New York City French Restaurant Bagatelle to Pay $1.1 Million for Tip Credit Violations

server restaurant image waiter tip credit

Bagatelle will pay $1.1 million to settle a wage theft lawsuit claiming that the restaurant misappropriated the tips of its food service employees and improperly used a tip credit to pay restaurant workers less than the minimum wage, in violation of the Fair Labor Standards Act and the New York Labor Law.  Bagatelle, the popular upscale French restaurant located in New York City’s Meatpacking District and self-described “NYC institution” is alleged to have required its food service workers, including servers, runners, bussers, and bartenders to share tips with tip ineligible employees, such as managers and silver polishers.   According to the lawsuit, brought by two servers who worked at the restaurant in 2015, when one of the servers asked his manager how much he had earned in tips on a particular night, he was referred to two different managers and never received an answer.

Attorneys for the workers also alleged that Bagatelle used a tip credit to pay its food service workers at the tipped minimum wage, despite failing to give them notice and requiring them to share tips with back of the house employees such as glass polishers and food expeditors.

The proposed settlement encompasses all servers, runners, bussers, and bartenders who worked at Bagatelle from January 1, 2012 to March 1, 2017.  It is estimated that the settlement will cover at least 100 workers and will be distributed in two categories: a. the amount of tips each worker received during his or her work period at Bagatelle, and b. a calculation based on total weeks worked.

Jue Lan Club, Hamptons Hot Spot, Sued for Wage Theft

Jue Lan Restaurant Front

The Jue Lan Club, the trendy Hamptons restaurant, nightclub and art gallery that made headlines for offering a $27,000 bottle of Dom Perignon Rose*, cheated workers out of the minimum wage, overtime pay and tips according to a class action lawsuit filed in New York federal court.

Attorneys for the workers claim that the Jue Lan Club and Stratis Morfogen, its principal owner, failed to pay its servers overtime pay of one-and-one-half times their hourly rate for all weekly hours worked over forty, even though waiters worked 60+ hours a week.  The lawsuit further alleges that Jue Lan unlawfully required its waiters, bussers, and bartenders to give a portion of their tips to managers and back of the house staff, including dishwashers.

Restaurant workers in Long Island are reminded that beginning in 2017, their employers must pay them at least $10.00 per hour worked.  An exception to this rule exists for tipped food service employees in restaurants, such as bartenders, servers, and bussers, who can be paid $7.50 per hour as long as the restaurant gives them proper notice of the “tip credit” laws.  To do so, the restaurant must provide them with a written notice explaining, among other things, that tipped employees make at least $2.50 per hour in tips.  The notice must also state that if the tipped employees failed to make at least $2.50 in tips per hour worked in a workweek, the restaurant will pay them the difference between the amounts that they actually made in tips per hour and the required minimum of $2.50.  Moreover, all restaurant employees who work over forty hours per workweek must be paid one and one-half times their regularly hourly wage rates per hour worked over forty.  The minimum overtime wage rate in Long Island is $15.00.  Once again, tipped employees’ rates can be lower as long as the restaurant complied with the notice requirements explained above.  Tipped employees who work more than forty hours per workweek must be paid at least $12.50 per hour worked over forty.

Reichenbach Hall Sued for Wage Violations

Reichenbach Hall Logo

A wage theft lawsuit has been filed against Reichenbach Hall, a German beer hall located in midtown Manhattan. The lawsuit charges that the restaurant cheated its waiters and waitresses out of minimum wage and overtime pay. The servers claim that Reichenbach Hall charged them for customer walkouts and for uniforms. The waitstaff also allege that Reichenbach Hall paid them the “tipped minimum wage” without giving prior notice and forced them to share their tips with managers and back of house employees as part of an unlawful tip pool.



Seventh Circuit Weighs In On 80/20 Rule and Tip Credit Disputes

Pancake House Restaurant Front

The Seventh Circuit addressed tip credit and 80/20  issues in a decision involving pay practices at Original Pancake House restaurants in Chicago.

On the 80/20 issue, the Court found that although some waiters and waitresses tasks may be performed by untipped staff at other restaurants, it does not make them unrelated to their server duties. The Court noted that “the possibility that a few minutes a day were devoted to keeping the restaurant tidy does not require the restaurants to pay the normal minimum wage rather than the tip credit rate for those minutes.”

