Tips

Mastro’s Restaurant Accused of Stealing from Tip Pool

tip pool

Tipped employees at Mastro’s Steakhouse in Chicago sued the restaurant in Illinois state court, claiming that the restaurant illegally retained a portion of the tip pool, and failed to pay its servers the correct minimum wage.

Former Mastro’s busser Jose Murata brought the class action in Illinois State Court against Mastro’s, accusing the restaurant of violating Illinois Minimum Wage Law and the Illinois Wage Payment and Collection Act when it kept part of the pool of tips shared by its front of the house employees.

Attorneys for the severs claim that “the net effect of defendant’s policies and practices is that defendant willfully failed to pay the full amount of compensation earned and due to plaintiff and all other similarly situated employees,” and that “defendant thus enjoyed ill-gained profits at the expense of its hourly employees, including its Tip Credit Employees and Tip Pool Employees.” The class action lawsuit alleges that “in exchange for said labor, defendant was obligated to plaintiff and each member of putative … class the full amount of wages they earned, including tips. Defendant’s practice of operating an illegal tip pool and its improper taking of the Tip Credit has resulted in defendant’s Tip Credit Employees not being paid the full amount of minimum wages owed to them.” The lawsuit, claims that the restaurant was not allowed to take a tip credit because it failed to pay the proper amount of wages to its servers.

Restaurants cannot require servers to share their tips with non-service employees who do not customarily and regularly receive tips, such as dishwashers, cooks, chefs, janitors, and managers. Restaurants can require waiters to split their tips from customers with other front of the house employees who provide personal service to customers as a principal and regular part of their duties (such as bussers, bartenders, barbacks, food runners, captains who provide direct food service to customers, and hosts who greet and seat guests).

Dimora Ristorante Pays Waiter $60,000 in a Wage Violations Settlement

Dimmora Ristorante pays a Waiter $60,000 in a Wage Violations Settlement

Dimora Ristorante, an Italian restaurant in Norwood, New Jersey, has paid $60,000 to a former waiter to settle a wage violations lawsuit for unpaid minimum and overtime wages and tip theft.  The waiter argued that Dimora unlawfully required all front-of-the-house tipped employees, such as waiters and bussers, to pool their tips and share portions of them with two of the restaurants’ managers.

Under the FLSA, a restaurant can require front-of-the-house employees to pool and share their tips.  However, the restaurant violates the FLSA if managers participate in the tip pool.  Only non-managerial tipped employees can participate in the tip pool.  If a restaurant violates this rule, it loses the tip credit, which is the privilege of paying front-of-the-house tipped employees at a reduced hourly wage rate.  If this happens, the restaurant must pay back the tipped employees the tip credit, i.e., the difference between the full minimum wage rate and whatever reduced amount it paid them (which cannot be lower than $2.13 in New Jersey).

This is what the waiter argued against Dimora.  According to the waiter, Dimora required him to share portions of his tips with two managers who hired, fired, interviewed, directed the duties, and set the work schedules of tipped employees.  Because of this violation of the FLSA, the waiter claimed that the restaurant should not have paid him at the reduced wage rate of $2.90 per hour.  He argued that because Dimora violated the FLSA, it should have paid him the full minimum wage rate of $8.38 in effect in 2016 in New Jersey.  In other words, the waiter claimed he was owed the tip credit of $5.48 (i.e., the difference between $8.38 and $2.90) per hour worked up to 40 per workweek.  The waiter also claimed that the restaurant failed to pay him any wages at all for hours worked over forty per workweek.

The waiter was represented by Louis Pechman and Gianfranco Cuadra of Pechman Law Group PLLC.

TGI Friday’s Settles Wage Theft Case for $19.1 Million

TGI Friday's Wage theft lawsuit

A nationwide wage theft lawsuit against TGI Friday’s has been settled for $19.1 million according to a court filing by the workers’ attorneys in New York federal court. The settlement, which covers 28,000 restaurant workers, is a record amount for resolution of a wage theft lawsuit in the restaurant industry. This settlement is the latest example of fast casual restaurants across the United States paying out millions of dollars on wage theft cases.

The lawsuit alleged that TGI Friday’s failed to pay its tipped hourly food service workers the proper minimum wage, overtime pay, and misappropriated tips. Attorneys for the servers, bussers, runners, bartenders, barbacks and hosts, claimed that TGI Friday’s failed to satisfy the strict requirements under the Fair Labor Standards Act (“FLSA”) and the New York Labor Law (“NYLL”) that would allow them to pay a reduced minimum wage rate to tipped employees. In particular, TGI Friday’s had a policy and practice that required tipped employees to spend over two hours and/or in excess of 20% of their work shift performing non-tip producing “side work.” Side work included, general cleaning of the restaurant, preparing food in bulk for customers, cutting produce, refilling condiments, and stocking and replenishing the bar and service areas. According to attorneys for the workers, this practice violated the “80/20 rule” and TGI Friday’s should have paid the tipped employees the full minimum wage rate, rather than reduced tipped minimum wage rate.

The front of the house workers also alleged that TGI Friday’s required them to perform “off the clock” work for which they were never compensated. “Off the clock” work consisted of requiring them to arrive at the restaurant one hour before customer service to perform side work, requiring them to punch in after they got their first table, and punch out before they performed closing side work. As a result of these practices, workers were not compensated for all the hours they worked and when they worked over forty hours per workweek, they were not paid overtime pay. Furthermore, the lawsuit claimed that TGI Friday’s required tips to be distributed to employees who are not entitled to tips under the FLSA and/or NYLL such as, silverware rollers and expeditors. Additionally, workers were given only one uniform, which TGI Friday’s failed to launder or pay workers the statutory uniform allowance. Finally, TGI Friday’s was accused of making unlawful deductions from employee wages for customer walkouts.

