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Washington, D.C., launches crackdown on restaurants' misuse of a tipping app

The District's attorney general says employers are illegally passing along the fees for using the app to servers and bartenders.
Photograph: Shutterstock

The attorney general of Washington, D.C., said his office is conducting “multiple investigations” of local restaurants that are inappropriately using a tip-distribution app to violate a local wage law.

Attorney General Karl Racine has not alleged any wrongdoing on the part of the company that provides the GratShare app. The program tracks what tips are left for servers and bartenders and distributes the money accordingly, a service for which it charges restaurants a small fee per waitperson per shift.

Racine says that some restaurants are violating a local statute by setting up the app to subtract those fees from the tips distributed to each server or bartender.

“No one should be charged a fee to receive wages and tips they have rightfully earned,” Racine said in a statement “This scheme is unconscionable—it is a poorly-disguised attempt by employers to offload their operating expenses to low-wage workers, many of whom are already struggling to make ends meet.

Yet there are also indications that operators may not be aware that using the app that way is illegal.

The attorney general’s office revealed that one local multiconcept group, Knightsbridge Restaurant Group, voluntarily came forward to resolve its misuse of the app. It agreed to pay employees 150% of what they were charged for the tabulation and distribution of their tips, for a total of $58,775.73. It also accepted a $5,000 fine, payable to the District. The settlement fees will be allocated in January.

The 10-restaurant group had been charging tipped employees between 38 cents and 76 cents per shift for use of the app.

The attorney general’s office says it intends to vigorously pursue other violators.

The crackdown comes as D.C. residents are voting on a referendum that calls for killing the tip credit and entitling all restaurant employees to direct payment of the district’s minimum wage, which is currently $15.20 an hour.

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