The fine-dining industry is booming.
With a surge of affluent people willing and able to spend big on gourmet meals, vintage wines, and pampered table service, high-end restaurant entrepreneurs are rapidly expanding across the country—from New York City and Washington, D.C., to Los Angeles and San Francisco—at a far greater clip than any other segment of the restaurant industry.
While diners often spend hundreds of dollars to indulge on a gourmet multi-course meal, those exorbitant prices don’t always translate to good pay and working conditions for employees in fine-dining restaurants.
“There are real mythologies about how these workers in fine-dining restaurants are all rolling in it. It’s just not true,” says Saru Jayaraman, co-director of the Restaurant Opportunities Center United, an advocacy group that promotes equitable working conditions in the industry. “It’s instability in the front and incredible poverty in the back. And racial discrimination all through out.”
Back in January, New York Times food critic Pete Wells wrote a scathing takedown of celebrity chef Thomas Keller’s Per Se—one of the most expensive restaurants in Manhattan, where patrons will pay at minimum $325 for a nine-course meal. One reader who said he used to work as a server at the restaurant commented on the Times website: “If you think eating there makes you feel ripped off and unwelcome, try working there. It was the absolute worst employment experience I've ever had in my life.”
“The money that new servers make is laughable compared to what Per Se charges for food and wine,” he wrote. “And ponder this: Service is included, at an hourly rate, for nearly all employees, regardless if a table spends $600 or $12,000 (yes, I saw a table spend $12,000), so who's making 20 percent of $12,000? It wasn't me, that was for sure.”
Last summer, Per Se paid out $500,000 to workers after the New York Attorney General’s office charged that it had withheld some tips from employees for nearly two years through its service charges for some select private dining contracts—the restaurant called it an “unintentional oversight.”
Front-end service employees—waiters, bartenders, bussers—are paid mostly through tips, and thus in most states are paid a much lower wage than the federal minimum, with gratuities expected to make up the difference. In Washington, D.C., for instance, the tipped minimum wage is currently $2.77 an hour while its actual minimum wage is $10.50 an hour.
A relatively small number of high-end waiters do very well. But working for tips can make for precarious living. Servers’ hours can be cut on short notice depending on the flow of business. Some fine-dining waiters, Jayaraman says, make the bulk of their money around the holiday season and are forced to scrape by the rest of the year. And by being forced to depend on the goodwill of well-heeled patrons, women working in the front-end are often subject to constant sexual harassment—misogyny doesn’t disappear with a Michelin star.
On top of that, lucrative tips can expose front-of-the-house employees to rampant exploitation from employers. In most restaurants, tips are pooled together and then divvied up between servers, bartenders, bussers, barbacks, and other front-end service employees at the end of the night. At gourmet restaurants with high-dollar tabs, the pool can grow to an impressive sum and there is potential for big payouts.
A major problem, however, is that restaurant bosses often skim from that tip pool to pay managers, maître d's, and kitchen staff. Despite being a violation of federal labor law, “Skimming off the tip pool happens so blatantly and everywhere,” says Maimon Kirschenbaum, a New York City employment lawyer who has filed hundreds of wage-violation lawsuits on behalf of employees at some of the city’s most well known restaurants. “It’s surprising considering how long these issues have been litigated. But the stakes are big.”
Owners can save a lot of money on payroll expenses if they pay managers, maître d's, and other staff in part from the tip pool. “They’re taking advantage of the situation. They say, ‘These guys are waiters—they shouldn’t be getting so rich anyway, so let’s divide up that money to other people,” Kirschenbaum explains.
Additionally, many restaurants charge waitstaff for breaking glassware and plates by taking the costs out of their tips, and for their uniforms and the cost of laundering them.
Some restaurants have begun implementing fixed gratuity or hourly service charges that are implied to be in place of tips. Patrons are under the impression that this money goes directly to service staff—though that’s sometimes not the case.
Even with rampant violations of wage and hour law, the better front-of-the-house jobs in high-end restaurants can provide a decent living. A well-paid fine-dining server or bartender in San Francisco, for instance, can make between $50,000 and $150,000.
Yet, not everyone has access to those jobs. Racial discrimination is implicitly embedded in the fine-dining hierarchy. In order to uphold the restaurant’s pristine experience, owners and managers say waiters must have the “right” look and talk the “right” way—often code for “white.” One study conducted by Restaurant Opportunities Centers United (ROC) had 400 evenly matched white people and people of color go into fine-dining restaurants to see who would be hired for a serving position. The study found that not only were the white applicants more likely to even be interviewed, but they were also twice as likely to be hired.
“People of color are relegated to lower level positions like bussing, buffing, and running,” Jayaraman says. “It’s so stark that, in some cities, the skin color gets darker the farther back in the restaurant you go.”
While mostly invisible to patrons, the back-end—line cooks, food prep workers, dishwashers, and polishers—makes the operation run. But the back-end is also highly segregated. Most back-of-the-house workers are black, Latino, and Asian. Restaurant workers of color experience poverty at nearly twice the rate of white restaurant workers. And the prospects for the workers of color moving up the chain—from line cook to sous chef; busser to waiter; barback to bartender—are usually limited. When people of color do work in the front-of-the-house, it’s mostly as bussers or runners, and they will often work those positions for years without any promotion.
Meanwhile, wages are kept low, access to paid sick days and health benefits is rare, and the hours are long. Overtime pay is often denied by fudging the numbers or requiring staff to work several hours off the clock. Some managers will shave hours off time cards, or pay based on a daily flat rate no matter how many hours an employee works. In some places, managers will pay kitchen staffers meager salaries as a way to skirt overtime requirements. As many kitchen workers are new immigrants—often undocumented—employers tend to take advantage of them, wrongfully assuming that undocumented workers have no legal recourse.
