WaiterPay – New York Labor and Employment Lawyers

Lawsuit Charges 17 Houlihan’s restaurants in New Jersey and New York With Wage Theft


Houlihan’s engaged in “pervasive skimming from employees’ tips and wages,” according to a federal court lawsuit charging the restaurants with violations of the minimum wage, overtime and record-keeping requirements of the Fair Labor Standards Act.

The wage theft lawsuit against Houlihan’s could recover millions in back wages, tips and liquidated damages on behalf of approximately 1,430 current and former Houlihan’s employees. The defendants include A.C.E. Restaurant Group Inc., A.C.E. Restaurant Group of New York LLC and Arnold Runestad. An investigation by the Department of Labor found that the defendants engaged in a number of practices that violated the FLSA. These include the following:

  • Requiring servers and bartenders to contribute a percentage of tips to a tip pool, but using the tips to pay employees for tasks, such as custodial and kitchen work. The lawsuit claims that Houlihan’s regularly retained a portion of employee tips.
  • Denying overtime pay to employees who worked at more than one restaurant, even when their combined hours totaled more than 40 hours in one workweek.
  • Having employees work off-the-clock, earning tips for their labor.
  • Routinely deducting money from employees’ paychecks for meals consumed during breaks, while also requiring payment, at times, for the meals. The deductions were greater than the defendants’ cost for providing the meals, and often resulted in some employees receiving less than minimum wage.

According to the Department of Labor, the severity of these violations and the number of affected workers is such that restitution, could amount to millions of dollars. Restaurant workers are among those in our economy who are most vulnerable to wage violations, and we are committed to pursuing remedies vigorously on their behalf whenever necessary. Houlihan’s practices deprived many of their employees of money rightfully earned — money that they need to afford basics. Reducing labor costs by shorting workers also places law-abiding restaurants at a competitive disadvantage, and violates the principle of a fair and level playing field laid out in the FLSA.

The New Jersey restaurants are located in Bayonne, Brick, Bridgewater, Cherry Hill, Eatontown, Fairfield, Hasbrouck Heights, Holmdel, Lawrenceville, Metuchen, New Brunswick, Paramus, Ramsey, Secaucus and Weehawken. The New York locations are in Farmingdale and Westbury.

The FLSA requires that covered, nonexempt employees be paid at least the federal minimum wage of $7.25 per hour for all hours worked, plus time and one-half their regular rates of pay, including commissions, bonuses and incentive pay, for hours worked beyond 40 per week.

The FLSA requires an employer of a tipped employee to pay no less than $2.13 an hour in direct wages ($5.00 in New York), provided that amount plus the tips received equals at least the federal minimum wage of $7.25 an hour ($8.75 in New York). If an employee’s tips combined with the employer’s direct wages do not equal at least the minimum wage, the employer must make up the difference.

Tips are the property of the employee, and the employer is prohibited from using an employee’s tips for any reason other than as a credit against its minimum wage obligation to the employee (tip credit) or in furtherance of a valid tip pool among employees who customarily and regularly receive tips. A valid tip pool may not include employees who do not customarily and regularly receive tips (for example, dishwashers, cooks, chefs and janitors), and an employee cannot be required to turn over his tips to the employer. Employers also are required to maintain accurate time and payroll records.


T.G.I. Friday’s Hit with Tip Credit Lawsuit


A former server at T.G.I. Friday’s in Honeoye Falls in Upstate New York has filed a class action lawsuit alleging violations of the tip credit provisions of New York Labor Law (NYLL) and the Fair Labor Standards Act (FLSA). The lawsuit, filed in the Northern District of New York, alleges that T.G.I. Friday’s did not give its waiters, waitresses and busboys proper notice that it was taking a tip credit, and therefore is required to pay tipped employees at the full New York minimum wage of $8.75 per hour.

United States Department of Labor guidelines provide that, in order to be able to apply the tip credit toward the minimum wage under the FLSA, a restaurant must inform its employees “of the amount of cash wages the employer is paying a tipped employee, the additional amount claimed by the employer as a tip credit, that the tip credit claimed by the employer cannot exceed the amount of tips actually received by the tipped employee, that all tips received by the tipped employee are to be retained by the employee except for a valid tip pooling arrangement limited to employees who customarily and regularly receive tips, and that the tip credit will not apply to any tipped employee unless the employee has been informed of these tip credit provisions.”

