Tip Credit

Grimaldi’s Pizzeria Sued for Overtime and Wage Violations


Brooklyn pizzeria, Grimaldi’s has been served with a wage theft lawsuit by one of the cooks who made its famous thin crust pies. The pizzeria, perennially named on lists having the best pizza in New York and the best pizza in America, has been accused of violating the minimum wage and overtime requirements of the New York Labor Law and the Fair Labor Standards Act.

According to the lawsuit, the Brooklyn pizzeria paid Nery Sosa, a kitchen worker, a weekly salary of $600 even though he worked as many as eighty-four hours per week. As Sosa was on a salary, Grimaldi’s failed to pay him overtime at one and a half times his regular rate of pay for hours he worked in excess of forty per work week. Grimaldi’s also did not pay Sosa spread of hours pay, when Sosa’s daily shift spanned for more than ten hours.

The lawsuit seeks to recover unpaid wages, overtime compensation, spread-of-hours pay, liquidated damagesand attorneys’ fees.


New Year = Higher Pay for New York Restaurant Workers

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Effective December 31, 2015, the minimum wage in New York increases to $9 per hour. The tipped minimum wage increases to $7.50 per hour for front of the house restaurant workers, including waiters, waitresses, bussers, runners, valets, and coat checkers. The overtime rate for front of the house restaurant workers increases to $12 per hour. The rate for spread of hours pay increases to $9.00.

Uniform maintenance pay increases to $11.20 per week for work weeks of more than 30 hours; $8.85 for work weeks of more that 20 hours, but less than 30 hours; and $5.35 per week for work weeks of 20 hours or less.

If a restaurant qualifies as a fast food establishment under the New York Fast Food Wage Order, the minimum wage increases to $10.50 per hour in NYC and to $9.75 per hour in the rest of New York State. For more information on these minimum increases please click here.

Texas de Brazil Sued for Tip Credit Violations


The Yonkers and Manhattan locations of Texas de Brazil have been sued by its waiters for including non-service employees in the tip pool at the restaurants.

The class action lawsuit filed in New York federal court by attorneys for the workers, alleges that the Brazilian Steakhouse should not be entitled to take a tip credit because it permitted non-tipped, ineligible employees to share in the tip-pool. According to the waiters’ lawsuit, front of the house employees were required to share their tips with polishers, who polished dishes and did not serve, and were not visible to the patrons of the restaurant.

Lawyers for the restaurant workers seek backpay, return of tips, attorneys’ fees, and other damages on account of Texas de Brazil’s violations of the restaurant workers’ rights.

Danny Meyers’ Gramercy Tavern Accused Of Tip Theft Violations

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Two former busboys have sued Gramercy Tavern in a class action lawsuit alleging tip theft and tip credit violations. The case was filed in Manhattan federal court alleging New York Labor Law (NYLL) and Fair Labor Standards Act (FLSA) violations. Gramercy Tavern is owned by Danny Meyer, the restaurateur who recently announced that he plans to do away with customer gratuities at all his restaurants.

The employees claim that the restaurant unlawfully required the waitstaff to share tips with non-tipped employees, including expeditors, polishers, and wine managers. According to the Complaint neither expeditors nor polishers performed any direct customer service. Wine managers interacted with customers but also had managerial duties, making them ineligible for the tip pool. The lawsuit states that due to these alleged violations, the restaurant was ineligible to claim a tip credit and was lawfully required to pay its waitstaff the statutory minimum wage ($8.75 in New York), rather than the tipped minimum wage of $5.00 per hour. According to the lawsuit, Gramercy Tavern also made customers who booked private events pay a service charge of 20%. The service charge was allegedly retained by the restaurant, which is illegal because the customers thought the money was a gratuity for the employees.

Attorneys for the workers are seeking unpaid wages, compensation for unlawful deductions, tip disgorgement, liquidated damages, and attorneys’ fees.

Tip Sharing with Expediters Costs Red Robin $1.3 Million Settlement


Servers at Pennsylvania locations of Red Robin restaurants have settled their tip theft lawsuit for $1,300,000, according to a settlement agreement filed in Pennsylvania federal court.

The employees alleged that the restaurant chain, known for its hamburgers, violated the Fair Labor Standard Act (“FLSA”) and the Pennsylvania Minimum Wage Act by requiring waiters and waitresses to share their tips with expediters, who they allege are non-tipped employees. Employers are legally permitted to create a tip-pooling or tip sharing arrangement among employees who customarily and regularly receive tips, but a valid tip pool may not include employees who do not customarily and regularly receive tips.

The $1.3 Million settlement fund will be distributed among Red Robin restaurant workers based on the number of hours they worked between February 10, 2011 and January 30, 2013. The settlement agreement between Red Robin and the restaurant workers was preliminarily approved by Judge James M. Munley of the Middle District of Pennsylvania.


