Court says Gyu-Kaku tip pool is legalCourt says Gyu-Kaku tip pool is legal

Lisa Jennings

LOS ANGELES In a victory for the operators of the Gyu-Kaku Japanese barbecue chain, a Los Angeles Court of Appeals on Friday affirmed that the restaurant chain’s tip-pooling policy does not violate state labor laws.

In the lawsuit originally filed in Los Angeles Superior Court in October 2006, the two plaintiffs named in the case charged that Gyu-Kaku’s tip-pooling policy was illegal because servers were asked to share tips with bussers, bartenders, kitchen staff and dishwashers who did not provide direct table service. The charges cited state law, which provides that gratuities are the sole property of employees.

In last week’s ruling, the Court of Appeals for the Second District upheld an earlier Superior Court decision to dismiss the lawsuit. The appellate court stated in its decision that “tip pooling is not illegal when the participants in the tip pool contribute to the patron’s service, even if not providing direct table service.”

The court argued that requiring direct table service to participate in a tip pool is illogical. Such a requirement would allow a busser to share in tips only if he cleared the table in front of customers, even though the work is the same if done after guests have departed.

The court endorsed a “chain of service” approach, under which dishwashers and other kitchen staff would be encouraged to do their best, knowing they would participate in financial rewards if customers were pleased with their experience, even if they didn’t see who provided it.

Operated by Reins International California, based in Torrance, Calif., the Gyu-Kaku chain includes six restaurants in Southern California.

Asimilar ruling came out of the Los Angeles Court of Appeals earlier this year, rejecting a claim by a former server at Dave & Buster’s who argued that it was unlawful to share tips with bartenders and other employees. In that case, the court found that existing law doesn’t define who may share in tips based on “direct” or “indirect” table service.

Many restaurant companies operating in California have been taken to court over tip-pooling policies, in part because, some argue, gray areas exist in state labor laws about who may participate in such pools. Companies that have faced lawsuits in recent years include Starbucks Corp., Brinker International, Darden Restaurants, California Pizza Kitchen, McCormick & Schmick’s, Applebee’s and Morton’s.

Contact Lisa Jennings at [email protected].