El Gaucho agrees to pay $1.5 million to employees to settle lawsuit

El Gaucho has agreed to pay $1.5 million to settle claims it improperly withheld wages and tips from employees working at some of its high-end restaurants, including the Tacoma location.

The proposed settlement is in response to a 2016 lawsuit originally brought against the company by a former server at the Tacoma restaurant, who alleged managers withheld tips and required off-the-clock work, among other labor-law violations.

About 400 current and former employees at the Tacoma, Bellevue and Seattle restaurants are affected and will be notified, according to the settlement, which was preliminarily approved by Pierce County Superior Court Judge G. Helen Whitener Nov. 17.

Whitener will decide whether to finalize the settlement at a hearing April 20.

Chad Mackay, CEO of El Gaucho’s operating company, said in a statement Tuesday: “Our company consistently strives to be a great place for our employees to build their careers and we provide excellent compensation, benefits, training and work environment. Our decisions are always based on what is right for our team, our guests and our company. Therefore, we chose to settle this lawsuit rather than continue to spend company resources on legal fees.”

The former Tacoma server, Matthew Blasco, alleged El Gaucho gave employees cards with restaurant credit in lieu of payment for off-the-clock work, such as prep work or cleaning, and that servers were sometimes required to work without being clocked in.

His lawsuit also accused the company of giving management a percentage of the tips, and denying or not paying workers for breaks that are required by state law.

As part of the settlement, El Gaucho has agreed to disclose how its automatic service charge is distributed, Blasco’s attorney said in a statement Tuesday.

“This agreement will ensure that customers are fully informed when making their tipping decisions that the restaurant may be retaining for itself portions of automatic service charges that otherwise would go to the employees serving them,” attorney Darrell Cochran said.

Cochran said El Gaucho was not alone in its practices.

“Based on the investigation conducted during the lawsuit, it became clear that employees in many restaurants throughout the area have been short-changed on tips, breaks and overtime wages,” he said. “We heard it said many times that El Gauchos was just doing what every other high end restaurant was doing.”

Alexis Krell: 253-597-8268, @amkrell

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