At the center of Rasika's union fight: Should servers be on commission?

Washington Post

19-02-2025

In the month since workers announced their intention to form a union at Rasika Penn Quarter, labor and management have been locked in a contentious, highly public battle. It has played out on the streets with union demonstrations and in the media with accusations of intimidation, unlawful practices and retaliation as both sides fight over the future of servers, bussers, cleaners and line cooks who have helped make the Indian restaurant a destination in Washington.
One issue, in particular, has galvanized servers at Rasika: their switch in July from hourly workers who earn tips to commissioned employees whose paychecks are based on how many chaats, curries and other dishes they sell to guests. The change came the same month that the District's tipped minimum wage increased to $10 an hour.
Rasika owner Ashok Bajaj is among a small group of restaurateurs who tout commissions as a reliable system to protect servers from the harassment, whims and prejudices baked into the tipping system. But proprietors also see it as a potential savior for their industry as they deal with rising labor costs in cities such as Washington, where locals voted via ballot initiative to gradually eliminate the lower minimum wage for tipped workers. Such measures have forced restaurateurs to add automatic service fees to bills to help cover costs, leading to frustration, confusion and sometimes even lawsuits from those on the other end of the dinner check.
'The way the city is going — from $8 to $10 to $12 to $18 [an hour] — there is no other way for us to survive but to change the tipping system, the payment system,' Bajaj said in an interview. 'I didn't want to lose anybody, and I didn't lose anybody' because of the commissions.
Servers at Rasika Penn Quarter tell a different story. They say the system was foisted on them without their consent, has cost them hundreds of dollars per paycheck and exempts them from overtime pay under a section of the Fair Labor Standards Act for commissioned workers. They have also complained about the system to the D.C. attorney general's office.
Isa Duzova, a server and bartender at Rasika Penn Quarter, said if servers wanted to continue working there, they had to sign a document that stipulated they'd receive a 13.5 percent commission on 'the net sales generated by each employee.' They'd also get, according to the document, a percentage of any tips that diners added on top of the 20 percent service charge applied to checks. The Washington Post viewed a photo of the document.
'They were saying, 'Hey, if you don't like it, the door is over there. It's not going to change,'' Duzova recalled as the general sentiment among Bajaj and his managers.
One server, who spoke on the condition of anonymity because he feared retribution, said he and his colleagues at Rasika Penn Quarter were asked to choose between the commissions model and another system that would pay them $18 an hour plus a smaller percentage of sales, and most voted for the latter. Bajaj said servers at Rasika in both its Penn Quarter and West End locations voted for commissions, though workers at sister restaurant Annabelle chose the hourly plan. He said no one was pressured into the new system.
The commissions model had been a source of irritation well before the servers and other workers announced their union campaign, which is part of a larger effort by Unite Here Local 25 to organize at five high-profile establishments in Washington: Le Diplomate, Pastis, St. Anselm, Rasika Penn Quarter — but not the West End location — and Modena. (Le Diplomate, Pastis and St. Anselm are part of the Starr Restaurant Group, while Rasika Penn Quarter and Modena are part of Bajaj's Knightsbridge Restaurant Group. Neither company voluntarily recognized the unions, a spokesman for Local 25 said.)
Last year, the spokesman said, a number of workers spoke to investigators with the D.C. attorney general's office about potential violations of wage-and-hour laws at Rasika Penn Quarter. A spokeswoman for Attorney General Brian Schwalb (D) could neither confirm nor deny that the office has launched an investigation. But the union spokesman said that among the complaints filed with the attorney general was one about the 'pay structure for front-of-house workers.'
Duzova, for one, has issues with the commissions model. Like his peers, he had been looking forward to a pay bump — perhaps as much as $300 per check — when the tipped minimum wage went up to $10 an hour in July. Instead, he and the anonymous server say they experienced the opposite: They made less. Bajaj acknowledged that he assured servers they'd earn the same, if not more, once extra gratuities were included.
What's more, the servers got the news about the new system about the same time WTOP reported Bajaj had purchased a 10,600-square-foot home with a built-in yoga studio, a wine cellar, a 14-seat movie theater, a half basketball court and a full-size gym. The property in the Phillips Park neighborhood, originally constructed for Fox News host Bret Baier and his wife, was sold for $7.1 million in June. The Post independently confirmed the sale to Bajaj through a trust.
The anonymous server said Bajaj's home purchase 'really pissed everybody off.' When Bajaj introduced the commissions model, he allegedly told servers that 'every single restaurant in D.C. is going to be doing the same. This $10 is too much. It's going to kill off all the restaurants. We don't make that much money,' according to the server.
