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Renowned Seattle Restaurateur Tom Douglas Settles $2.4 Million Lawsuit With Employees

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The lead plaintiff alleged that Douglas and his company did not properly disclose where service charge fees were going and provided inadequate breaks

Tom Douglas in an apron against a tinted background.
Tom Douglas owns and operates 16 restaurants in the Seattle area.
Tom Douglas Seattle Kitchen/Official

On Monday afternoon, a King County court approved a $2.4 million class action settlement against Tom Douglas and his massive restaurant group, Tom Douglas Seattle Kitchen, filed on behalf of 1,360 current and former employees. The lead plaintiff in the lawsuit, Clare Thomas — a former worker for the gastropub Brave Horse Tavern in South Lake Union — alleged that Tom Douglas’ company failed to properly disclose where the money from service charge fees was going after it eliminated tips in early 2016, and did not provide adequate rest and meal breaks.

Douglas’s restaurants — which include the acclaimed Dahlia Lounge and the Carlisle Room — were among many that switched from a tipping system to a flat service fee when the city’s $15 minimum wage laws went into effect in 2016. Washington law requires that restaurants disclose to customers — either on the menu or on checks — what percentage of that fee is going to the employees.

According to the original complaint filed in a King County superior court last December, Thomas alleged that the defendants (Douglas, the Brave Horse Tavern’s parent company, Terry Avenue, Inc., and Tom Douglas Seattle Kitchen) “did not disclose in menus and itemized receipts provided to customers the actual percentage of the automatic service charge that was paid directly to the employee or employees serving the customers.” She also claimed that her employer failed to “affirmatively” provide her with ten-minute rest breaks for every four hours of work, regularly required her to work more than three consecutive hours without a rest break, and didn’t provide full, uninterrupted 30-minute meal breaks.

“I brought this lawsuit to try to change the culture in restaurants, ensure transparency regarding distribution of service charges, and seek fair pay,” said Thomas.

For his part, Douglas maintains that neither he nor his restaurant group did anything wrong. “We worked diligently with legal counsel and the Office of Labor standards to craft our service charge-distribution language and policy, all the while making sure our team remained compensated at historic levels,” he said in a statement provided to Eater. On the subject of breaks for employees, Douglas added: “Our company has a clear and legal rest-break policy, formerly adopting the allowed intermittent break practice that allows employees to take multiple short breaks throughout a shift as needed. For the sake of clarity and assurance of the breaks regularly occurring, we moved to a more structured practice of daily recording that breaks did occur.” This means that employees now officially affirm daily that they have taken their rest breaks, so that the company can better monitor its policy.

Rather than seek a trial, the two sides mediated an agreement over the past several months. Under the settlement, Douglas will dole out not only the $2.4 million, but also provide an additional $200 gift card to every past and present employee in the lawsuit. The settlement also required that the company — which currently has 850 employees — set up a confidential employee hotline for workers to report workplace concerns, and provide employment rights training to supervisors.

According to a rep for Tom Douglas Seattle Kitchen, the tipline went into effect August 1 and more than 90 percent of managers have already completed the first round of rights training, with further sessions to take place in the coming months. Meanwhile, the lead counsel for Thomas tells Eater that the settlement checks could arrive the week before Christmas.

In related news, chef Josh Henderson settled a similar lawsuit for $1 million with his employees last year. At the time, Henderson claimed that the money from service fees was not improperly handled, but conceded that settling was a more expedient and painless way to resolve things. The same lead counsel for the main plaintiff in the Douglas class action lawsuit was involved in Henderson’s case.