Metropolis investigating Hollywood eating places for allegedly protecting service charges, stiffing staff
When Earl Witron landed a job as a waiter at the Thompson, a new luxury hotel from World of Hyatt, in the summer of 2021, he was “excited,” he said, “to be a part of something big in Hollywood.”
He made just $17.50 an hour at the hotel’s rooftop restaurant, the Terrace, which offers its well-heeled guests stunning views of the Hollywood Hills. But, he said, managers promised that he and his colleagues would contribute a 5% service fee that would be applied to each check “in support of the health benefits to our employees,” according to the bill’s statement is called.
Still, the 40-year-old said he’s never seen that money reflected in his compensation. When he questioned management about how the 5% service fee was allocated, he received confusing answers or was simply dismissed.
“I lived paycheck to paycheck,” said Witron, 40, who now works as a runner at the Beverly Hilton. “I’m financially behind. I still haven’t recovered.”
This 5 percent service charge associated with customers’ restaurant bills is the focus of an investigation by the City of Los Angeles Attorney’s Office and affects some of the city’s most famous restaurants in the adjacent Thompson Hotel, Tommie Hotel and Citizen News building: Mother Wolf, Ka ‘teen, mes amis, bar lis and the terrace.
The city attorney is looking into whether Ten Five Hospitality – the group that operated the five restaurants at the time of the allegations – violated an ordinance that allegedly withheld the entire 5% service fee charged by customers instead of redistributing it to workers a letter from the Deputy City Attorney dated April 6. 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 the workers were benefiting from the fee. City prosecutors are also investigating allegations that at least two workers at the Terrace were fired after speaking out about the service charge.
Ten Five Hospitality executives were not available for comment. A spokesman issued a prepared statement that read: “The wellness fee, which is clearly explained on all customer invoices, allows the company to offer a better-than-market employee package, including a robust health, dental and vision insurance program, 401 (k) Benefits and better working conditions for all employees.”
The spokesman did not want to answer any further questions about the allegations in the letter from the city.
The dining room at Mother Wolf, one of the liveliest restaurants in Los Angeles. Mother Wolf is in the Citizen News building next to the Thompson Hotel.
(Mariah Tauger / Los Angeles Times)
Please investigate
Tipping and service charges are becoming a focal point in the food service and hospitality industry. Fees for health-related services began to appear on guest bills over the past decade, but became ubiquitous after the COVID-19 lockdowns. The additional fees came amid an outpouring of empathy and gratitude toward service staff at a time when the restaurants’ future seemed in doubt.
But for guests, the fees have become a source of confusion, leading some to tip less, feeling like the extra fee goes straight to their waiters. Workers who prepare and serve food and beverages at bus tables typically rely on tips as part of their net pay.
Where these service fees actually end up is unclear.
In California, courts have long held that compulsory dues do not qualify as benefits under labor law. That changed in 2019 when the law on service fees in the San Francisco case of O’Grady vs. Merchant Exchange Productions Inc. became clearer. In that case, a state appeals court ruled that under California law, service fees are due to employees if customers could reasonably believe the allegations were tips. The verdict applies to all catering establishments.
That ruling was not reviewed until April 19, when a San Francisco judge ruled in a trial without a jury that a Marriott hotel in downtown San Francisco must pay approximately $9 million in withheld service fees to staff serving served food and drinks at banquets.
The case revolved around the question of whether such fees are reasonably considered tips by customers. In April 2017, the San Francisco hotel began specifically notifying banquet guests that the fees incurred are not tips, thereby freeing itself from future liability.
Shannon Liss-Riordan, the plaintiff’s attorney in the Marriott case, said the ruling was the first on the matter in California. “I expect this will now lead to extensive enforcement action and employees are now acknowledging their rights,” she said.
Liss-Riordan, also the plaintiff’s attorney in the 2019 San Francisco case that set a precedent in California, has won similar cases in Hawaii and Massachusetts. Lawsuits are pending against other hotels in San Francisco and elsewhere in California.
