The Mario Batali Settlement

 Mario Batali has had a rough time the past few months. In November, attempting to comment on theChef Mario Batali recent financial crisis, he famously compared the nation’s bankers to Hitler and Stalin. The star chef seemed to forget that most of his high-end restaurants were in New York’s Financial District, and were expense-account favorites of Wall Street bankers. The howls of outrage echoed across the land, and many banking firms organized boycotts of Batali’s establishments.

Last week, Batali and his partner Joseph Bastianich agreed to pay $5.25 million to settle a class-action lawsuit filed by their employees. The pair jointly own Manhattan restaurants such as Babbo, Esca, Lupo, Casa Mono, Del Posto, Bar Jamon and the Tarry Lodge. The suit alleged that the owners skimmed tips from employees, failed to pay minimum wage, and refused to pay overtime for shifts exceeding 10 hours.

Originally, Batali and Bastianich had vowed to fight the lawsuit to the end, “because we know we’re right.” After the settlement, lawyers announced that “the matter has been resolved to the satisfaction of all parties.” Perhaps so, but I’ve never met a restaurant owner who was satisfied to cough up more than $5 million.

To be fair, the charges against Batali and Bastianich are standard practice in the restaurant industry—or were, until a Manhattan attorney began a flurry of lawsuits against high-profile chefs several years ago. Those suits are being settled, one by one, in favor of the employees. Until the cases were filed, it was difficult to find an upscale restaurant where some form of tip skimming didn’t take place. It was almost universal for waitstaff to be expected to surrender a portion of their tips to non-tipped employees such as service bartenders and bus help.

This is a nice way to run a business—rather than pay the help, you extort employees to subsidize the salaries of other employees. The days of restaurant owners getting away with this practice are probably now numbered, at least in cases of famous restaurants run by celebrity chefs. What’s almost certain is that prices in these establishments will now go up, as diners will be expected to bear the cost of making payroll.



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