Thomas Keller Agrees to Pay $500,000 to Settle Per Se Tipping Allegations

One of the country's best and most expensive restaurants was slammed today by New York State attorney general Eric Schneiderman for wage violations. Thomas Keller's Per Se, whose adoption of European-style pricing policies in 2005 eliminated the need for diners to tip, paving the way for the espousal of similar policies at tasting menu venues across America, has agreed to pay $500,000 to current and former waiters after an investigation found that it broke state wage and tipping laws.

As part of the settlement, Per Se "neither admits nor denies" the attorney general's findings. The restaurant, in an emailed statement, called the issue an "unintentional oversight" stemming from a new state rule governing how service charges are levied. The three Michelin-starred establishment also wrote the following in a subsequent statement to Eater this afternoon:

"Our employees were never short-changed and no monies intended for employees were withheld...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."

The violations appear to be confined to a service charge the restaurant was levying on private dining contracts from January 2011 to September 2012, according to court documents. Those same documents don't allege Per Se of any wrongdoing in its main dining room where there's no service charge; all food and wine prices there are already reflective of what the restaurant needs to earn to pay its employees, as well as to cover its general expenses. This stands in stark contrast to most other culinary establishments, where waiters are paid as little as $5.00/hour and therefore depend on gratuities to bring their wages up to the New York minimum of $8.75/hour.

Accordingly, patrons of Per Se's main dining room don't need to tip, and the restaurant can redistribute its revenues as it sees fit. But when a service charge is levied, as is the case with Per Se's private dining events, state law is more restrictive on what a restaurant can do with the funds it collects. In early 2011, the New York enacted an order stating that any additional charge on a bill is "purported to be gratuity," and that restaurants are required to specifically inform customers when those charges on a bill are not used as gratuities (i.e. if that fee is being used to help pay for cooks or managers). A gratuity is the property of an employee, and cannot, for the most part, be used to count as revenue or to compensate non-tipped workers.

So in the case of Per Se, the attorney general found that in 2011, when the new law went into effect, the restaurant didn't update the language in its private dining agreements to reflect the fact that its service charge was being used as an administrative fee for the general operation of the restaurant. The attorney general's investigation didn't show that Per Se was aware of the new law in 2011, but it did find that Per Se updated its contracts in September 2012 to comply with the wage order, a change that was made before New York began its investigation.

As part of the $500,000 settlement, Per Se will send checks to directly to employees, past and present, who are eligible for restitution, along with a letter explaining the payment. The exact formula used to calculate the individual payments will have to be approved by the attorney general.

The legal documents, incidentally, reveal how much the restaurant's waiters make: $16.60-$28.00/hour, depending on their position. "Our employees are among the best compensated in the restaurant industry because they are the best in the business," Per Se wrote in an email. And here it's worth noting that even though diners at the restaurant don't need to tip, many of them still do on the "optional gratuity" line at the bottom of the bill, further supplementing the wait staff's income.

Waiters in the New York-New Jersey metropolitan area earn on average $13.21/hour, or $27,470 per year, according to the U.S. Bureau of Labor Statistics.

Dinner at Per Se involves either a nine-course chef's tasting or a vegetable tasting of the same length, for $310. Supplements for foie gras ($40), high-grade caviar ($75), Wagyu ($100), and Australian black winter truffles ($125) can push the bill to $650 per person before wine.

Editor's note: This story has been updated for clarity and for the purposes of including notes from two separate Per Se statements.