Minimum wage law sparks controversy over cooks’ and servers’ pay

The city of Los Angeles’ new minimum wage legislation has brought to a head the controversy over the longstanding pay disparity between the restaurant workers who cook your food and those who bring it to you.

In response, a group of more than 250 Los Angeles restaurant owners has joined to fight the changes.

The new law, passed by the City Council on May 19, gradually raises the city’s $9 per hour minimum wage to $15 by 2020.

But it does not allow employers to calculate tips as part of that income, as many restaurant owners had wished. And, the owners say, a proposed amendment would further restrict their ability to even the pay between service staff and cooks.

The conflict stems from the fact that California is one of only a handful of states that guarantees that employees who earn tips from customers are paid the same minimum hourly wage as everyone else. (The others are Alaska, Minnesota, Montana, Nevada, Oregon and Washington.)

California state law requires that those tips be shared only among employees who actually interact with diners, not kitchen workers. This results in service staff often earning far more than kitchen staff.

Walter Schild, chief executive of Culinary Lab, a restaurant group that includes Hinoki & the Bird, Pizzeria Ortica and Comme Ca, said that at his fine dining restaurants, a server can earn more than $40 an hour including tips, while line cooks, who receive no tips, average a flat $12 an hour.

“I don’t understand why we need to give a $5 an hour raise to employees who are making that much,” he said. “We have waiters who are making in excess of $70,000 a year. What do they need a minimum wage increase for?”

In response to the council’s actions, Schild and other Los Angeles restaurant owners have started a group called L.A. Independent Restaurant Coalition to lobby the City Council on this and other issues. It will hold its first general meeting June 1.

Schild and other restaurant owners had hoped for an exemption that would allow them to guarantee a minimum wage to servers, but one that included tips. That was rejected by the City Council.

Some owners then began planning to take their restaurants to a service charge model, in which a flat fee of 15% to 18% is added to every check.

Bill Chait, head of Sprout Restaurant Group, which includes some of Los Angeles’ most popular restaurants, including Bestia and Republique, said that under state law, service charges -- as opposed to tips -- are owned by the restaurant and can be distributed as the owner sees fit. That means it can be shared by kitchen workers as well as waitstaff. It can also be used to fund worker benefits, such as healthcare and retirement.

That’s an increasingly popular model, pioneered by such restaurants as Chez Panisse in Berkeley and the French Laundry in the Napa Valley. In Los Angeles, Trois Mec is the leading example.

At Chez Panisse, for example, the 17% service charge pays for 75% of employee health insurance, paid vacations, sick pay and a 401K plan as well as the salaries of both servers and cooks.

Earlier this year, a group of several Los Angeles restaurants, including some from Sprout Group, instituted a 3% service charge -- in addition to the tip -- with the stated purpose of offsetting the costs of adding employee healthcare coverage.

But an amendment to the city’s minimum wage law, signed by council members Mike Bonin, Curren Price and Nury Martinez, asks that service charges now be considered the property of the employees, not the restaurant, and that the service charge not be considered part of the minimum hourly wage.

It says that the existing state law “is inconsistent with wage actions the city has taken on behalf of hotel workers and could create confusion with customers who believe they are paying service charges to reward and thank servers for their service, but are instead having that money taken by their employer.”

A spokesman for Councilman Bonin said the motion, which would apply to all businesses where service charges might be used, simply clarifies state law.

Chait says it contradicts the law, and is therefore illegal. “When the law says ‘A’ and you change the law to ‘B’, you haven’t clarified it, you’ve changed it.”

Schild says restaurant owners want to work with the council and the mayor to equalize the pay of all workers.

“We want to make sure we’re heard on a balanced motion that is compatible with California law and lets all the employees, including kitchen employees, get a higher wage.”

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