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.
New York State Department of Labor
The average wage of a server in a New York City restaurant is $23.34 per hour, according a tip wage survey conducted by New York City Hospitality Alliance.
The pay survey, which was taken by employers at 486 New York City restaurants and bars employing approximately 15,000 tipped employees, revealed that besides the average $23.34 hourly wage for servers, bartenders earn approximately $27.48 per hour, and bussers and food runners earn about $17.11 per hour. Cocktail servers and bartenders at clubs and lounges make approximately $31.21 an hour and $32.35 an hour, respectively, and bussers and food runners at those nightlife establishments make an average of $18.84 per hour.
The survey was released by the New York City Hospitality Alliance, an industry advocacy group, on October 17, 2014, in anticipation of a Wage Board hearing that was held by the New York State Department of Labor on October 20. At the hearing, advocates were pushing for the elimination of the tip credit, which would require employers to pay tipped employees an additional $4.00 after the minimum wage increases. Restaurant employers and industry representatives, however, argued that the elimination of the tip credit would have devastating economic effects, resulting in among other things, hiring freezes, layoffs, lower wages, and few restaurants openings.
The New York City Hospitality Alliance proposed freezing the $5.00 per hour for tipped employees making a living wage of about one and one-half times the current minimum wage when their tips are added to the base wage. If the $5.00 per hour plus tips equals less than that, the employer pays a higher hourly tip wage.
Five Papa John’s locations in New York have been accused of failing to pay its delivery workers the minimum wage, shaving hours from their pay, and requiring them to pay for bicycles and safety equipment used to do their jobs. The lawsuit brought by New York Attorney General Eric Schneiderman seeks to recover $2 million in damages for more than 400 delivery workers who were underpaid.
The lawsuit is the result of lengthy investigation by the Attorney General’s Labor Bureau that uncovered a multitude of wage violations by Papa Johns that included paying its delivery workers $5.00 an hour rather than the minimum wage of $7.25 at the time, shaving work hours by rounding down, improperly calculating overtime pay, requiring delivery workers to purchase bikes, helmets, locks, and chains at a cost of $500.00 a year, failing to pay spread of hours pay which is an additional hours of pay required when an employee worked more than 10 hours in a day, and not compensating for “call-in pay” which requires compensation for being called into work and then being sent home early.
In a press release on the filing of the lawsuit, Attorney General Schneiderman stated, “Nobody who works 40 hours a week should have to live in poverty.” He continued, “Like every other business in New York, fast-food employers must follow the law. My office will combat wage theft whenever and wherever we see it in order to protect the rights of hardworking New Yorkers, including pizza delivery workers and others who toil at fast-food restaurants.”
A former cook and delivery worker at Energy Kitchen in New York, a restaurant chain touting a health conscious menu of items that are all under 500 calories, sued the restaurants for failing to pay minimum wage and overtime pay, tip theft and other Fair Labor Standards Act (FLSA) and New York Labor Law wage violations.
The Complaint, filed by Camerino Hernandez, alleges that six Energy Kitchen restaurants unlawfully took a tip credit and failed to pay their workers the proper minimum wage, overtime for hours worked over forty in a workweek, and spread-of-hours pay when the servers worked more than ten hours in a day. Attorneys for the employees also claimed that the restaurants deducted money from their workers’ pay for breakage, customer walkouts, mistakes, and uniform related expenses.
The class action lawsuit seeks unpaid wages, recovery of the unlawful pay deductions, liquidated damages and attorneys’ fees for violations of the FLSA, the New York Labor Law, and New York State Department of Labor Regulations.
The owners of Colony Diner in East Meadow, New York have pled guilty to cheating seventy-two of their workers out of minimum wage and overtime payments, and falsifying payroll and time records.
As part of their plea, the restaurant owners agreed to pay $337,780 in back wages, $163,742 in damages, and $46,681 in state unemployment insurance payments. An investigation by the Department of Labor found that between September 2007 and September 2010 Colony waiters, busboys, and servers at the restaurant sometimes earned less than $2 an hour and the kitchen staff earned no overtime despite working 50 to 60 hours a week.
According to an article in Newsday, after obtaining a search warrant, the Nassau County District Attorney’s office found two sets of books at the restaurant, one with falsified payroll and time records and another set with the “true pay rate and hours work by the diner’s employees”. “Labor laws exist to ensure that hardworking employees are paid every penny of their wages,” said District Attorney Kathleen Rice.
The guilty pleas arise out of the first joint investigation under New York State’s Wage Theft Prevention Act. Both the Nassau County District Attorney’s office and the federal and state labor departments filed charges against Colony Diner. On July 17, the owners will be sentenced and could face up to four years in prison for their labor law violations.
