Per Se restaurant paying $500K in dispute over tips

Source: Per Se

Thomas Keller's Manhattan restaurant, Per Se, is involved in some legal trouble over withholding tips from service employees, Grub Street reported on Thursday. (Tweet this)

According to a legal agreement with the New York state Attorney General, the fine dining establishment will have to pay those tips back to its employees at a cost of $500,000.

The investigation by the attorney general's office showed that Per Se billed a 20 percent service charge fee to customers, but "used the fees from this service charge towards the operational revenue of the restaurant." This was between January 2011 and September 2012.

Basically, by calling it a "service charge" and not an operational charge, the restaurant was required to give it to the service staff.

Read More Mobile payments are making people tip more at meals

The document noted that wait staff is paid between $16.60 and $28 (much higher than the minimum wage), however the restaurant still violated a work order during that time period.

Per Se, which is owned by American chef Thomas Keller, will pay the half a million dollars to entitled employees, both current and former.

Read More America's most-loved fast food joint is...

Per Se gave CNBC the following statement:

Our employees were never short-changed and no monies intended for employees were withheld. Our employees are among the best compensated in the restaurant industry because they are the best in the business. The Attorney General's office's own findings state that the charge was used in part to pay Per Se's workers their industry-leading wages – a waiter at Per Se, for example, including overtime and gratuities, makes approximately $116,000 a year.

This matter relates to the words that Per Se used to describe its private dining operational charge during a 21-month period three years ago. According to the Attorney General, Per Se should have made it clearer that that this charge was not a gratuity. Per Se revised this language on its own, well before it ever heard from the Attorney General's office, and has been in compliance for nearly three years.

Read the full coverage at Grub Street.