Tip Credit

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.

Maine Fish Market to Pay $750,000 in Back Wage to Employees

Maine Fish Market Restaurante Logo

Maine Fish Market, a popular seafood restaurant in East Windsor, Connecticut, paid $750,000 in back wages to approximately 70 employees for unpaid wages and tip theft violations. The class action lawsuit alleged that Maine Fish Market neglected to pay the federal minimum wage to its servers and bartenders and failed to pay overtime wages to the restaurant’s kitchen workers. In addition, servers claim they were unlawfully required to pay for breakages, customer walkouts, and uniforms. The restaurant also took ten to fifteen percent of each servers’ tips on a daily basis and allegedly used this money to pay other employees’ wages. As per the Fair Labor Standards Act and the Connecticut Minimum Wage Act, employers are not entitled to any of the tips earned by servers.

The employees were represented by Louis Pechman and Laura Rodriguez of Pechman Law Group PLLC, as well as by William Madsen of Madsen, Prestley & Parenteau LLC.

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.

Lawsuit Against Pizza Hut Restaurants Moves Forward

pizza hut logo

A lawsuit against an operator of 1,260 Pizza Hut restaurants in twenty-eight states was given the green light by a federal court judge in Tennessee. The lawsuit claims that Pizza Hut restaurants operated by NPC International, Inc. violated the Fair Labor Standards Act by requiring servers to (1) undergo training and attend meetings while not clocked in; (2) perform “unrelated non-tip producing work” at “sub-minimum hourly wages”; (3) perform “side work” in excess of twenty percent of their time while clocked in as tipped employees at sub-minimum pay; and (4) falsely report tips they did not receive so as to reduce the amount of supplemental compensation the restaurant had to pay in order to meet the federal minimum wage.

The Pizza Hut workers allege that they were required to perform excessive side work while clocked in as tipped employees and that they worked off the clock, including attending monthly meetings and receiving mandatory training. Some workers claim they performed other duties, such as food preparation, customer service work, and cleaning while clocked in as tipped employees and that they were instructed to over-report tips to satisfy NPC’s tips credit requirement. These workers claim that, as a result of Pizza Hut’s goal of reducing labor costs, they were required to work off the clock, perform non-tipped work while clocked in as tipped employees, and over-report tips.

Judge Breen granted certification of a collective action and ordered that NPC produce the names of and send notice to all current and former tipped employees who were subjected to Pizza Hut’s alleged illegal policies at any time during the previous three years.

DOLs Tip Pool Rule Poses Tough Decision For Restaurants

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Tip pooling was the topic of a recent Law 360 article that discussed the legal challenges the U.S. Department of Labor’s tip pooling rule could face. The tip pooling rule bars restaurants from requiring their wait staff to share tips with employees in the back of the house. The rule might be revisited in the wake of a new administration. Louis Pechman, founder of waiterpay.com was quoted in the article discussing tip splitting by front and back of the house workers.

Johnny Rockets Ordered to Pay Servers Over $570K in Tip Theft Case

Johnny Rockets logo

Two Johnny Rockets restaurants in the Washington, D.C. metropolitan area will pay 55 servers $571,460 for unpaid minimum wages, overtime and other damages. The judgment follows a Department of Labor investigation, which revealed that the restaurants required its servers to contribute a portion of their total tips back to the restaurant. Johnny Rockets then unlawfully distributed the servers’ tips to cooks and dishwashers. In addition, Johnny Rockets failed to pay the servers required overtime wages when they worked more than 40 hours in a week, and did not keep accurate records of all hours worked by employees.

Many restaurants require servers to pool their tips for workers to share equally. A valid tip pool may not include employees who do not receive tips customarily and regularly, such as dishwashers, cooks, chefs and janitors. When an employer utilizes employees’ tips for any purpose other than a valid tip pool, as was the case at Johnny Rockets, it is a violation of the tip credit provision of the FLSA. As a result, no tip credit may be claimed, and the employees are entitled to receive the full cash minimum wage on a retroactive basis, as well as a return of the tips that were misappropriated.