The  New York Hospitality Wage Order similarly provides that a restaurant “may take a credit towards the basic minimum hourly rate if a service employee or food service worker receives enough tips and if the employee has been notified of the tip credit.” In New York, servers are entitled to receive a wage of at least $5.00 per hour, and credit for tips shall not exceed $3.75 per hour, provided that the total of tips received plus the wages equals or exceeds $8.75 per hour. The Hospitality Wage Order provides that “prior to the start of employment, an employer shall give each employee written notice of the employee’s regular hourly pay rate, overtime hourly pay rate, the amount of tip credit, if any, to be taken from the basic minimum hourly rate, and the regular payday. The notice shall also state that extra pay is required if tips are insufficient to bring the employee up to the basic minimum hourly rate.”




Dunkin’ Donuts Charged With Sexual Harassment and Retaliation


A Dunkin Donuts store manager tormented young female staff and terminated a worker who opposed sexual harassment according to a lawsuit filed by the U.S. Equal Employment Opportunity Commission (EEOC).

The sex harassment and retaliation lawsuit claims that a franchisee of Dunkin’ Donuts with multiple stores and one office/kitchen in Westchester County, N.Y., subjected young female workers to sexual harassment by a manager since at least 2011. The lawsuit charged the company with unlawfully firing a female worker for opposing the sexual harassment and calling the police. According to EEOC’s suit against Hillcrest Marshall, Inc., the store manager’s harassment included making sexual comments and propositions, such as saying almost daily that he wanted to have a “threesome” with the women, many of whom were in their teens. The manager talked about his genitals, tried to kiss a female worker, and pressured a female worker to have sex. Frustrated with one worker’s rejection of his sexual advances, the manager smacked her face, cursed and yelled at her regularly and sent her home several times in the middle of her shift. When she contacted the police, she was fired.

Under Title VII of the Civil Rights Act of 1964, employers may not subject employees to a hostile work environment because of sex and cannot retaliate against employees for resisting or making complaints. The lawsuit seeks monetary relief for the affected workers, as well as relief meant to remedy and prevent future harassment or retaliation at the company. In his comments about the sex harassment lawsuit New York District Director Kevin Berry stated, “It took a great deal of courage for these young women to come forward and speak up against the manager who had power over their livelihood. Employers need to implement strong policies so that victims can report sexual harassment without reprisal.” The EEOC trial attorney assigned to the case added that, “Targeting teenaged female workers is especially inexcusable. Our most vulnerable workers must be protected against sexual advances at work.”

Class Action Status Granted in Lawsuit Against Mallozzi’s Restaurants


The Albany Times-Union reported on the class action certification of a lawsuit filed by servers who worked at Mallozzi’s Restaurants in the Albany, New York area. The lawsuit alleges that Mallozzi’s charged banquet customers a mandatory “20% service personnel charge,” but while banquet customers reasonably believed this charge to be gratuity, Mallozzi’s retained the funds and did not distribute them to servers, who were paid at a flat hourly rate. In the Decision by Judge Richard Platkin, the Court found that class action status was warranted to address the claims that the restaurant’s retention of the service charge violated the New York Labor Law.

The attorneys for the restaurant workers are Louis Pechman, founder of waiterpay.com, along with Maimon Kirschenbaum. Over one hundred employees, who worked at Mallozzi’s since July of 2008, are covered by the class action.

Inclusion of Coffee Person in Tip Pool May Invalidate Tip Credit

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A tip out to a coffeeman who does not interact with customers may invalidate a restaurant tip pool according to a Decision by the Fifth Circuit Court of Appeals.

In a case against Tony’s Restaurant, a fine dining restaurant in Houston, a coffeeman received a fixed ten dollars from each station each shift. The servers at the restaurant sued, claiming that by requiring them to share tips with the coffeeman, who worked in the kitchen and did not serve customers, the restaurant violated the Fair Labor Standards Act, and was not entitled to take a tip credit.

The Court of Appeals explained the tip credit rule as follows: “A restaurant may not claim a tip credit unless all tips received by a tipped employee have been retained by the employee, except that this subsection should not be construed to prohibit the pooling of tips among employees who customarily and regularly receive tips. 29 U.S.C. § 203(m). Thus, the general rule is that an employer may not claim a tip credit unless a tipped employee is permitted to retain all of his tips. The statute provides a limited exception to this rule by permitting the pooling of tips among employees who customarily and regularly receive tips. If an employee is required to share tips with an employee who does not customarily and regularly receive tips, the employer may not legally take a tip credit.”

In this case, the Court held that a jury could find that the coffeeman did not customarily and regularly receive tips, and may therefore be ineligible to participate in the restaurant’s tip pool.

Famous New York Deli Sued for Time Shaving and Overtime Violations

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A former cook at Ben’s Kosher Deli, has sued the restaurant chain for wage theft in New York federal court.