In LA, city prosecutors appear to be focusing their investigations on additional service fees for restaurants at hotels, where current tipping laws are clearer. The definition of “hotel” in the LA Regulations includes restaurants that are contracted or leased premises affiliated with or operated by hotels, such as: B. the Terrace or Mother Wolf.
LA regulation states that service fees cannot be withheld by a hotel employer, but must be paid in full to the hotel employee who provides services to the customers from whom the service fees are collected. The regulation also stipulates that no part of these amounts may be paid to supervisors or officers and that the service charge must be paid fairly to hotel employees.
Steve Garrett, Jae Redlich and Jazelle Merritt, all former waiters at the Terrace, said that when they brought up the disagreements and asked questions about the 5% service charge in staff meetings, management gave them answers that didn’t make sense. A human resources representative told them it would offset the cost of the health insurance premium for full-time employees, the workers said. Dan Daley, director of Ten Five Hospitality, told them the service fee is intended to offset losses at the restaurants due to the COVID-19 pandemic.
Daley did not respond to requests for comment.
Garrett, Redlich and Merritt subsequently filed an unfair labor practice complaint with the National Labor Relations Board, alleging that management either fired them or forced them to resign after raising questions about the application of service fees. An indictment is a request for the government agency to investigate and decide whether the evidence is sufficient to institute proceedings against the employer.
At this time, no lawsuits or charges have been filed; The allegations are still being investigated. Unite Here Local 11 is helping Hollywood workers pursue their case.
It’s unclear if the celebrity chefs most associated with the restaurants named in the city’s letter — including Evan Funke at Mother Wolf, Wes Avila at Ka’teen, and Lincoln Carson, formerly at Mes Amis — understand workers’ concerns were aware of this or were trying to clarify their questions. Funke and Avila, two of LA’s most well-known and admired chefs, did not respond to multiple requests for comment.
Even before the allegations, the restaurants were locked in a chaotic tug-of-war between Ten Five Hospitality and Relevant, the hotels’ project developer, and the Citizen News building next door, which houses Mother Wolf, known for its Roman-style pasta, one of the most coveted reserves in the city. Both companies once claimed control of the properties, according to a report by Eater LA.
Chef Carson, who left Mes Amis in December, said he was aware of the restaurant’s service charge but believed “the money was properly allocated”.
Carson contracted with Ten Five Hospitality to develop the acclaimed French restaurant and also worked at The Terrace before Mes Amis opened. He said he works as a consultant and isn’t responsible for day-to-day financial accounting for the restaurants.
“I’m disappointed in all the people who put in so much hard work to create something that should be very special,” he told the Times. “It’s disappointing that this is coming out.”
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Prosecutors declined to discuss Crowell’s letter. The bureau also declined to disclose whether it sent letters to other restaurant groups in the city about the service charges.
The Thompson Hollywood (seen on the left) is next to the Citizen News building where Mother Wolf is located.
(Irfan Khan / Los Angeles Times)
In interviews, several former and current Ten Five Hospitality employees said they were in a difficult financial situation. Many workers were not eligible for the company’s medical program because they were not working full-time. And they said that if they qualified, the program would be financially unattainable for them.
Witron, Redlich, Merritt and Garrett said they are still dealing with the aftermath of working at the Terrace. They all described psychological anxiety and financial loss – arrears on bills and rent. Three of the four said they were unlikely to return to the hospitality industry.
“It’s awful. It’s so dehumanizing,” Redlich said. “On the surface, everything has been reduced to a certain appearance. It’s like putting all the dirt in the house, all this clutter, just under the rug. And yes, it looks clean but don’t look under the rug, that’s what it was like working there.”
Ten Five Hospitality faced a May 12 deadline to respond to inquiries in the April letter from the assistant city attorney. Both companies said Monday they were in contact but declined to explain further.
