The recent lawsuit against Iron Chef Mario Batali’s restaurants Babbo, Bar Jamon, Casa Moni, Otto Enoteca, and Tarry Lodge underscores the rampant wage and hour abuses in New York restaurants. The heart of the allegations in the Complaint is that Batali, the renowned chef and cookbook author, and his co-owner Joseph Bastianich took from the tip pool “an amount equal to 4.5% of the restaurant’s nightly wine and beverage sales.”
If the allegations in the complaint are proven, the recovery could be enormous. Not only will Batali have to disgorge the money he allegedly skimmed from the tip pool, but he will also be deprived of the tip credit that he has taken for his waitstaff. So, for example, when a restaurant employer in New York pays a tipped employee the $4.65 hourly wage rather than the full $7.25 minimum wage, that “tip credit” of $2.60 is forfeited if the tip pool is found to be invalid because of management skimming. What this means for Batali is that he may have to pay back his waitstaff the amount of the tip credit he took advantage of for the last three years (the statute of limitations under the Fair Labor Standards Act – FLSA). And there is even more bad news for Batali: employers who violate the tip credit provisions of the FLSA are usually hit with double damages for their violations.
Batali is the second Iron Chef to be hit for problems with a tip pool. Earlier this year, Bobby Flay settled a case alleging that his restaurants improperly included certain employees, such as managers who had the power to hire and fire, in the tip pool, failed to pay overtime, had employees working “off the clock,” and committed other wage and hour violations. In the Bobby Flay case, a settlement pending before the Court will entitle approximately 500 workers who were employed at Flay’s Mesa Grill, Bar Americain, and Bolo restaurants to share in an $800,000 settlement.