The lawsuit was filed by Michael Palermo, who worked at the Greenvale, Long Island location of the restaurant. Palermo claims that he worked between 72-96 hours each week, 12-16 hours per day, six days per week. According to lawyers for Palermo, the deli only paid him forty hours per week, not paying the cook any wages, including his over time wages of time and one-half, for hours that he worked in excess of forty per week. Palermo claims that Thanksgiving week in 2012, he worked approximately 100 hours and was only paid for forty of those at his regular hourly rate of $26.44.

The lawsuit seeks to recover unpaid wages, overtime compensation, and compensation for not receiving wage notices and statements as required by the Fair Labor Standards Act and the New York Labor Law.


Popular Greek Restaurant in Astoria, Queens Sued for Wage Violations

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Waiters worked only for tips at Taverna Kyclades, according to a lawsuit filed in New York federal court. The wage theft lawsuit filed against the restaurant, often recommended as one of the best Greek restaurants in New York, seeks to recover minimum wages, overtime compensation, and spread-of-hours pay under the Fair Labor Standards Act and New York Labor Law.

The former servers claim that the restaurant failed to pay any wages to employees—they only received tips from customers and were never paid an hourly rate. Additionally, the employees worked double shifts, expanding more than 10 hours a day, without receiving spread-of- hours compensation, required by New York wage laws.



Lawsuit Against Le Perigord Reported on by Wall Street Journal

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An article in The Wall Street Journal reported on workers suing restaurants in wage disputes. The story reports that workers claiming they have been cheated out of wages are increasingly taking legal action against expensive eateries in Manhattan. Featured in the article is a lawsuit against Le Perigord, which was filed by Louis Pechman, waiterpay.com founder.

Judge Rules Fresco by Scotto Violated Tip Credit Rules for Waiters

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The tip credit requirements of the Fair Labor Standard’s Act were violated by Fresco by Scotto Restaurant according to Analisa Torres, a federal court judge in New York.

An employer may not take a tip credit under the FLSA unless the employee has been informed of the FLSA’s tip credit provision. Judge Torres noted that “this requirement is strictly construed, and must be satisfied even if the employee received tips at least equivalent to the minimum wage. The employer bears the burden of showing that it satisfied the FLSA’s notice requirement by, for example, providing the employee with a copy of § 203 (m) and informing the employee that her tips will be used as a credit against the minimum wage as permitted by law. If the employer cannot show that it has informed the employee that tips are being credited against her wages, then no tip credit can be taken and the employer is liable for the full minimum-wage.”

Applying these principles, the Court found that Fresco by Scotto was not entitled to take a tip credit against the servers’ wages under the FLSA prior to July 2012. To begin with, the waiters and bussers were not orally informed about their compensation generally or the tip credit specifically when they began working at Fresco. Moreover, the written notices that the restaurant provided beginning in March 2011 did not adequately explain the tip credit provision because the notices were in English only. Fresco offered no evidence that the servers – all of whom testified at trial in Spanish with the assistance of an interpreter – were sufficiently literate in English to be informed by the notices. Finally, the Court rejected the restaurant’s argument that the government posters displayed at Fresco satisfied the FLSA’s notice requirement. Judge Torres ruled that although “a generic government poster could inform employees that minimum wage obligations exist, it could not possibly inform employees that their employers intend to take the tip credit with respect to their salary.”

Popular Indian Restaurant on Long Island Sued by Department of Labor

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Akbar Restaurant has been accused of wage theft by the United States Department of Labor in a case filed in New York federal court. The lawsuit accuses the restaurant of violating the minimum wage and overtime requirements of the Fair Labor Standards Act (FLSA).

The Department of Labor lawsuit claims that the Garden City restaurant paid kitchen workers and dishwashers a set weekly salary per week or a day rate, regardless of the number of hours that they worked. Although the employees sometimes worked as many as sixty hours per week, Akbar did not pay them overtime at one and a half times their regular rate of pay for hours worked in excess of forty per work week.

The lawsuit also alleges that Akbar’s “front of the house” workers, including servers and bussers, typically worked as many as seventy hours per week but were also paid a set weekly salary or day rate regardless of the number of hours worked. The servers’ salaries ranged from approximately $30 to $40 per day, and bussers’ salaries ranged from approximately $350 to $425 per week.

Attorneys for the Department of Labor also claim that Akbar failed to keep accurate records of the employees’ actual hours of work, rates of pay, and total weekly payments and took steps to disguise their violations of the Fair Labor Standards Act by keeping multiple sets of fraudulent records. This is the second lawsuit by the Department of Labor against Akbar, which was previously ordered in 2012 to pay $110,475.73 in unpaid wages and liquidated damages to their employees.

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