San Francisco Marriott Marquis Hotel must pay five years of withheld fees to hundreds of banquet workers after illegally keeping about $9 million in “services charges” paid by customers who believed they were gratuity fees for the servers, a judge said.
According to local media, San Francisco Superior Court Judge Ethan Schulman ordered the international hotel brand to pay banquet servers from 2012 through April 2017. The hotel reportedly hosted approximately 1,000 banquets annually, adding a 23% to 24% service charge to the customer’s bill per contractual agreements.
Schulman wrote in his decision, first reported by The San Francisco Chronicle, “a reasonable customer would understand and intend the service charges to be a gratuity for service staff.”
“It was common practice for employees, including banquet servers and their managers, to refer to service charges as gratuities or tip pay,” Schulman said, adding that some contracts that were written by hotel managers had notified the customer that the charge classified as a tip for the servers.
Banquet staff earned between $11 to $13.50 per hour, including tips, which amounted to about $70 million over the five years. Schulman said Marriott management kept $9 million.
The judge said workers who testified believed the charges referred to gratuity, adding that many customers did not leave a tip because they thought the customary practice was already included.
According to McGillivary Steele Elkin law firm, Marriott violated California law that mandates service charges belong to the employees if the customers assumed the tips would go to the server. The group said the hotel distributed only 70-72% of the service charges paid to the banquet staff.
In 2017, the law group noted that Marriott changed its practices by splitting the service charge into two transactions — a “staff charge” and a “house charge.”
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“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.
Marriott has not commented on the ruling.