An upmarket California restaurant took thousands of dollars in tips from staff to fund business expenses, a federal lawsuit claims

• A California restaurant "misappropriated" thousands of dollars in tips to fund business expenses, the DOL claims.
• The restaurant deposited tips into its business account and gave a portion to staff each week, the DOL claims.

A French restaurant in Pasadena, California took thousands of dollars in tips from servers, runners, and bartenders and "misappropriated" them to fund business expenses, the Department of Labor has claimed in a lawsuit.

The DOL filed a lawsuit against 2 Poto, the operators of Entre Nous French Bistro, saying the company violated the Fair Labor Standards Act. It's seeking $500,000 for affected staff.

The lawsuit, filed in US District Court for the Central District of California on December 28, says that owners Jean-Christophe Febbrari and Mathias Wakrat kept a portion of employees' tips to use for business expenses. The upmarket restaurant, which has a $50 minimum spend per diner, deposited both cash and card tips into its business account and distributed only a portion to staff via a weekly wire transfer, the DOL claims.

For example, in the week from December 21, 2021, customers left about $12,500 in credit card tips, but the restaurant gave less than $7,600 of this to staff, the lawsuit claims.

Employers are not allowed to keep staff tips "under any circumstances," the FLSA stipulates. If a restaurant operates an illegal tip pool, for example by sharing tips with owners and managers, it invalidates its claims to a tip credit, which can sometimes push workers' wages under the minimum wage, as the DOL has said during previous investigations into tip violations.

The DOL says in the lawsuit that amid its investigation, Entre Nous introduced a no-tip policy in May 2023, instead collecting a 20% service charge. But some customers still leave cash tips, which the restaurant keeps, the DOL claims.

Entre Nous says on its menu that the fee "is not a gratuity or tip." It variously lists the fee as 20% and 18%.

"The fee is revenue that is not segmented or designated in any way; it is taxed per state law and is used to fund all of our operations," it notes.

The DOL also claims that its investigation into Entre Nous found that the restaurant misclassified several employees as independent contractors and didn't keep accurate pay records, including failing to record all tips staff received and record all hours they worked.

These practices violate the FLSA, the DOL claims. Though the lawsuit doesn't name a dollar amount, the DOL said in a press release that it was seeking $250,000 in back wages and an equal amount in liquidated damages for 18 employees.

Entre Nous has an 4.6-star rating on Google and 4.5-star on Yelp. Entrees at the restaurant start at $29.

Business Insider has contacted Entre Nous for comment, but did not immediately receive a response, outside regular business hours.