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.
Minimum Wage Order
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.
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.
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.
*These comments were prepared for the New York City Hospitality Alliance program on February 2, 2015, Have We Reached the Tipping Point for Tips?
Banquet hall servers at the DoubleTree Hotel in Westchester, New York are suing for the hotel’s failure to pay minimum wages, overtime wages, spread-of-hours pay, unlawful deductions, and improper distribution of gratuities.
According to the collective action lawsuit filed in Manhattan federal court, DoubleTree waiters were not paid for the overtime hours they worked. Employees regularly worked more than 60 hours per week but were only paid for 40 hours a week. Additionally, according to the Complaint, the hotel retained service charge payments made by customers even though they reasonably believed that money would be distributed as gratuities for the workers. Furthermore, DoubleTree failed to reimburse its staff for the laundering and maintenance of their uniforms.
The suit also alleges that employees did not receive the minimum wage and “spread of hours” pay required under the Federal Labor Standards Act (FLSA) and the New York Labor Law. Lawyers for the employees are seeking to recover their unpaid wages, liquidated damages and attorneys’ fees.
Tip misappropriation, minimum wage and other Hospitality wage issues will be addressed at a NELA/NY conference on October 10. Louis Pechman, founder of waiterpay.com will moderate the session, which will be held at the Yale Club, at 50 Vanderbilt Ave, New York, NY 10017.
Fig & Olive restaurants have been sued by a former worker for failure to pay its waitstaff federal and state minimum wage for all hours worked, for instituting a tip scheme which was not determined nor agreed upon by the waitstaff, and for failure to provide proper wage statements informing the tipped employees of the amount of tip credit taken for each payment period.
On September 5, 2014, a former busboy of the restaurant’s New York City Fifth Avenue location filed a federal court lawsuit against Fig & Olive, a national chain of restaurants known for its specialty olive oils. The class action lawsuit was filed on behalf of waiters, busboys, runners, bartenders, and barbacks, alleging various violations against the restaurants’ seven locations across the United States. Among the various pay violations alleged, attorneys for the workers claim that the restaurants were not allowed to take a tip credit (which would allow the restaurants to pay a minimum wage at a rate less than the state and federal minimum wage) since the restaurants’ violations of the tip pool invalidated the tip credit. Attorneys for the waiter allege that the restaurant also violated the workers’ rights by failing to pay them for all hours worked through a policy of time-shaving, and failing to pay them call-in pay premium on days when they were sent home when they arrived at the beginning of the shift. Under the New York Labor Law, call-in pay must be paid to an employee who is reports for duty on any day, regardless of whether the employee is assigned actual work. The workers also claim that the restaurants failed to provide them with wage notices and wage statements as required by state and federal law. Lawyers for the workers are seeking unpaid wages, liquidated damages, and attorneys’ fees and costs.
Some restaurant workers in New York will receive an increase in minimum wage and overtime pay on December 31, 2013.
The minimum wage for cooks, dishwashers and other non-tipped employees will increase from $7.25 to $8.00 an hour. The overtime rate for employees making the minimum wage is calculated at 1 ½ times the minimum wage for all hours worked over 40 in a week. Because the minimum wage will increase, the overtime rate for employees earning the minimum wage will also increase from $10.88 an hour to $12.00 an hour.
Minimum wage rate paid to waiters, waitresses, bussers, runners and bartenders who receive tips will stay at $5.00 per hour. New York law permits employers to apply a tip credit and pay a reduced minimum wage to tipped employees. To use the tip credit, the worker must receive tips equal to or greater than the tip credit and the employer must give notice to the employee that the tip credit will be applied. Beginning December 31, 2013, the tip credit for these workers will increase to $3.00 an hour. However, due to the increase in the minimum wage, the new overtime rate for tipped employees in New York making $5.00 per hour will be $9.00 per hour (calculated by multiplying the full minimum wage by 1.5 and then subtracting the increased tip credit of $3.00).
Minimum wage rate paid to delivery workers, coat check and bathroom attendants that receive tips will stay at $5.65 per hour. Beginning December 31, 2013, the tip credit for these workers will increase to $2.35 an hour. The overtime rate for these workers will be $9.65 (calculated by multiplying the full minimum wage by 1.5 and then subtracting the increased tip credit of $2.65).
Restaurant Opportunities Center (ROC), a restaurant worker rights advocacy group has been accused of misconduct. In an opinion piece published in the New York Post, Mike Paranzing accused the ROC of being a labor union front that doesn’t practice what it preaches. Acccording to Paranzing, ROC exploited its own workers and cheated its employees at the restaurant Colors, and is guilty of the same labor abuses and health violations that it has leveled against other restaurants.
Today is National Waiters and Waitresses Day. Check out our blog featured in the Huffington Post!