In a phone interview, Bajaj was offended by the reference to his home purchase. He suggested his story — an immigrant from New Delhi who struggled to pay his first mortgage when he started in Washington — should stand as an example of the American Dream, not a source of jealousy.
'How I live, where I invest and how lucky I got in my investments, it's nobody's business,' he said. 'Nobody's business.'
Chad Mackay, the chief executive of Fire & Vine Hospitality in Seattle, can identify with the financial burden that the old pay model has put on restaurants like Rasika. One of the pioneers of commissions-based pay for servers, Mackay was crunching the numbers after Seattle's minimum-wage ordinance went into effect in 2015. When fully implemented, Mackay said, the law would have added another $1 million to payroll costs at the group's restaurants — a figure that didn't include the expected wage bumps for supervisors and others as a result of minimum-wage increases.
'It would have basically wiped out all of our profitability,' Mackay told The Post.
Mackay sat down with his senior servers and, over the course of several months, began developing the commissions model. The servers had a few requests, which Mackay honored: The commissions would be based on each server's individual sales, not the pooled sales of all wait staff. The model would also include a line on checks for added gratuities, above the 20 percent service charge that Fire & Vine applies to bills. The group expressly notes on menus, checks and websites that its servers are paid by commissions.
One of the company's baseline principals while developing the model with servers, Mackay said, was: 'We wanted to do it with them, not to them.'
After a three-month trial period, in which Fire & Vine worked out the kinks of the system, the group introduced the commissions model in November 2017 across its five restaurants. It was a painful shift. The new system cut into profits at first because the company lost a federal tax credit for tips and had to pay more in taxes on earned income. But over time, Mackay said, the commissions model made it easier for Fire & Vine to plan and put itself on a 'pathway for sustainability.'
Mackay's servers earn 15 percent commissions on their sales, plus 100 percent of added gratuities. The company does not deduct credit card fees from the added tips, as some restaurants do. Under the new system, servers now earn between $50 and $120 an hour, Mackay said, about 15 percent more than they made on the tipping model.
This year, Seattle's minimum wage rose to $20.76 per hour for all workers. Mackay no longer sweats the increases. 'I don't care about minimum wage anymore,' he said. 'I don't lose sleep over that anymore, and there's a lot of people losing sleep about how they're going to figure out what to do, because it's hard.'
The system installed at Rasika — developed, Bajaj said, with the help of Littler Mendelson, the labor and employment law firm hired by such companies as Starbucks to fight unionizing efforts — is different from the one at Fire & Vine. Servers at Rasika receive 13.5 percent of their sales, and, as before the switch to the new system, they are required to share tips with bussers, bartenders and food runners, now keeping about 65 percent of the gratuity. According to the pay document servers were asked to sign, Knightsbridge also deducts 2 percent from those tips to cover credit card processing fees.
Duzova shared 26 of his paycheck stubs, covering a period from Dec. 16, 2023, to Dec. 13, 2024. Comparing checks from before and after the switch with commissions is imperfect: Duzova also works as a bartender, and bartenders are still paid by the hour in the new system.
Based on a Post analysis of his pay stubs, Duzova's average hourly wage went from $44.79 under the old system to $41.97 under the new one.
But Duzova also worked more than 80 hours during a two-week pay period on five of the 11 pay stubs reviewed by The Post following the switch. On two occasions, he logged more than 95 hours during a two-week period. He received no overtime pay.
Bajaj ran the numbers for Duzova, too, and came up with slightly different hourly rates for the pre- and post-commissions periods in 2024, but the result was the same: Duzova lost nearly $3 an hour. Bajaj said he also checked the earnings for five other servers — out of the 14 total who work the floor at Rasika Penn Quarter — during the same period and found that four of them made more money under the commissions model. Knightsbridge forwarded the five employees' pay records — with their names redacted — and The Post confirmed the numbers.
Regardless, Bajaj added, revenue was down in the last six months of 2024, which could have affected earnings for some.
'Seven percent less revenue, it makes a huge difference for everybody,' Bajaj said. He also noted that diners, before the changeover, would frequently tip on the whole dinner check, including taxes, which led to higher paychecks for servers.
Since workers at Rasika Penn Quarter announced their union plans, Duzova and others involved with Local 25 say they have seen their hours cut, too, part of what Unite Here alleges is a pattern of retaliation and intimidation from Bajaj and managers. At the same time, according to interviews and employee statements reviewed by The Post, Knightsbridge has added servers to the payroll at Rasika Penn Quarter, sometimes giving the newcomers the best sections in the dining room. Eduardo Estrada, a Rasika busser who signed a union card, told The Post his shifts were cut by 25 percent per week.