 

Chili’s Restaurants Sued for Requiring Servers to Tip Out Expediters

chilis logo

Chili’s policy of requiring servers to share their tips with expediters has been challenged in a federal court class action lawsuit. According to the wage theft lawsuit, Chili’s locations in New Jersey, Delaware, Indiana, Michigan and Ohio forced their servers to split tips with expediters. Expediters are individuals who generally work at or near the kitchen area traying food orders for pick-up by servers and who do not interact with restaurant customers.

The lawsuit alleges that Chili’s forces waiters and waitresses who regularly take orders and actually serve the restaurant’s customers to share their earned tips in a pool with expediters who do not interact with the customers at all. As a result, a percentage of the tips customers leave intended for their servers end up in the hands of the food expediters with whom customers neither communicate nor likely ever see.

The lawsuit claims this illegal tip sharing policy was uniformly applied throughout the forty-six Chili’s locations owned and operated by Quality Dining, Inc. The workers claim that as a result of this company wide policy, the restaurant has forfeited its right to take a tip credit under the Fair Labor Standards Act.

 

 

 

Cosimo’s Italian Restaurant Sued For Overtime Violations

Cosimo's Italian Restaurant Logo

Restaurant workers are suing Cosimo’s Italian Restaurant in Westfield, New Jersey for unpaid overtime wages in New Jersey federal court. Cooks, dishwashers, food preparation workers, and other back of house workers  claim Cosimo’s illegally profited at the expense of their employees.  Workers claim Cosimo’s was underpaying them “hundreds of thousands of dollars in wages” throughout the course of their employment. The kitchen workers claimed employees all worked at least approximately 57 to 60 hours per week and often worked long shifts totaling approximately 10 to 12 hours a day.

Cosimo’s paid back of house workers a set salary regardless of the number of hours that they actually worked, and therefore did not pay overtime. Further, it’s claimed that while Cosimo’s knew the failure to pay overtime wages to its workers at time-and-a-half their regular hourly rate would result in financial harm, they intentionally falsified time and pay records in order to evade the law. Attorneys for the former employees have asked that the District of New Jersey Court allow them to notify other former workers about joining the suit.

Former employees of Wahlburgers in Brooklyn claim they were denied wages, file lawsuit

Wahlburger logo

New York Daily News has reported that Wahlburgers, subject of the popular A&E reality show by the same name, is being sued by former employees for unpaid overtime and tip violations.  The attorneys for the former restaurant workers in the case is Louis Pechman, founder of waiterpay.com and Mitchell Schley.

Department of Labor Agreement with Subway Will Keep Workers Protected From Wage Theft

Subway Logo

The Department of Labor announced it signed a cooperative agreement with Subway, the world’s largest franchisor. The agreement boosts Subway’s compliance with labor laws, helping ensure that workers get paid the wages they are legally entitled.

The agreement with Subway breaks new ground in how the Department of Labor can work with the regulated community — not only with employers, but with franchisors, suppliers, retailers and others — to channel their influence to ensure that all employers along a supply chain or otherwise linked in commerce play by the rules. The agreement builds upon the Wage and Hour division’s ongoing work to provide technical assistance and training to Subway’s franchisees. It also provides an avenue for information-sharing where the Department of Labor will provide data about concluded investigations with Subway, and shares Subway’s data with the Department of Labor, generating creative problem solving and sparking new ideas to promote compliance.

When necessary, the franchisor will remind franchisees of the Wage and Hour Division’s authority to investigate their establishments and to examine records. The agreement also specifies that Subway may exercise its business judgment in dealing with a franchisee’s status within the brand, based upon any history of Fair Labor Standards Act violations. The agreement provides a model for exacting compliance, at scale, in an industry that has experienced problems.

The Department of Labor calls its collaboration with Subway a recipe for success, demonstrating how government and industry can work together to protect vulnerable workers and ensure a fair day’s pay for a fair day’s work.

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