SOURCE: Gardere Wynne Sewell LLP

March 05, 2009 10:35 ET

Dave & Buster's Wins California Tip Pool Case

DALLAS, TX--(Marketwire - March 5, 2009) - In a case closely watched by the restaurant and hospitality industry, Dallas-based Dave & Buster's has won a California appellate court ruling affirming the restaurant's policy requiring waitstaff to contribute a portion of their tips to a pool to be shared with bartenders.

The ruling this week, in the Court of Appeal of California, Second Appellate District, Division Eight, has turned back efforts to place strict limits on participation in the traditional practice of mandatory tip pools. Celeste Yeager, a labor and employment partner in the Dallas office of Gardere Wynne Sewell LLP, represented Dave & Buster's as lead counsel in both the trial and appellate courts.

The class action, Aaron Budrow v. Dave & Busters of California, Inc., involved an estimated 4,000 current and former Dave & Buster's employees in California and challenged the restaurant chain's policy of requiring servers to contribute 1 percent of their gross sales to "tip pools," which then are shared with bartenders. Mr. Budrow, a former cocktail server, and the others claimed the policy violated the state's business and professions code, but lost the case in the trial court.

The appellate decision upholds the lower court ruling. Specifically, the court found no requirement in California law that money from tip pools should be shared among those employees who provide "direct" table service only, as Mr. Budrow and the others claimed.

"The court called this whole notion of direct versus indirect service an 'artificial controversy' and it's absolutely correct in that regard," says Ms. Yeager. "The court specifically noted that the California Labor Code does not make a distinction between the duties performed by employees, nor does it contain a requirement that tip pools are limited to those employees providing direct table service."

The California Restaurant Association and the California Hotel & Lodging Association filed an amicus curiae brief in support of Dave & Buster's.

"Although the use of tip pools is a longstanding practice in the hospitality industry, and has benefited countless workers, it is a practice that has received an unfair amount of scrutiny," adds Ms. Yeager. "It is a relief to all involved to finally have a ruling that spells out what constitutes a legal tip pool in California and that it is the employer's prerogative to determine which non-management employees should participate."

Celebrating over 26 years of operations, Dave & Buster's was founded in 1982 and is one of the country's premier entertainment/dining concepts with 52 locations throughout the United States and in Canada. More information on the Company is available at www.daveandbusters.com.

Gardere Wynne Sewell LLP, an AmLaw 200 firm celebrating 100 years in 2009 and one of the Southwest's largest full-service law firms, has offices in Austin, Dallas, Houston and Mexico City. Gardere provides legal services to private and public companies and individuals in areas of energy, hospitality, litigation, corporate, tax, environmental, labor and employment, intellectual property and financial services.

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