an internet meme that depicts him dramatically sprinkling salt on a dish. His restaurants are known for their expensive menus, including steaks covered in edible gold leaf that cost up to $2,000.

The plaintiffs in Friday's case argued that the service charge was not mandatory because managers had discretion to remove it from the bills of dissatisfied customers.

But the 11th Circuit, agreeing with a Miami federal judge, said that still left the decision to the restaurant rather than giving sole discretion to customers.

The ruling is in line with a 2020 4th Circuit decision that said a restaurant's automatic 20% gratuity for large parties did not qualify as a tip.

The case is Compere v. Nusret Miami LLC, 11th U.S. Circuit Court of Appeals, No. 20-12422.

For the plaintiffs: Lowell Kuvin of The Law Office of Lowell J. Kuvin

For Nusret: Jonathan Beckerman of Lewis Brisbois Bisgaard & Smith

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Dan Wiessner (@danwiessner) reports on labor and employment and immigration law, including litigation and policy making. He can be reached at daniel.wiessner@thomsonreuters.com.