A program on “How to Handle a Wage and Hour Case” will be held at the New York County Lawyers’ Association on January 31, 2013. Faculty for the program are Terri Gerstein, the Labor Bureau Chief, New York State Attorney General’s Office; Justin Swartz, attorney with Outten & Golden LLP; and Noel Tripp, attorney with Jackson Lewis LLP.
Louis Pechman, founder of waiterpay.com, will moderate the program. For more information on the program, visit NYCLA’s site.
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.
Mamma Lombardi’s, a Long Island restaurant with locations in Holbrook, Port Jefferson, and Patchogue, has been hit with a class action lawsuit alleging that the restaurant failed to pay overtime to “back of the house” food preparers at its Holbrook location. According to the Complaint filed in federal court, the chef’s assistants and helpers who prepared the food at the restaurant regularly worked sixty hours a week, but the restaurant failed to compensate them at time and a half for each hour worked over forty.
Lawyers for the workers also claim that the restaurant failed to maintain payroll records and failed to follow record keeping procedures required by the federal Fair Labor Standards Act (FLSA) and the New York State Labor Law including the failure to maintain accurate statements of payment of wages, listing hours worked, rates of pay, gross wages, deductions and allowances required by law.
The lawsuit seeks damages for unpaid overtime wages, liquidated damages, interest, attorneys’ fees and costs.
The scope of liability under Samiento v. World Yacht, the landmark 2008 decision by the New York Court of Appeals, is facing a challenge from New York legislators. A proposed Senate Bill and an Assembly Bill in the New York State Legislature seek to eliminate past liability for catering halls and restaurants for improper retention of mandatory service charges held out to customers to be gratuities.
The battleground of the proposed legislation is Section 196(d) of the New York Labor Law, which currently provides that an employer or his agent cannot accept “any part of the gratuities, received by an employee, or retain any part of a gratuity or of any charge purported to be a gratuity for an employee.” The New York Court of Appeals, in Samiento v. World Yacht, Inc., 10 N.Y.3d 70 (2008), interpreted this provision to mean that a restaurant cannot add a “service charge” or gratuity to the bill without passing it on to the waitstaff. In other words, a restaurant cannot keep a “service charge” or gratuity that it leads customers to believe will be given to the waiters. However, if the restaurant adequately conveys to the customer that the charge is not going to the waitstaff (i.e., by referring to it as an “administrative fee”) then the restaurant is allowed to keep all or a portion of the charge, but not any additional amount the customer intends for the waitstaff.
Under the Hospitality Wage Order, which went into effect on January 1, 2011, a charge for the administration of a banquet, special function, or package deal must be clearly identified as such and customers must be notified that the charge is not a gratuity or tip. However, the employer has the burden of demonstrating, by clear and convincing evidence, that the notification was sufficient to ensure that a reasonable customer would understand that such charge was not a gratuity. Under the Hospitality Wage Order, adequate notification includes a statement in the contract or agreement with the customer, and on any menu and bill listing prices, that the administrative charge is for administration of the banquet, special function, or package deal, is not a gratuity, and will not be distributed as gratuities to the employees who provided service to the guests. The statements must use ordinary language, which can be readily understood and appear in a font size similar to the surrounding text, but no smaller than a 12-point font.
The proposed legislation is intended to give the effects of the Samiento v. World Yacht decision only prospective treatment. From the point of view of the restaurant lobby, the decision in Samiento v. World Yacht reflected a change in the law, and restaurants and caterers should not be punished for the Court of Appeals’ interpretation. From the point of view of workers, an employer who infers to its customer that a service charge or gratuity will be given to its service staff should be held accountable for actually paying those gratuities to the servers.
The significant liability for restaurants and catering halls under the Samiento v. World Yacht, Inc. decision was underscored by the recent $8.5 million settlement of servers with Pier Sixty. The complaint against Pier Sixty, a premier banquet hall in New York City, 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.
Under the New York State Wage Theft Prevention Act, effective February 1, 2012, New York employers are now required to give annual notice to their employees of wage information, including:
•His or her regular rate(s) of pay and overtime rates of pay (if applicable);
•The basis of the employee’s wage rate (i.e. hourly, weekly, salary, commission, other);
•Any allowances claimed against the minimum wage (tip credit, meal credit, lodging allowances, etc.);
•The employer’s principal place of business, and mailing address (if different);
•The employer’s telephone number; and
•Additional employer information, such as the official name of the business and all “doing business as” names.
Employers are also required to obtain signed acknowledgements from each employee which memorialize the employee’s receipt of his or her wage notice. These signed acknowledgements must be retained by employers for six years.
This Notice requirement is an important law with significant penalties for non-compliance. Any new employee not provided with the notice within 10 business days of his or her start date may bring a claim to recover $50 for each workweek that a violation occurs and may recover up to $2,500, plus attorneys’ fees. For statutory violations relating to a current employee, the employer may be liable for damages of up to $100 per week and may recover up to $2,500, plus attorneys’ fees.