'There's no justification given for this,' Estrada said via a Spanish-language interpreter from Unite Here.
Bajaj said the shift cuts reflect the economic reality: Business was down 15 percent in January compared with a year ago. February hasn't been much better. The new hires, he added, were just normal for restaurants. 'You always bring in new people,' Bajaj said. 'You lose some, you bring some. That's how it always goes.'
In unfair labor practice complaints filed last month with the National Labor Relations Board, Unite Here Local 25 alleges Knightsbridge has fired three Rasika workers who supported the union — plus a veteran Bombay Club cook who had a romantic relationship with a longtime Rasika cook tied to the union.
One of the fired Rasika workers is Halis Rodriguez, who was a cleaner, polisher and part-time busser. She claimed in an interview that, before she was terminated, Bajaj said he would pay her for the names of employees who were talking to the D.C. attorney general's office. She provided none, she said. Bajaj denied the allegations. Rodriguez also said her hours had been cut. She had worked four hours per shift to clean the restaurant, but it had been reduced to three.
'With just only three hours per day, my choices were either to do the job poorly or to stay extra hours in order to get the job done,' Rodriguez said via a Spanish-language interpreter.
Bajaj said he couldn't comment on individual NLRB complaints, but he said no worker has been fired because of their union support. He also noted that a petition, started by dishwashers, made the rounds at Rasika Penn Quarter before recently landing on his desk. The document, Bajaj said, called for the staff to reject the union. Fifty-eight of the restaurant's 72 employees, the owner said, signed the petition, undermining Local 25's claim that it has the majority of workers on its side. Bajaj accused Local 25 of harassing and making false promises to workers to convince them to sign union cards.
Local 25 has not yet requested an election from NLRB for Rasika Penn Quarter — though it has for the Starr restaurants — but Bajaj said the petition results could foreshadow the results of any union vote.
'The law is clear: it is the employees — not the union, not politicians, not social media — that determine whether they want union representation. 80% of our employees have spoken, and their decision must be honored,' Rasika Penn Quarter said in a statement.
Benjy Cannon, director of communications for Local 25, said the petition has no legal standing. 'It is our understanding that management has tried to get signatures on an anti-union petition through more threats and intimidation,' Cannon said in a statement. 'At least one worker was not even permitted to read the full paper she was being asked to sign.'
The standoff between organizing workers and Knightsbridge has led to two picketings outside Rasika. It has also led to two letters from elected officials: One is from the D.C. Council addressed to Bajaj and Paul Schwalb, the secretary treasurer of Local 25. The other is from Eleanor Holmes Norton, the District's delegate to the U.S. House of Representatives, addressed to Bajaj only. The Post has seen copies of both letters.
'I have received allegations that Knightsbridge has attempted to block the formation of the union, including by firing employees who are union supporters. Under the National Labor Relations Act, employees have the right to unionize,' Norton wrote in her letter.
D.C. Council member Brooke Pinto, a Democrat whose district includes Rasika Penn Quarter, said the council does not take positions on unionization efforts or any allegations. In a statement to The Post, she wrote that the letter 'requests that Knightsbridge and the employee representatives come together for a meeting.'
The elected officials made no reference to the commissions pay model. The spokeswoman for the D.C. attorney general did not respond to requests for comment on whether the system is allowed under District law. But a pair of labor attorneys contacted by The Post, one of whom spoke on the condition of anonymity to talk freely, said the model would be legal as long as it's consistent with D.C. regulations and the Fair Labor Standards Act.
Under Section 7(1) of the FLSA, employers can take an overtime exception if more than one-half of a worker's earnings are from commissions — and the worker's rate of pay is more than 1½ times the minimum wage. For Rasika, that means Knightsbridge would be required to pay at least $26.26 per hour to servers, no matter how many diners they end up serving during a shift.
'He's sort of backed into a guarantee by claiming these as commission workers,' said Molly Elkin, a partner with McGillivary Steele Elkin LLC, a labor and employment firm. 'If they don't have a table and they're there for seven hours, he's still got to pay them $26.26 an hour in order to call them commission workers.'
Despite complaints from workers and their conversations with the D.C. attorney general, Bajaj likes the commissions model, though he indicates that he'd be open to scrapping it if necessary.
'I am a big fan of it,' he said. 'I'm going to go educate them, and if they say, 'No, we want to go back to $10 an hour,' I will do so.'