Judge rules in favour of Salt Bae restaurant in service charge dispute

In the latest reminder of just how vital tipping is to restaurant staff, a judge has ruled in favour of social media sensation Salt Bae’s Nurs-Et Steakhouse in Miami, after two dozen employees brought a lawsuit against their employer, arguing that a mandatory service charge should not have been used to cover their normal wages.

Nusret Gökçe, better known the world over as seasoning-sprinkler Salt Bae, has built an enviable restaurant empire over the last few years that appears to show no signs of slowing up despite the many column inches devoted to excoriating its sky-high prices.

But headlines are also being made by members of staff. Earlier this month, we reported the news that a sommelier at Nusr-Et’s London outpost claimed that he was fired for eating an avocado after 5.30pm in the staff canteen. Guillermo Perez called Nusr-Et, which has outposts in several cities around the world, a “McDonald’s for rich people”, and made several claims about the restaurant’s practises, including that customers had been served “frozen chips and Heinz ketchup”.

And now, two dozen Nusr-Et employees have been ruled against in a lawsuit arguing that an 18% service charge should not have been used to cover their wages.

The United States Court of Appeals for the 11th Circuit upheld the decision of a Miami federal judge who ruled in favour of Nurs-Et Steakhouse in Miami. The ruling stated in part, “If the mandatory service charges are tips, federal law would generally prohibit restaurants from using the fees to pay minimum and overtime wages to employees. But if the charges are not tips, establishments may apply them toward employee wages.”

The court ruled that “the essential element of a tip is its voluntary nature.

“The FLSA [Fair Labor Standards Act] defines neither ‘tip’ nor ‘service charge.’ But as noted in Department of Labor  (“DOL”) regulations, the critical feature of a ‘tip’ is that ‘[w]hether a tip is to be given, and its amount, are matters determined solely by the customer.’”

Citing a DOL regulation example of what does not constitute a tip, the court said,  “A compulsory charge for service, such as 15% of the amount of the bill, imposed on a customer by an employer’s establishment, is not a tip.”

The court said it could not distinguish between this example and Nusr-Et’s service charge.