Litigation over food-and-beverage service charges is increasing.
A California appellate court recently held that mandatory service
charges added by banquet facilities to their contracts may need to
be paid to banquet service employees essentially as a gratuity.
Lawsuits also have been filed recently against food delivery
provider DoorDash by customers in California and the District of
Columbia government alleging that the company improperly kept part
of tips provided to delivery drivers, misleading customers who
thought that their entire tip would go to the driver.
In the California appellate case, O'Grady v. Merchant
Exchange Productions, the employer added a 21 percent service
charge to all banquet contracts for food and beverages. The company
did not pay any of the service charge to servers. Rather, it
distributed some of the money to managers and nonservice personnel
and retained the rest. The plaintiff, a banquet server and
bartender, sued her employer claiming
