The $3,000 tip: Is the employer stuck?

This would be a great law school problem.

But you non-geeks, feel free to join in, too!

The following is a true story.

A man went to pizza restaurant in Scranton, Pennsylvania, and ordered a stromboli worth a little more than $13.

He made his waitress's day. He left her a credit card tip of $3,000.

After the credit card charge of $3,013 cleared, the restaurant (as is typical based on my own long-past experience as a waitress) paid the waitress the full $3,000 in cash. Yippeeeeee!!!!!

The plot thickens

Meanwhile, the customer began to reflect on his act of kindness and decided he might have gotten carried away. So when he got the credit card bill, he disputed the charge, and the credit card company notified the restaurant. As a result, the restaurant didn't get back the $3,000 it had paid to the waitress on the day of the customer's visit.

The restaurant has now sued the customer in small claims court. Good. And good for them for not making the waitress pay the back the tip money.

"Tips for Jesus"

It turned out that the tip was part of the social media trend "Tips for Jesus." (Which, apparently, has nothing to do with Jesus or even Christianity.) People go out to eat, leave an outrageous tip in proportion to the price of the meal, take pictures of their bills, and post the pix on social media. 

Most of the "Tips for Jesus" people are just trying to do a good deed. They don't try to take their tips back. 

But this Scranton "restaurant reneger" (hat tip to the New York Post for that one) got the best of both worlds: Nice publicity initially, and then the restaurant gets stuck with the bill. 

Because that's exactly the way Jesus would have done it.

My sentiments exactly.

Put on your thinking caps!

Here's the law school problem: In court, does the "restaurant reneger" win, or does the restaurant win?

I should note here that the restaurant could probably recover the tip from the waitress, instead of the customer, as an overpayment of wages. When an employer makes a mistake and overpays an employee, most state wage-hour laws let the employer recover the amount of the overpayment from the employee. In this case, the "mistake" was not the waitress's fault, and it wasn't the restaurant's fault. Since the waitress may not have been making a lot of money anyway, the restaurant might be able to work out a payment plan where they deducted small amounts from her paychecks until the $3,000 was repaid. If they were feeling charitable, they could even elect to let her keep a decent, but more mundane, tip for the $13 meal -- say, $5, which is more than 20 percent of $13. That would bring her debt all the way down to $2,995. 

Apparently this restaurant didn't want to do that to the waitress, which I think says a lot for them. Either that, or they didn't want to have to wait until the year 2086* to get repaid in full.

*Take this with a grain of salt. I did not do the math.

So now we're down to a contest between the restaurant and the stiffer.

I still think the restaurant should beat the customer in court. Here's my reasoning:

The implicit agreement to pay $13 in exchange for a stromboli is a contract, so he's definitely obligated to pay for that. But a tip isn't called a "gratuity" for nothing. It is gratuitous. So unless there is some quirky legal rule that applies to credit card charges, I'd say there was no "contract" here.  

However . . . 

There is a concept in the law known as "promissory estoppel." If you make a promise to someone, and they reasonably rely on your promise "to their detriment," then you may have to pay, even if there is no contract.

Let's say my kid is thinking about buying a new car but can't afford the one he wants. I tell him, "Oh, go ahead and buy the car, Honey. I'll make a $20,000 down payment, and then if you take out a five-year loan, you'll be able to afford the payments." My kid does the math, and finds that I am correct. He can indeed afford the car with my $20,000 down payment. So he goes to the car dealer and buys the car. But when he asks me to reimburse him for the down payment, I say, "Oh, you thought I was serious? Haha, I was just kidding! Boy, are you stupid!"

My kid and I didn't have a contract because my promise to make the down payment of $20,000 was gratuitous. In other words, I wasn't getting anything of value in exchange for that promise, which would be required for a contract. But my kid could still sue me and claim that I promised to pay the $20,000, he reasonably relied on my promise (after all, I'm his mom, albeit a rotten one), and as a result of his reliance, he suffered a detriment (he's now committed to paying for a car that he can't afford). That's promissory estoppel. I am "estopped" (legally barred) from claiming that I don't have to pay him $20,000 because we didn't have a contract.

I think this concept might apply to the restaurant.

Alfredo's Pizza Cafe of Scranton, Pennsylvania, read this post before your court date!

Robin Shea has 30 years' experience in employment litigation, including Title VII and the Age Discrimination in Employment Act, the Americans with Disabilities Act (including the Amendments Act). 
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