On the tip credit issue, the Court analyzed the requirements of §203(m) and explained “workers are entitled to knowledge about the tip credit program but not to a comprehensive explanation.” The Seventh Circuit’s take on the requirements for notification of the tip credit was threefold: “Three things are apt to matter most to employees at establishments such as these defendants: (a) in anticipation of tips the employer will pay less than the minimum wage; (b) how much the cash wage will fall short of the current minimum wage; and (c) if tips plus the cash wage do not at least match the current minimum wage, the employer must make up the difference. We think that person told these things has been adequately “informed” for the purpose of the statute, during the time before the Department of Labor elaborated by regulation.”

Servers Say NO To No-Tipping Policy

share your opinion logo

Restaurants that have adopted a “no tipping” policy and got rid of tips in favor of a higher hourly wage have received a great deal of media attention in the last few months. While much has been discussed from the management and customer perspective, WaiterPay.com conducted a survey to get the server point of view. We sampled a group of about 200 restaurant workers, the majority from the tri state area, and asked how they thought a no tipping policy would affect their work performance and livelihood.


According to the survey, 78% of participants believed there was a direct correlation between tips and service, agreeing that “the quality of service greatly affects tips.”


When asked “How will a no-tipping policy affect the quality of service you provide to customers?”

38% of survey takers said they believe the no tipping policy will significantly reduce the quality of service they provide to customers.

30% of survey takers said they believe the no tipping policy will not affect the quality of service they provide to customers.

32% of survey takers said they believe the no tipping policy would slightly reduce the quality of service they provide to customers.


When asked, “Do you believe earning a higher hourly wage and eliminating tips will reduce your incentive to upsell?”

 33% will not have a reduced incentive to upsell.

77% will have a reduced incentive to upsell.


When asked, “How do you think eliminating tipping and earning a straight hourly wage will affect the amount you earn?”

94% believed they would be earning less.

3% thought they would earn more.

3% thought they would earn the same.


When asked, “Do you think front of the house workers should make a higher hourly wage than back of the house workers?”

35% said back of the house workers should be making more than front of the house workers.

46% thought they should be making the same.

19% said front of the house workers should be making more than the back of the house workers.


When asked, “If tips were eliminated at your restaurant, what do you think is a reasonable hourly wage for serves?”

The survey average was $25/hr.


When asked, “Do you believe that restaurants should adopt a no tipping policy?”

94% of survey takers  said NO.
2% of survey takers said YES.


For more information about the survey please check out Waiterpay.com’s Facebook and feel free to contact Louis Pechman at [email protected]

Danny Meyer Shaking Up Restaurant Industry With No Tipping Policy

eyewitness news abc splash screen

Danny Meyer, widely recognized as New York City’s lead restaurateur, has established a no tipping policy at his restaurants. Louis Pechman, founder of waiterpay.com, spoke to Eyewitness News ABC 7 about the effects of this policy change on restaurant workers.

Lawsuit Charges 17 Houlihan’s restaurants in New Jersey and New York With Wage Theft

houlihans logo

Houlihan’s engaged in “pervasive skimming from employees’ tips and wages,” according to a federal court lawsuit charging the restaurants with violations of the minimum wage, overtime and record-keeping requirements of the Fair Labor Standards Act.

The wage theft lawsuit against Houlihan’s could recover millions in back wages, tips and liquidated damages on behalf of approximately 1,430 current and former Houlihan’s employees. The defendants include A.C.E. Restaurant Group Inc., A.C.E. Restaurant Group of New York LLC and Arnold Runestad. An investigation by the Department of Labor found that the defendants engaged in a number of practices that violated the FLSA. These include the following:

  • Requiring servers and bartenders to contribute a percentage of tips to a tip pool, but using the tips to pay employees for tasks, such as custodial and kitchen work. The lawsuit claims that Houlihan’s regularly retained a portion of employee tips.
  • Denying overtime pay to employees who worked at more than one restaurant, even when their combined hours totaled more than 40 hours in one workweek.
  • Having employees work off-the-clock, earning tips for their labor.
  • Routinely deducting money from employees’ paychecks for meals consumed during breaks, while also requiring payment, at times, for the meals. The deductions were greater than the defendants’ cost for providing the meals, and often resulted in some employees receiving less than minimum wage.

