Hospitality Wage Order

Opening A Restaurant in New York: Legal Issue Boot Camp

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The New York City Bar Association will hold the CLE program “Opening A Restaurant in New York: Legal Issue Boot Camp” on March 24. The program will focus on the corporate, real estate, liquor license, and labor/employment issues involved in opening a restaurant in New York City. Speakers on the panel include Jack Gordon, partner at Kent, Beatty & Gordon LLP; Carolyn Richmond, partner at Fox Rothschild LLP; Sonal Shah, General Counsel of Ark Restaurant Group; Alex Victor, partner at Davidoff, Hutcher & Citron LLP; and Larry A. Welch, Associate at Golenbock Eiseman Assor Bell & Peskoe LLP.  Lou Pechman will be chairing the event. For more information on the program please visit the event page.

Restaurant Workers Get 2017 Pay Hike

back of house cooks

On December 31, 2016, restaurant workers throughout New York State will begin to see changes in the payment structure of their wages.
Back of the House Workers

 

Back of the house workers (cooks, dishwashers, stockers, and others without direct customer contact) will receive an increase from the current minimum wage rate of $9.00/hour beginning December 31, 2016, according to the following specifications:

New York City – Large Employers (with 11 or more employees): $11.00
New York City – Small Employers (with 10 or fewer employees): $10.50
Long Island & Westchester: $10.00
Remainder of New York State: $9.70

 

Front of the House Workers

 

New York State law allows employers in all industries, except building service and fast food, to satisfy payment of the minimum wage by combining a “cash wage” paid by the employer with a credit or allowance for tips that the employee receives from customers. For example, employers in the Hospitality Industry could satisfy the 2016 minimum wage of $9.00 by combining a cash wage of at least $7.50 with a tip allowance of no less than $1.50 per hour. Employers need only pay a cash wage of $7.50/hour to workers, so long as the employees receive at least $1.50/hour from customers in tips.

 

Beginning on December 31, 2016, tipped front of the house restaurant workers (servers, bussers, bartenders, hosts, hostesses, and others with direct customer contact) will still be required to receive the same 2016 minimum hourly wage rate of $7.50/hour from their employers. However, as of December 31, 2016, tipped restaurant workers must receive at least the following amount in tips per hour in order for employers to use the tip credit:

 

New York City – Large Employers (with 11 or more employees): $3.50
New York City – Small Employers (with 10 or fewer employees): $3.00
Long Island & Westchester: $2.50
Remainder of New York State: $2.20

 


Fast Food Workers

 

Additionally, restaurant workers in the fast food industry will see an increase in hourly wage rates. Employees who qualify for this increase include any person working at a fast food establishment whose job duties include at least one of the following: customer service, cooking, food or drink preparation, delivery, security, stocking supplies or equipment, cleaning, or routine maintenance.

 

On December 31, 2016, the minimum hourly wage rates for all fast food workers will increase according to the following specifications:

 

New York City: $12.00
Rest of the State: $10.75

 

For more information about your rights as a restaurant worker, take a look at our Top 10 Restaurant Pay Violations.

Happy National Waiters and Waitresses Day!

old school waiter photo

Today is National Waiters and Waitresses Day. To commemorate, check out this blog about the top ten wage violations in the restaurant industry written by waiterpay.com founder Louis Pechman, featured on the Huffington Post.

Five Tips To Avoid Restaurant Pay Lawsuits

5 things you need to know

In handling over 100 restaurant pay lawsuits, I have seen common themes play out, whether that restaurant is a mom and pop take out place or a high end fine dining establishment. From the perspective of someone who has collected millions of dollars for restaurant workers across the United States, here are my top five tips to avoid wage theft lawsuits.

1. Tips Are the Property of Servers

From the management point of view, think of tips as kryptonite – stay away. It is not your money. Many of the lawsuits against restaurants arise from management dipping into gratuities left by customers for their servers. Tips are not house money. Owners need to make sure that tips are only shared with waiters, waitresses, bussers, runners, and other front of the house workers who deal with customers. And, managers need to stay out of the tip pool as well. The temptation to dip into the tips of servers – some of whom may be making a six-figure income – often times is irresistible for an owner. Taking 5% off of the pool, sharing tips with the kitchen, putting a manager in the tip pool, and having servers kick in cash every shift for a dishwasher to scrape plates, are all examples of skimming of tips that have resulted in lawsuits. Keep in mind that the penalties for skimming tips are severe, as the restaurant may have to disgorge the tips, lose the tip credit, and be subject to liquidated damages.

