A judge ordered the San Francisco Marriott Marquis Hotel to reimburse hundreds of banquet workers $5 million in withholding fees after the hotel wrongfully kept $9 million in “services charges” paid by clients who thought they were gratuities for the servers.
San Francisco Superior Court Judge Ethan Schulman, according to local media, ordered the worldwide hotel chain to compensate banquet servers from 2012 to April 2017. According to reports, the hotel hosted roughly 1,000 banquets per year, with a 23% to 24% service charge added to the customer’s bill per contractual agreements.
In his judgment, which was first published by The San Francisco Chronicle, Schulman stated that “a reasonable customer would understand and intend the service charges to be a gratuity for service staff.”
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“It was common practice for employees, including banquet servers and their managers, to refer to service charges as gratuities or tip pay,”
According to Schulman, certain contracts drafted by hotel managers informed the consumer that the charge was classed as a tip for the servers.
Banquet staff received between $11 and $13.50 per hour, including gratuities, totaling around $70 million during the five-year period. According to Schulman, Marriott management kept $9 million.
According to the judge, staff who testified thought the charges referred to gratuity, and many clients did not give a tip because they assumed the typical practice was already included.
According to the law firm McGillivary Steele Elkin, Marriott breached California law, which states that service charges belong to the employees if customers anticipated the gratuities would go to the server. According to the group, the hotel only dispersed 70-72% of the service costs paid to banquet workers.
The legal firm highlighted in 2017 that Marriott modified its methods by separating the service charge into two transactions – a “staff charge” and a “house charge.”
“Customers pay service charges — on top of hefty food and beverage bills — because they think they are tips for the waitstaff,” Attorney Shannon Liss-Riordan, who represented the workers, told The San Francisco Chronicle.
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Marriott has not commented on the ruling.
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