Lawsuit: Caribou Cafe Owner Took Employee Tips, Failed to Pay Overtime

Longtime Walnut Street restaurant Caribou Cafe has been hit with a lawsuit filed in Philadelphia’s federal court. In the filing, five employees claim that the restaurant deducted credit card fees from their tips (a big no-no!) and failed to pay overtime to some of its employees.

According to the suit, Caribou Cafe routinely deducted 3 percent of all gratuities before paying them out to employees to cover credit card processing fees. If you leave a $60 tip on a $300 restaurant check and pay with a credit card, for a total charge of $360, the restaurant is charged a processing fee of about $9 (2-and-a-half percent, in many cases). The employees allege that Caribou Cafe was taking out money to cover those fees.

This was standard operating procedure in many of Philadelphia’s restaurants until City Council passed Councilman Jim Kenney’s Gratuity Protection Bill aka “The Tip Bill,” which prevents employers from doing exactly that.

It became a city ordinance in 2011, much to the dismay of restaurateurs like Marc Vetri, a (very) vocal opponent.

Here is the relevant portion of that ordinance:

An employer that permits patrons to pay gratuities by credit card shall pay employees the full amount of the gratuity that the patron indicated on the credit card slip, without any deduction for any credit card payment processing fees or costs that may be charged to the employer by the credit card company.

The suit also claims that Caribou Cafe violated the Pennsylvania Minimum Wage Act and the federal Fair Labor Standards Act, in part by failing to pay overtime compensation.

Olivier Desaintmartin (seen here in a restaurant publicity photo), chef-owner of Caribou Cafe, denies that anyone was owed overtime compensation. “There hasn’t been any overtime in my restaurant in 12 years,” he tells Foobooz. “No one works more than 40 hours each week.”

But he doesn’t deny taking money from tips.

“I did it, I admit it,” he says. “When the ordinance passed, I was burying my dad and brother, and I didn’t know anything about it. Eighteen months later, a server tells me that it was a law, and I said I didn’t think it was. But as soon as I found out for sure, I stopped. But I still think it’s wrong for them to tell me I can’t do this, and a lot of people are still doing it. We pay our dues, they should pay their dues.”

Desaintmartin says that he has been well aware of the employees’ complaints and that he tried to settle the matter back in August. “But I never heard back from their lawyer,” he claims. The lawyer, Lance Geren, says that Desaintmartin’s offer was unacceptable.

“Now they are suing me,” says the chef. “I don’t have any money for lawyers, so I am stuck. I’m an easy target because I am French, I think. They think I can’t win in court.”

The suit asks for unspecified damages, including back pay and tips owed.