The Denver restaurant service charge lawsuit involves a legal dispute between former employees and Culinary Creative Group (CCG), a prominent restaurant owner in Denver, over the handling and distribution of mandatory service charges added to customers’ bills. The lawsuit, filed in early 2025, alleges that CCG misrepresented the purpose of its automatic 20% service charge and improperly allocated a substantial portion—around 30%—of that collected fee to management rather than distributing it fairly among the restaurant staff. This case has drawn significant attention to tipping practices, wage fairness, and transparency in the restaurant industry in Colorado and beyond.
Background of the Denver Restaurant Service Charge Lawsuit
In recent years, many restaurants have shifted from relying on voluntary tips to imposing mandatory service charges on customer checks, commonly set at 18-20%. Culinary Creative Group, which operates notable Denver establishments including Highland Tap and Burger, Kumoya, Forget Me Not, and others, implemented a 20% service charge billed as benefiting all staff members equitably—front-of-house and back-of-house alike.
However, former employees began raising concerns in late 2023 and early 2024, claiming the service charge revenues were not fully passed on to the workers the surcharge was intended to support. Instead, workers alleged that CCG diverted a significant slice of the funds—approximately 30%—to management compensation. Several employees quit or walked out in protest, and these grievances culminated in a formal lawsuit filed by ex-staff members represented by attorney Adam Harrison.
Key Allegations and Legal Claims
- Misleading Customers: The lawsuit claims CCG represented the service charge as a way to fairly share tips and extra wages with employees, but this representation was false as a large portion went to management.
- Improper Use of Service Charges: 30% of the automatic 20% service fees allegedly went towards manager pay, which the plaintiffs argue was not disclosed properly and violated Colorado wage and hour laws.
- Inadequate Wage Compensation: Employees contend they received lower wages and tips than promised or expected under the new service charge system, harming their income.
- Failure to Provide Paid Rest Breaks: The suit also alleges denial of state-mandated paid rest breaks, further violating labor protections.
Responses from Culinary Creative Group
CCG CEO Juan Padró has defended the service charge policy, asserting that under Colorado law, service charges are distinct from tips and may be allocated among all employees, including managers, at the discretion of the restaurant. Padró emphasized that guest checks clearly state the 20% charge as a “service fee” and list an additional line for voluntary tips, aiming for transparency with customers.
While acknowledging that some service fee money goes to management, CCG maintains the charges support higher wages across the staff spectrum, including kitchen workers and support roles, contributing to better overall pay and job stability in a challenging labor market.
Industry and Public Reaction
The lawsuit has sparked debate within Denver’s restaurant community and among diners about the fairness and transparency of mandatory service charges. Restaurateurs argue service fees help address rising labor costs and compensate roles traditionally excluded from tips, like kitchen staff and dishwashers. Critics and affected workers caution that unclear distribution and management takeaways undermine employee compensation and erode trust.
The issue has also attracted public scrutiny of how service charges affect tipping culture, customer expectations, and wage equity, with some industry experts noting that poorly implemented surcharge systems can create conflicts and harm employee morale.
Current Status and Legal Developments
As of mid-2025, the lawsuit remains active but temporarily stayed while employees’ attorneys challenge arbitration agreements requiring disputes to be resolved privately. The case is closely watched as it may set influential precedents on how mandatory service charges are treated under Colorado law and potentially in other states.
The plaintiffs seek unpaid wages, reimbursement of misallocated service fees, and damages for lost rest breaks, while pushing for clearer consumer disclosures and more equitable employee compensation structures.
Frequently Asked Questions About the Denver Restaurant Service Charge Lawsuit
What is the lawsuit about?
It challenges the Denver restaurant Culinary Creative Group over misleading customers about a mandatory 20% service charge and alleges that the company improperly allocated about 30% of this money to management instead of distributing it fairly to staff.
Who is involved in the lawsuit?
Former employees of Culinary Creative Group restaurants including Highland Tap and Burger, Kumoya, and other venues in Denver are plaintiffs, represented by attorney Adam Harrison.
What does Culinary Creative Group say?
The company argues service charges are legally different from tips and that under Colorado law the fees may be distributed to any employees, including management. They maintain the service fee disclosures are clear and the policy supports fair wages overall.
What are the legal claims?
Allegations include wage theft, deceptive business practices, violation of wage and hour laws particularly regarding rest breaks, and misrepresentation to customers about how service charges are used.
What could happen next?
The case will proceed with challenges to arbitration clauses before possible court trials or settlements. Its outcome could influence labor practices and service charge disclosures in Colorado’s restaurant industry.
Conclusion
The Denver restaurant service charge lawsuit highlights crucial tensions in modern dining industry compensation systems as restaurants navigate labor cost pressures and shifting tipping cultures. It exposes challenges around transparency, wage fairness, and management accountability linked to mandatory surcharges. As the legal process unfolds, the case offers a vital lens into evolving employee rights, consumer protections, and compensation models in restaurant operations. The resolution may prompt broader reforms ensuring that service charges truly benefit all employees fairly and build greater trust among workers, customers, and restaurateurs alike.