2. Paying Salary or Shift Pay = Lawsuits

Unfortunately, there is a common misconception that if you pay an employee on a salary, you don’t have to pay overtime. This can be a catastrophic mistake. The fact is that only a limited amount of employees in restaurants are “exempt” from the requirement of overtime under the federal Fair Labor Standards Act (FLSA) and the New York Labor Law. In order to qualify as an “exempt” job under these laws, a restaurant worker has to fit within the administrative, executive, or professional exemption. So, if you are paying your cook, maître’d, bookkeeper, host or other non-management employee a salary for a workweek in excess of 40 hours, you are unlawfully failing to pay them overtime — regardless of how much they are paid. Likewise, regardless of how much you pay an employee for shift pay, if that employee works more than 40 hours per week, the restaurant has broken the law by not paying him or her time and one-half for all hours worked over forty.

3. Keep Track of Work Hours

Restaurant pay lawsuits usually involve some sharply contested claim that employees are not paid for all hours worked. Do the kitchen workers take a break between lunch and dinner rush? Do waiters clean up for a half hour after they close out of the POS system? What is the start time, stop time, break time, lunch time? If a restaurant is not keeping track of hours worked by employees in either the front of the house or the back of the house, then it risks claims for unpaid hours. Both the FLSA and the New York Labor Law require employers to keep time and pay records of their employees. In this regard, it is important to note that in the Mt. Clemens case the Supreme Court held that where the employer keeps inadequate records, there is a presumption that the employee’s recollection of hours worked should be believed.

4. Know Your Restaurant Pay Math

Many restaurants get caught up in “gotcha” violations because they do not keep track of the specific wage rates for their workers. Here is a checklist for current restaurant pay requirements in New York

o Minimum Wage for non-tipped employees, including back of the house, is $8.75 per hour and $13.13 per hour for overtime hours.

o Tipped Minimum Wage for front of the house is $5.00 per hour and the tip credit is $3.75. The overtime rate for front of the house is $9.38 per hour. (You can only take the tip credit once).

o Tipped Minimum Wage for delivery workers is $5.65 and the tip credit is $3.10. The overtime rate for delivery workers making tipped minimum wage is $10.03 per hour.

o Uniform Maintenance for workers that work over 30 hours a week is $10.90; 20 -30 hours a week is $8.60; and less than 20 hours a week is $5.20.

o Meal Credits for front of the house and delivery workers is $2.50 and for back of the house workers is $3.00.

o Restaurants may deduct the cost of converting a tip left on a credit card to cash, but only may deduct the pro-rated share of the charge levied by the credit card company.

o All restaurant employees that work a spread of hours that exceed 10 hours on any day must receive an additional $8.75 in spread of hours pay.

5. Respect, Respect, Respect

A large portion of workers who sue their boss for wage pay violations visit an attorney because they believe they were the victims of an unlawful termination or wrongful discharge. Although that claim is generally DOA because employees in New York are “at will,” the inquiry leads to the follow-up question of “But how were you paid?” If that worker was paid incorrectly, and the employee believes he has been mistreated, a lawsuit will follow. However, there are many occasions where employees with excellent claims for back pay do not want to sue because the owner always treated them with respect and they believe they were paid fairly, albeit incorrectly. On the other hand we have seen lawsuits where some of the highest paid servers in New York have sued because they were treated disrespectfully, called names, and talked to in a demeaning manner. Restaurant owners in New York are right to believe they are under siege, but it is a misconception that every employee has a goal to bring a public lawsuit. Sometimes, treating employees with respect can make the difference in whether your cook or waiter has the word “plaintiff” before his name.

 

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*These comments were prepared for the New York City Hospitality Alliance program on February 2, 2015, Have We Reached the Tipping Point for Tips?

McDonald’s Restaurants Sued for Wage Theft

mcdonalds logo

McDonald’s was hit with seven lawsuits by workers in California, Michigan, and New York, who claimed that the company and some franchise owners failed to pay the employees for all hours worked, failed to pay them overtime, shaved their hours from their time cards, and ordered them to work “off the clock.”

In California, lawsuits were filed against area restaurants, including one filed against 100 McDonald’s owned and operated by the company itself.  In Michigan, attorneys for the workers allege that fast food restaurants told their employees to show up for work, but only paid them after having them wait an hour or two for more customers to arrive.  The New York lawsuit alleges that McDonald’s failed to reimburse its staff for the laundering and maintenance of their uniforms, or the time spent doing so, even though the restaurant provided them with only one uniform and required a clean uniform to be worn each day.  Because of these and other worker rights violations, the lawyers for the restaurant workers are seeking reimbursement for unpaid wages, liquidated damages, and other relief.

These lawsuits come on the heels of several strikes organized in New York to pressure McDonald’s and other fast-food restaurants to increase the minimum wage.

Le Pain Quotidien Sued For Minimum Wage and Overtime Violations

le pain quotidien

Servers at Le Pain Quotidien restaurants in New York City, claim they have been unlawfully denied minimum wage and overtime pay, according to a class action lawsuit filed in Manhattan federal court.

