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.”
Rosa Mexicano, the upscale Mexican restaurant chain, is being sued by its servers for stealing wages. Attorneys for the workers allege Rosa Mexicano failed to pay waitstaff minimum wage and overtime wages and misappropriated tips in violation of the Fair Labor Standards Act (“FLSA”) and New York Labor Law (“NYLL”).
According to the wage theft lawsuit, Rosa Mexicano claimed an invalid tip credit and improperly paid their waitstaff at a tipped minimum wage instead of the full minimum wage. The waitstaff claims in their lawsuit that Rosa Mexicano did not inform them they would be paid at tipped minimum wage and misappropriated their tips, violating the FLSA and NYLL. Tips were shared with “floaters”, who conducted miscellaneous tasks around the restaurant without ever having customer contact. According to the lawsuit, these “floaters” were not entitled to sharing in a tip pool, invalidating Rosa Mexicano’s tip credit.
The lawsuit claims that Rosa Mexicano did not pay waitstaff for hours worked over forty per week. Some former servers claim to work up to 50 hours per week without receiving overtime pay. The lawsuit also alleges that waitresses, waiters, bussers, and bartenders did not receive “call-in pay” required under NYLL, when they reported for work only to be sent home before being able to work three hours. One of the former workers claims this happened on 146 shifts.
Attorneys for the waitstaff seek to recover unpaid minimum wages, unpaid overtime wages, unpaid “call-in pay”, liquidated damages and attorneys’ fees. Rosa Mexicano has locations in New York, New Jersey, Los Angeles, San Francisco, Miami, Boston, Atlanta, Washington D.C., Baltimore, and Minneapolis. The workers are represented by Fitapelli & Schaffer, a New York law firm.
Twelve restaurant workers employed by Scales 925, a restaurant in Atlanta, Georgia owned by Clifford Harris – the famous rapper formerly known as T.I. – are suing the Atlanta restaurant for minimum and overtime wage violations of the Fair Labor Standards Act (“FLSA”). The wage theft lawsuit alleges that the waitstaff would routinely work more than 40 hours per week without being paid overtime and spent more than twenty percent of their time performing non-tipped tasks.
According to the lawsuit, waiters and waitresses were required to work off the clock for three hours before they were allowed to go home. The waitstaff complained to Scales 925 about not being paid overtime, but Scales 925 management ignored their complaints. In addition, the lawsuit claims the restaurant unlawfully deducted money from server’s paychecks for broken glasses, even if no glasses were broken. The restaurant also deducted money from servers’ paychecks supposedly to pay for busboys, which the busboys claimed they never received.
New Jersey Five Guys locations have been sued by former employees for overtime violations under the Fair Labor Standards Act (“FLSA”) and the New Jersey State Wage and Hour Law (“NJWHL”). The lawsuit alleges that workers were only being compensated for forty hours per week, without being compensated for the hours worked off the clock over forty in a workweek in violation of the FLSA and NJWHL.
The workers performed non-exempt restaurant labor duties for Five Guys, such as, serving customers, working the cash register, cleaning the grills, bussing tables, and all of the other duties necessary to run a restaurant. Thus, the workers were entitled to receive overtime compensation for all hours worked above forty in a workweek. The lawsuit also allege workers were required to work approximately one hour off the clock each day, for which they were not compensated at all.
Attorneys for the workers are seeking compensation for all hours due to them, overtime hours due to them for the hours worked for which they have not been properly compensated, liquidated damages, and reasonable attorneys’ fees.
A minimum wage and overtime lawsuit against Hibachi City Buffet was settled for $128,335. The U.S. District Court for the Central District of California approved a judgment ordering the Palm City, California restaurant and owners to pay 44 employees $90,000 in back wages, in addition to $38,335 in penalties. The court also prohibited Hibachi City Buffet from retaliating or taking any adverse employment action against any worker who exercises or asserts their rights under the Fair Labor Standards Act (“FLSA”).
Investigators from the U.S. Department of Labor’s Wage and Hour Division found that Hibachi City Buffet violated the minimum wage, overtime and recordkeeping provisions of the FLSA. They found the employees – cooks, dishwashers and servers – worked more than 60 hours per workweek on average, yet the employer paid a fixed salary, without regard to the number of hours employees worked. Minimum wage violations resulted when those salaries failed to cover all the hours employees worked at the federal minimum wage of $7.25 per hour. Overtime violations occurred when workers exceeded 40 hours in a week, yet the employer still paid workers only their fixed salaries. Hibachi City Buffet also failed to keep time records showing how many hours employee worked, or how much they paid employees, as the law requires.
“Vulnerable restaurant employees are often reluctant to complain when their employer fails to pay them the wages they’ve earned,” said Danny Pasquil, district director for the Department of Labor’s Wage and Hour Division in West Covina. “We urge all employees who are not paid legally to step forward. Cheating workers out of their hard-earned wages is illegal. As this consent judgment illustrates, we will continue to use every available tool, including asking the courts to step in, to ensure that workers receive a fair day’s pay for a fair day’s work.”
