Seattle celebrity chef settles for $1 million in wage theft lawsuit

Seattle celebrity chef Josh Henderson settled with his employees this week for $1 million after they accused him of stealing their tip money.

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“When an employer, like a restaurant, fails to pass all the tip money along to the people it was intended for, that is considered wage theft, even though tips aren’t wages,” former Washington State Attorney General Rob McKenna told KIRO Radio’s Dave Ross.

The Stranger reports that Henderson agreed to a $1 million settlement with employees who alleged wage theft. The settlement comes after Henderson sold nine of his Seattle restaurants to another celebrity chef, Renee Erickson. Henderson’s company, Huxley Wallace Collective, owned a range of popular restaurants in the city, including Westward in South Lake Union, Saint Helens in Laurelhurst, and the Great State Burger chain.

Henderson was charging a 20 percent service charge on bills, in place of a tip, at all of his restaurants. He used that money for higher wages, including higher pay for kitchen staff, as well as other benefits for workers. But his staff objected and argued they were entitled to all of the tip money.

Dave Ross points out that it doesn’t seem like Henderson feels as if he did anything wrong, according to a statement he gave to The Stranger:

The legal system we have doesn’t have anything to do with logic or if we are right or wrong, it has to do if you are willing to play the legal game and risk everything you have or are you going to settle and move on.

“It didn’t seem that the restaurant company owner really thought he was concealing where the money was going ….” McKenna said. “He felt he could implement it, and hold some of it back from his workers in order to provide them with benefits and give higher pay to kitchen staff … that seemed to be his rational. Maybe he got bad legal advice. But the fact is, tip revenue is supposed to be passed through straight to employees.”

Wage theft allegations

McKenna said it’s not uncommon for such lawsuits to hit businesses. It ends up being a business decision to settle, rather than spend thousands of dollars, and hours in court proceedings.

“I often hear from companies in lawsuits that they didn’t do anything wrong, but it’s just more sensible to settle the case than to litigate it,” McKenna said. “There’s a lot of costs involved with litigating any case. And there’s uncertainty; you may not win. It’s often a business decision to settle cases that are brought. And plaintiff’s lawyers know that.”

The case of chef Henderson, however, doesn’t appear to line up with that scenario, according to McKenna.

“I don’t know if this is one of those cases though,” he said, noting that many employees also argued that they did not receive legally-required breaks, which is another kind of wage theft.

“And (they argued) the company obscured how the 20 percent service charge was actually being distributed to people who worked at the restaurant,” McKenna said. “That sounds like something that was based on actual evidence. That many employees could probably get together and compare notes and figure out that there’s a 20 percent service charge and they were not seeing that amount of money coming to them.”

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