The main exceptions to this dismal pattern are restaurants that are unionized. But due to the industry’s volatility, organizing restaurants is very difficult. While precious few free-standing restaurants are unionized, even in a union town like New York, the large hotels in the City are union almost wall to wall. And the restaurants attached to union hotels suggest the difference a union can make.
Back in 2011, the New York Hotel and Motel Trades Council reached an industry-wide agreement with the Hotel Association of New York City that set standards for roughly 28,000 workers—including those in hotel restaurants. In the back-of-the-house, a unionized line cook started out in 2011 making nearly $27 an hour—a living wage for a family of four with one income earner in New York City. Based on the contract’s wage scale, that will increase to just over $32 an hour in July. A dishwasher, silver cleaner, food runner, and barback all started off at nearly $25 an hour and will soon earn almost $30 an hour. Wages in non-union restaurants are a fraction of that.
In the front-of-the-house, wage floors are far above the tipped minimum wage: Servers started at about $13 an hour and will scale up to nearly $16 this year, plus tips. Bussers make slightly more, from $14.60 an hour to $17 this year. There are clear standards stipulating who can and cannot be paid from the tip pool.
“There are many advantages to working in a union restaurant, including better wages, full family medical and dental benefits, free job upgrade training, job security, seniority rights in scheduling, and retirement benefits,” says Hotel Trades Council President Peter Ward. “Because of these advantages it is not unusual for our members to work 10 years, 20 years, or even longer in the same location.”
The union represents workers in some of Manhattan’s most upscale restaurants in the most luxurious hotels: the Bull & Bear steakhouse at the Waldorf-Astoria, Harry Cipriani in the Sherry-Netherland, the Perrine in Pierre Hotel.
The relatively small number of free-standing union restaurants also suggests the union difference. For a couple of years, the Local 6 of the hotel union had been organizing workers at the Boathouse, a high-end restaurant in the heart of Central Park, in response to complaints of stolen tips, sexual harassment, and other labor violations. In 2011, the union and workers held a strike during the restaurant’s busiest stretch. Workers created a picket line outside the restaurant and talked with potential patrons about their grievances. After a tense six weeks, the restaurant owner Dean Poll, who was facing diminished business, agreed to settle with the union and negotiate a contract, which drastically improved Boathouse workers’ lot.
Workers got access to the union’s comprehensive health coverage, and on average, wages increased 30 to 40 percent. Line cooks’ hourly pay nearly doubled to $16; grill cooks started earning $20 an hour. The Local 6 has also since successfully organized a couple more freestanding restaurants in New York, as has the Local 100.
Thanks to unions, advocacy groups like the Restaurant Opportunities Center United, litigation, and tougher enforcement of laws against wage-theft, conditions are slowly improving in the restaurant industry. Over the past ten years, the number of class-action lawsuits filed on behalf of servers or kitchen workers who claimed their wages were stolen has surged—especially in New York City, the restaurant capital of the country. Several well-known restaurants with big-name chefs have found themselves in the middle of major lawsuits.
Back in 2012, celebrity chef Mario Batali, facing a class-action lawsuit on behalf of 117 front-of-the-house workers who alleged that his New York City restaurant skimmed from the tip pools to pay sommeliers’ salaries, reached a $5.25 million settlement—at the time it was likely the largest ever settlement of its kind. Employment lawyer Kirshenbaum was the man who led the case. As his law practice targets some of the city’s most prestigious dining establishments, he has become known as the “scourge of the restaurant industry”—Mario Batali’s business partner said Kirschenbaum is “shaking the very foundation of Manhattan’s restaurant industry.”
Other cases of his have gone after the power-dining steakhouse chain Smith & Wollensky, high-end French eateries Jean-Georges and Le Bernardin, and the legendary Japanese spot Nobu.
In addition to aggressive litigation the New York Department of Labor has also upped fines for wage and hour violations, adding teeth to its enforcement.
“I think the lawsuits have been a wakeup call for many restaurants to fix their practices,” says Lou Pechman, another prominent employment lawyer in New York City. There are indications that legal action is increasing in restaurant industries across the country. In those relatively few free-standing unionized restaurants and union hotel restaurants, wage scales are much more robust than in nonunionized places, scheduling practices are far more predictable, and hiring procedures are in place that work to desegregate the front- and back-of-the-house and provide upward mobility to workers.
Restaurant worker advocacy groups like ROC have also become increasingly successful at pressuring industry leaders to adopt high-road policies. Some of the leading restaurateurs in the country are now changing the very core of their business model as a way to improve working conditions.
Perhaps most notable is Danny Meyer, whose Union Square Hospitality Group runs some of the most upscale restaurants in New York City. Last year, he announced that he would completely eliminate tipping in his restaurants, and instead raise menu prices enough to ensure that front-end workers earn as much as they would with tips and that back-end workers can earn a decent living—a move that earned him glowing accolades as the industry do-gooder.
Still, it remains to be seen how these benefits are shared. Under the new policy, waiters are paid $9 an hour, the state’s full minimum wage, and all tipped workers participate in a revenue sharing program, according to Eater. But starting wages in the back-of-the-house still remain low. Cooks start out at $14 an hour and kitchen support staff make just $11 an hour.
It’s an uphill battle, though, to fix an industry where exploitation is business as usual. “We have a long way to go,” says Jayamaran.