Las Margaritas, a Mexican restaurant in Astoria, was ordered to pay two former waitresses $41,618.08 for multiple wage violations under the Fair Labor Standard Act and New York Labor Law following a four-day trial and a jury verdict in favor of the waitresses. Magistrate Judge Cheryl Pollak upheld the jury’s verdict which found that the restaurant failed to pay waitresses minimum wage, overtime, and improperly applied a tip credit towards their wages. Las Margaritas also violated New York Labor Law by failing to pay the waitresses a uniform allowance of $9.00 per week as well as making deductions from the waitresses’ pay or making them pay out of pocket if the cash register was short.
The waitresses were represented by Vivianna Morales and Lou Pechman, founder of waiterpay.com.
The New Jersey strip club used for Tony Soprano’s “Bada Bing!” club in the hit TV series “The Sopranos,” in addition to another club under the same owner, was hit with a class action lawsuit by its former employees. It is alleged that Satin Dolls and The Harem were illegally retaining private dancers’ tips and failing to pay them minimum wage by deducting “house fees” from their wages in violation of the Fair Labor Standards Act (“FLSA”) and New Jersey Wage Laws (“NJWL”).
The entertainers allege in their lawsuit that Satin Dolls and The Harem required customers to tip dancers during private or VIP dances. However, the dancers did not retain the entirety of their tips. For example, if a customer tipped $300 for a private dance, the strip club would retain approximately $150, even though customers believed that the dancers were keeping 100% of the tips. In addition, entertainers were required to share their tips with managers, including the “house mom”, the DJ, and security personnel through mandatory tipouts at the end of each shift.
The entertainer’s rights were also violated under the FLSA and NJWL due to the clubs’ policy requiring dancers to pay “fines,” “fees,” and “miscellaneous improper surcharges,” bringing their pay not only below the minimum wage, but to a negative wage. “House fees” collected prior to each shift would amount from $30-$80 depending on the night. Attorneys for the entertainers are seeking to recover unpaid wages, illegally retained tips, illegal deductions from wages, and other penalties from the respective clubs.
Miller’s Ale House locations in Suffolk, Nassau, Queens, and Staten Island, have been sued by former servers in a class action lawsuit for unpaid minimum wages and unpaid spread-of-hours pay. The wage theft lawsuit also claims that Miller’s Ale House improperly applied a tip credit, where servers were required to perform regular non-tipped work for more than twenty percent of their workday in violation of the Fair Labor Standards Act (“FLSA”) and the New York Labor Law (“NYLL”).
According to the lawsuit, the waiters and waitresses were required to complete non-tipped “side work” at the beginning of their shift. This “side work” took at least one and a half hours to complete. The non-tipped “side work” included, but was not limited to, making dressings, cleaning and setting tables, dusting ceiling fans, preparing food, preparing and cleaning soda machines. Even though servers’ responsibilities included non-tipped work at the beginning and end of their shifts for more than an hour and a half, Miller’s still claimed a tip credit. Therefore, the servers were being paid at hourly rates below the standard minimum wage at $5.00 per hour. Under the NYLL, the servers were also owed “spread-of-hours” pay for worked shifts that spread over ten or more hours in a single day.
The attorneys for the restaurant workers are seeking to recover unpaid minimum wages owed to the waiters and waitresses for improperly claiming a tip credit towards their obligation to pay the statutory minimum wage rate under the FLSA and NYLL, as well as, unpaid spread-of- hours pay under the NYLL.
Servers and bartenders have united in a class action lawsuit against Shea’s American Bar and Grill for minimum wage violations and improper deductions under the Fair Labor Standard Act (“FLSA”) and the Connecticut Minimum Wage Act (“CMWA”). According to the worker’s lawsuit, servers and bartenders were required to perform non-tipped work at the beginning or end of their shifts, and even during their shifts. The lawsuit alleges the Restaurant did not keep a record of what time was spent performing non-tipped work in violation of the CMWA.
In addition, the lawsuit claims that Managers would clock out workers from the time keeping system, even though they were still working. It is alleged that the restaurant shaved workers’ hours worked by changing clock-in and/or clock-out times in the timekeeping system. Therefore, the servers and bartenders worked off the clock without pay and were not given overtime compensation for hours they worked past forty in a week.
The lawsuit further alleges that the restaurant took improper deductions from employee paychecks. The restaurant deducted a cost between $15-$20 for uniforms workers were required to wear which carried the restaurant logo. Penalties of at least $20 were also deducted from paychecks if the managers were not “satisfied” with a cleaning job by an employee. The restaurant even deducted customer bills from a server’s or bartender’s pay for those customers that “walked out”. Workers’ rights were violated as these deductions brought the workers’ wages below the minimum wage under the FLSA. This lawsuit seeks unpaid wages, liquidated damages, interest, and attorneys’ fees.
Joe’s Crab Shack announced that it would restore tipping at most of their no tipping locations less than a year after adopting the highly criticized “no tipping policy” at their restaurant chain. Created with the intention of moving away from an antiquated gratuity model, Joe’s Crab Shack became the first national chain to eliminate tipping from their restaurants when they applied the “no tipping policy” to 18 of their restaurants.
The restaurant’s research showed that about 60% of customers disliked the policy because it took away incentive for good service and that they didn’t necessarily trust that management is passing along the money to workers. The feedback from the customers of Joe’s Crab Shack is consistent with the results of a survey held by WaiterPay.com which revealed that a majority of servers were against no tipping policies. The WaiterPay survey revealed that waiters and waitresses believed that “no tipping” policies would negatively affect the pay they earned and decrease they quality of customer service.