Sushi Samba to Pay $2.37 Million to Settle Wage Theft Claims

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Workers at Sushi Samba restaurant locations in New York, Florida, Las Vegas and Illinois will receive $2.37 million as a result of a lawsuit, filed by former servers, bussers, runners, and bartenders, alleging improper application of the tip credit, failure to pay minimum wages, overtime pay and other federal and state wage violations.

Sushi Samba, a popular chain of sushi restaurants blending Brazilian, Japanese, Peruvian influences, with nationwide and international locations is alleged to have paid its waitstaff the tipped minimum wage without providing adequate notice as well as improperly allocating 5% of the waitstaff’s tips to sushi chefs. Attorney’s for the waitstaff alleged that the sushi chefs had no interaction with customers and therefore should not have received tips. Employees at certain locations also reported that they were required to work off the clock and that Sushi Samba hosted private parties whereby a 20% service charge was added to the total price paid by customers, but not distributed to the waitstaff in its entirety.

The proposed settlement, which covers over 500 workers, was submitted for preliminary approval to Magistrate Judge Ronald L. Ellis on November 30, 2015.

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.”

Houlihan’s in New Jersey Sued By Servers For Improper Tip Pooling

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Servers at Houlihan’s—a popular New Jersey bar and restaurant chain, are suing A.C.E. Restaurant Group Inc., Houlihan’s franchise owners responsible for operating about 15 Houlihan’s locations in the Garden State. The lawsuit, filed in a New Jersey federal court, alleges that for approximately three years, Houlihan’s maintained a policy of arranging forced tip-pooling agreements, and failed to pay their employees the minimum wage. According to the lawsuit, Houlihan’s forced their servers to pool their tips with kitchen expediters, hostesses, and other non-tipped employees.

Under the Fair Labor Standards Act (FLSA), tip pooling is permitted only when it is “limited to employees who customarily regularly receive tips.” Attorneys for the employees are seeking unpaid minimum wages, unpaid wages, liquidated damages, and attorney’s fees.


KTCHN restaurant and XL Nightclub Sued for Sex Discrimination and Wage Violations








KTCHN restaurant and XL nightclub have been sued by servers for sexual orientation and gender discrimination and for failure to pay minimum and overtime wages and withholding tips.

KTCHN restaurant and XL Nightclub, located in New York’s OUT Hotel, caters to the LGBT community and is referred to as “gay-friendly” in the media. However, according to the lawsuit, management discriminated against servers Donald Shorter and James Stress, the only openly homosexual servers that outwardly presented as feminine at work by regularly wearing eye shadow, glitter eye liner, and nail polish. Shorter and Stress allege that management singled them out for their appearance and implemented a dress code policy that prohibited male employees from wearing nail polish and makeup, stating, “[t]he only acceptable time for gentlemen to wear make-up or nail polish will be Sunday Brunch.” Shorter and Stress complained about the policy and management allegedly humiliated, disparaged and reprimanded them for not following the policy. Shorter and Stress claim that the restaurant’s policy is a violation of the New York City Human Rights Law (“NYCHRL”) which prohibits discrimination based on sexual orientation and gender, and gender is defined by the NYCHRL to include “gender identity, self-image, appearance, behavior and expression.”

In regard to the wage violations, together with Shorter and Stress, two other servers allege that the restaurant unlawfully paid them the reduced tipped minimum wage when they worked in positions that did not receive tips, did not pay them overtime pay, and collected their credit card tips and distributed them at their own discretion and without regard for the established tip pool.

The lawsuit seeks to recover unpaid wages, misappropriated tips, and liquidated damages pursuant to the New York Labor Law and Fair Labor standards Act, and compensatory and punitive damages under the New York City Human Rights Law.

Pizza Hut Restaurants in New York Sued for Wage Payment Violations


Pizza Hut restaurants in New York State have been hit with a wage theft lawsuit by one of its servers. Amanda Perry, a server who worked at a Pizza Hut in Canandaigua, New York, claims in her lawsuit, filed in a federal court in western New York, that the restaurants stiffed her and other servers out of overtime and minimum wage pay.

According to the lawsuit, the Pizza Hut restaurants should not have taken a “tip credit” and paid the servers at the $5 per hour tipped minimum wage because the restaurant did not notify the servers of the tip credit provision of the law and did not provide proper wage statements and notices. Lawyers for the restaurant workers claim the restaurants should have paid at the full minimum wage rate for all hours worked in addition to overtime pay for hours worked in excess of forty per week.

The lawsuit also claims that the servers were entitled to an additional hour of pay as “spread-of-hours pay” for days when the waitstaff worked more than ten hours. The lawsuit also claims that the Pizza Hut restaurants required the waitstaff to maintain uniforms without providing additional pay to do so.



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