May 21, 2011 is National Waiter and Waitress Day, but it’s safe to say that many of the 38,000 restaurants in New York are in no mood to celebrate. In the past few years, New York restaurants have been besieged by lawsuits from their waiters, waitresses and bartenders, who claim they have not been paid correctly under the wage and hour laws.
From mom and pop diners to high-end eateries owned by Iron Chefs Morimoto, Mario Batali, and Bobby Flay, every restaurant in New York is a potential target. And settlement of these cases has not been cheap, with several recent settlements topping a million dollars.
There are a few reasons why restaurants have become the defendant du jour. First, there is still a cash element to the restaurant business. Where there is cash, games are often played.
Second, many illegal immigrants populate the kitchens and dining rooms of the restaurant industry. Some employers mistakenly believe that the illegal status of their employees exempts them from complying with the law.
Third, the restaurant industry is competitive and unforgiving to owners who cannot maintain service and quality. Unfortunately, some restaurants seek to increase their profit margins by denying employees the compensation they are due.
Finally, there is an extraordinarily complicated set of laws governing the payment of restaurant employees. Even lawyers and accountants who are supposed to guide restaurants are often confused by the legal requirements under the Fair Labor Standards Act and the New York Labor Law.
Taken together, these factors create an ideal recipe for lawsuits. To stay out of court, restaurants must familiarize themselves with terms such as “tip credit,” “spread of hours,” and the “80/20 Rule” and should be vigilant about recordkeeping of their workers’ pay and hours.
Most importantly, restaurants must resist the temptation to dip into the tips of their waitstaff. Waiters toil at a minimum wage of $5.00 per hour in New York, and they depend on tips for the majority of their income. Owners are strictly prohibited under the law from diverting tips left by customers for service to managers, kitchen staff, and other employees who do not perform direct customer service. The penalties for violating this prohibition compound so rapidly that even minor violations could put a restaurant out of business.
So, if you are a restaurant owner, this National Waiter and Waitress Day make sure you are paying your waiters the right way. Otherwise, they may be serving you with a lawsuit.