The lawsuit alleges that the restaurants paid its waiters and waitresses a reduced tipped minimum wage rate, but did not satisfy the requirements under the Fair Labor Standards Act or the New York Labor Law by which they could take the “tip credit.”  Attorneys for the workers claim that the restaurant should not have paid the workers the federal tipped minimum wage because the restaurant failed to inform the waiters and waitresses of the tip credit provisions of the law.

Attorneys for the workers also claim that the restaurant was not able to take the tip credit because the waiters and waitresses were required to perform substantial non-tipped “side work,” that equaled more than twenty percent of their time at work.  That “side work” included polishing silverware, washing the tables, slicing and preparing the bread, and sweeping and mopping floors.

Under the Fair Labor Standards Act (“FLSA”), employers are allowed to take a “tip credit” and pay waiters, bussers, and bartenders below the federal minimum wage of $7.25 per hour. (Note: minimum wage in New York is now $8.00 per hour).  For example, the “tip credit” for waitstaff in New York is currently $3.00 per hour, meaning that waiters, busboys, and bartenders can be paid an hourly minimum wage of $5.00 per hour.  The United States Department of Labor regulations provide, however, that a restaurant will not qualify for the “tip credit” for employees that spend more than 20% of their time performing non-tipped work.

Restaurant workers and employers in New York State should note that the twenty percent rule is already in effect for waiters, bussers, and bartenders in New York.  The New York State Department of Labor’s Hospitality Wage Order specifically provides a twenty percent rule for restaurants that take a tip credit.  Subpart 146-2.9 of the Hospitality Wage Order states:

On any day that a service employee or food service worker works at a non-tipped occupation (a) for two hours or more, or (b) for more than twenty percent (20%) of his or her shift, whichever is less, the wages of the employee shall be subject to no tip credit for that day.

The case against Le Pain Quotidien seeks back wages, penalties, and attorneys’ fees and an injunction to protect workers rights.

This National Waiters and Waitresses Day Know Your Rights!

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Today is National Waiters and Waitresses Day. Check out our blog featured in the Huffington Post!

Landmark Decisions for Waiters’ Rights in Batali and Pier Sixty Cases

mario batali simple italian food book

On September 13, New York federal court Magistrate Judge Ronald L. Ellis approved a $5.25 million dollar settlement between current and former tipped service workers and Mario Batali’s eight New York City restaurants: Babbo, Bar Jamon, Casa Mono, Del Posto, Esca, Lupa, Otto, and Tarry Lodge.  The following day, September 14, New York federal court judge Paul A. Engelmayer gave final approval to an $8.5 million settlement agreement between Pier Sixty, a premier banquet hall in New York City, and current and former workers of the catering hall for alleged unfair wage practices and other violations of waiters’ rights.

The Batali lawsuit, which was filed in 2010, alleged that the Batali restaurants violated the Fair Labor Standards Act and the New York Labor Law by: (1) unlawfully deducting the equivalent of four to five percent of each shift’s wine or alcoholic beverage sales from the tip pool; (2) unlawfully taking a “tip credit” and paying the waitstaff less than the minimum wage; and (3) failing to pay employees spread-of-hours pay when they worked more than ten hours in a day.

The Batali Settlement creates a fund of $5,250,000 for approximately 1,100 class members.  The eligible employees consist of all individuals who worked at the restaurants as captains, servers, waiters, waitresses, bussers, runners, back waiters, bartenders, and/or barbacks from July 22, 2004 to February 14, 2012.  The Batali restaurant workers will receive a proportional share of the Settlement based on the number of hours they worked, the restaurant at which they worked, and the percentage of total tips received during their employment.

The Pier Sixty Complaint, which was filed in 2008, alleged that the banquet facility misappropriated gratuities when it charged its customers a 20-22% service charge but failed to distribute the service charge monies in full to its waitstaff.  The lawsuit also alleged that the banquet hall failed to pay its workers overtime pay as required under the law.  The Pier Sixty Settlement Agreement creates a fund of $8,500,000 for approximately 2,300 class members who were banquet servers any time between November 25, 2002 and February 24, 2012.

The Batali settlement of $5.25 million is a record for a multiple restaurant case in New York.  The $8.5 million settlement in the Pier Sixty case is the largest payment to date of any reported wage and hour lawsuit in the New York hospitality industry.  The record for a single restaurant settlement in New York is $3.15 million for the 2009 settlement involving Sparks Steakhouse.

Pret A Manger Sued for Time Shaving and Overtime Violations

pret a manger logo

Pret A Manger, a British fast food restaurant chain, has been sued by a former employee for pay violations.

The class action complaint filed by Manuel Trinidad, a former sandwich maker and cashier of the restaurant chain, claims that he and other employees were not paid overtime, not paid “spread of hours” pay when they worked overtime, and did not receive proper wage statements as required under the New York Labor Law.

The lawsuit seeks class action status on behalf of employees at the 33 New York City locations of Pret A Manger and damages for unpaid overtime and spread of hours, liquidated damages, and attorneys’ fees for the workers.

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