According to the Department of Labor, the severity of these violations and the number of affected workers is such that restitution, could amount to millions of dollars. Restaurant workers are among those in our economy who are most vulnerable to wage violations, and we are committed to pursuing remedies vigorously on their behalf whenever necessary. Houlihan’s practices deprived many of their employees of money rightfully earned — money that they need to afford basics. Reducing labor costs by shorting workers also places law-abiding restaurants at a competitive disadvantage, and violates the principle of a fair and level playing field laid out in the FLSA.

The New Jersey restaurants are located in Bayonne, Brick, Bridgewater, Cherry Hill, Eatontown, Fairfield, Hasbrouck Heights, Holmdel, Lawrenceville, Metuchen, New Brunswick, Paramus, Ramsey, Secaucus and Weehawken. The New York locations are in Farmingdale and Westbury.

The FLSA requires that covered, nonexempt employees be paid at least the federal minimum wage of $7.25 per hour for all hours worked, plus time and one-half their regular rates of pay, including commissions, bonuses and incentive pay, for hours worked beyond 40 per week.

The FLSA requires an employer of a tipped employee to pay no less than $2.13 an hour in direct wages ($5.00 in New York), provided that amount plus the tips received equals at least the federal minimum wage of $7.25 an hour ($8.75 in New York). If an employee’s tips combined with the employer’s direct wages do not equal at least the minimum wage, the employer must make up the difference.

Tips are the property of the employee, and the employer is prohibited from using an employee’s tips for any reason other than as a credit against its minimum wage obligation to the employee (tip credit) or in furtherance of a valid tip pool among employees who customarily and regularly receive tips. A valid tip pool may not include employees who do not customarily and regularly receive tips (for example, dishwashers, cooks, chefs and janitors), and an employee cannot be required to turn over his tips to the employer. Employers also are required to maintain accurate time and payroll records.


Community Comments

Famous New York Deli Sued for Time Shaving and Overtime Violations

bens logo

A former cook at Ben’s Kosher Deli, has sued the restaurant chain for wage theft in New York federal court.

The lawsuit was filed by Michael Palermo, who worked at the Greenvale, Long Island location of the restaurant. Palermo claims that he worked between 72-96 hours each week, 12-16 hours per day, six days per week. According to lawyers for Palermo, the deli only paid him forty hours per week, not paying the cook any wages, including his over time wages of time and one-half, for hours that he worked in excess of forty per week. Palermo claims that Thanksgiving week in 2012, he worked approximately 100 hours and was only paid for forty of those at his regular hourly rate of $26.44.

The lawsuit seeks to recover unpaid wages, overtime compensation, and compensation for not receiving wage notices and statements as required by the Fair Labor Standards Act and the New York Labor Law.


Roberta’s Pizzeria in Brooklyn Served With Class Action Wage Lawsuit

pizza olives tomatoes

A lawsuit has been filed on behalf of dishwashers, stock organizers, food preparers, and cleaning personnel, who worked at Roberta’s Pizzeria in Brooklyn, NY. The class action complaint, filed in Brooklyn federal court, claims that the renowned pizzeria failed to pay their employees the correct overtime pay rate. The employees also claim that Roberta’s failed to provide all of their employees with wage notices and spread-of-hours pay. According to the employees, Roberta’s staff told employees that they were not entitled to overtime pay because they were all working “off-the-books.” Moreover, the employees who complained were terminated.

One dishwasher at the restaurant alleges that he was only compensated for the hourly rate of $13.50, regardless of working sixty to ninety hours a week. According to the dishwasher, Roberta’s Pizzeria also failed to compensate him for sick leave that he was forced to take, being that he suffered two amputations at work. Attorneys for the restaurant workers are seeking unpaid overtime compensation, liquidated damages, and attorney’s fees for violating the Fair Labor Standards Act (“FLSA”) and New York Labor Law (“NYLL”).


DISCLAIMER: The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form. Please verify that you have read the disclaimer.

Thank you! Your submission has been received!

Oops! Something went wrong while submitting the form