AG Racine Announces Investigation into Restaurants Charging Tipped Workers Unlawful Fees

OAG Alerts Workers that Restaurants Using GratShare Tip-Distribution App Are Illegally Charging Employees Fees to Receive Tips

WASHINGTON, D.C. – Attorney General Karl A. Racine today announced that the Office of the Attorney General (OAG) is investigating numerous District restaurants that use GratShare, a tip-distribution and administration app, for unlawfully charging employees fees to receive tips they have earned.

Generally, under District law, employers—not employees—must pay for business expenses, including expenses for payroll and tip-distribution services. Workers must be paid all wages earned, and employers may not take unlawful deductions or charge fees for expenses that benefit the employer. OAG  is encouraging restaurant workers who use the GratShare app to check whether they are being charged improper fees. If you are a restaurant worker being charged fees to collect your tips through GratShare, please contact OAG by calling (202) 442-9828 or emailing workers@dc.gov or trabajadores@dc.gov.

“No one should be charged a fee to receive wages and tips they have rightfully earned,” said AG Racine. “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. My office is dedicated to protecting DC’s workers and proactively investigating issues like this when they arise. We strongly encourage any workers who are being charged fees to receive tips to reach out to the Office of the Attorney General.”

GratShare is an app used by restaurants to distribute tips to workers, and it charges fees for its service. OAG has found that many restaurants unlawfully pass these fees along to tipped workers, who may see small deductions each time they use the app to get paid. OAG has already resolved one investigation into a restaurant that uses GratShare and has secured restitution for tipped workers who paid fees. The office also has multiple pending investigations concerning local restaurants that use the app, which it will vigorously pursue to protect District workers.

First Investigation into GratShare Fees Resolved

AG Racine commended a large restaurant group, Knightsbridge Restaurant Group, for cooperating with OAG’s investigation, voluntarily coming into compliance with the law, and making workers who paid fees whole. Knightsbridge operates multiple restaurants in the District, including Rasika Penn Quarter, Bombay Club, and Modena. As part of a settlement with OAG, Knightsbridge discontinued its practice of charging tipped employees a fee of between $0.38 and $0.76 per shift to use GratShare. Knightsbridge also agreed to pay $63,775.73 to hundreds of workers, which refunds 150% of GratShare fees these employees paid between 2019 and 2021, and will pay an additional $5,000 to the District. Knightsbridge will distribute payments to eligible employees in January 2023.

A copy of the settlement agreement is available here.

The Knightsbridge matter was handled by Assistant Attorney General Randy Chen and Section Chief Graham Lake of the Workers’ Rights and Antifraud Section of OAG.

DC Wage & Hour Laws
The District’s Wage Payment and Collection Law requires employers to pay employees all wages earned and prohibits unlawful deductions and fees. In general, expenses that are primarily for the benefit of the employer must be paid by the employer and may not be shifted to the employee.

OAG’s Efforts to Protect Workers    
In 2021, OAG established the Workers’ Rights & Antifraud Section, which is dedicated to fighting wage theft and protecting District workers. Since gaining wage theft enforcement authority in 2017, OAG has launched more than 75 investigations and recovered over $7 million for workers and the District by bringing investigations and lawsuits against employers who violate District law. OAG’s wage theft enforcement efforts have focused on industries with high populations of vulnerable workers, such as constructionrestaurants and hospitalityhealthcare, and the gig economy. AG Racine also testified before Congress to highlight findings from an OAG report about how worker misclassification hurts workers, undercuts law-abiding businesses, and cheats taxpayers.

How to Report Wage and Hour Violations
Workers who believe that their rights have been violated, or that they have experienced wage theft or other wage and hour violations, can contact OAG by calling (202) 442-9828 or emailing workers@dc.gov or trabajadores@dc.gov.

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