If approved, the settlement would resolve a nationwide class action brought by more than a dozen workers, alleging violations of the FLSA and claims brought under the labor or unfair competition laws of nine states: California, Colorado, Connecticut, Florida, Illinois, Maryland, Michigan, New Jersey and New York.

 

Jessica Biel’s Restaurant Hit with $430k Wage Theft Lawsuit

Au Fudge gratuities Jessica Biel

Au Fudge, an upscale Los Angeles restaurant owned by actress Jessica Biel, was hit with a wage theft lawsuit claiming the restaurant withheld over $430,000 in tips from staff during events.   Described by the Los Angeles Times as an “organic, kid-friendly restaurant,” Au Fudge serves fine food and drinks and offers creative spaces for children’s activities, as well as au pair services.  Biel and her business partners are sued by several former employees including a former server, server assistant, au pair, bartender, runner, host and event director for gratuities and rest and meal break pay.

Au Fudge frequently hosted private events for big companies including Amazon, Netflix, and Fox Studios where the event contracts included an automatic 22 percent gratuity.  In their lawsuit, the former employees claimed that whenever there was a private event at Au Fudge, the restaurant led customers to believe that the “gratuity” fee that they paid was a tip that would be distributed to the waitstaff.  According to the workers, Au Fudge unlawfully pocketed all the gratuity fees that customers paid, even though those amounts should have been given to the waitstaff as tips. The complaint also alleges that employees were not paid for rest and meal breaks under California Law.

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

 

 

 

Ruby Tuesday Restaurant in Times Square Sued by Bartender for Wage Theft

Ruby Tuesday Lawsuit Tips Hours Bartender

Ruby Tuesday’s Times Square location was sued for wage theft by a former bartender, Amanda Zarfos, who alleges that the restaurant failed to pay tipped employees for all hours worked and violated the so called 80/20 rule.

The lawsuit, filed in New York federal court, claims that during her employment at Ruby Tuesdays, servers and bartenders at Ruby Tuesday were improperly paid at the tipped minimum wage  rate for all hours worked even though they spent more than 20 percent of her shifts performing work that involved no customer interaction and did not generate tips.  For example, Zarfos was required to brew beverages, cut lemons, bake bread, help pack to-go orders, and wipe wood.  According to the Department of Labor’s Field Operations Handbook,

The FLSA permits the employer to take a tip credit for time spent in duties related to the tipped occupation of an employee, even though such duties, are not by themselves directed toward producing tips, provided such related duties are incidental to the regular duties of the tipped employees and are generally assigned to the tipped employee. For example, duties related to the tipped occupation may include a server who does preparatory or closing activities, rolls silverware and fills salt and pepper shakers while the restaurant is open, cleans and sets tables, makes coffee, and occasionally washes dishes or glasses.  However, where the facts indicate that tipped employees spend a substantial amount of time (in excess of 20 percent of the hours worked in the tipped occupation in the workweek) performing such related duties, no tip credit may be taken for the time spent in those duties. All related duties count toward the 20 percent tolerance.

Similarly, the New York Labor law has an analogous prohibition covering non-tipped work exceeding 20 percent of a shift.

Attorneys for the restaurant workers also claim that tipped employees were required to work off-the-clock without pay. The lawsuit claims that employees were not allowed to clock in despite the restaurant knowing and expecting them to start working.  Willful refusal to pay employees wages for off-the-clock work is a violation of the Fair Labor Standards Act and the New York Labor Law.

Indian Restaurant Ordered to Pay $1.4 million to Five Restaurant Workers for Wage Violations

Indus Valley wage violations

Indus Valley Restaurant, an Indian restaurant on the Upper West Side, has been ordered by a New York Judge to pay $1.4 million in back pay and damages to five former restaurant workers for wage violations.

Indus Valley, now closed, was accused by the workers of failing to pay minimum wage, overtime, and spread of hours pay as required by the Fair Labor Standards Act and New York Labor Law. The workers who sued the restaurant included two cooks, a food runner, a waiter, and a busboy. The workers, who regularly worked up to seventy-two hours per week, were each paid a fixed weekly salary, rather than an hourly wage. They did not receive overtime payment when they worked over forty hours in a workweek.  Three of the employees are also owed unpaid minimum wages.

The decision follows an inquest at which the employees gave sworn testimony about their weekly schedules and payments from Indus Valley.  The owners failed to appear and were held in default by the Court.  Indus Valley is ordered to pay $1,412,318.66 plus interest, for unpaid wages, liquidated and statutory damages. Laura Rodriguez, an associate at Pechman Law Group, was lead attorney on this case.

Rosa Mexicano Reaches $3.6 Million Settlement with Servers for Tip Violations and Overtime

rosa mexicano overtime pay lawsuit tip theft

Rosa Mexicano has agreed to pay $3.6 million to settle a nationwide class action lawsuit alleging that the upscale Mexican restaurant chain failed to pay its waitstaff minimum and overtime wages and misappropriated tips.  The settlement agreement covers an estimated 3,500 employees at twelve locations in New York, New Jersey, Los Angeles, San Francisco, Miami, Boston, Atlanta, Washington D.C., Baltimore, and Minneapolis.

The restaurant workers filed the lawsuit suit in New York federal court in July of 2016, arguing 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 Fair Labor Standards Act (“FLSA”) and the New York Labor Law (“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 wage theft lawsuit also claimed that Rosa Mexicano did not pay waitstaff for hours worked over forty per week. Some former servers claimed 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.  For these violations, the employees sought to recover unpaid minimum wages, unpaid overtime wages, unpaid “call-in pay”, liquidated damages and attorneys’ fees.

The attorneys for the restaurant workers are Fitapelli & Schaffer, a New York law firm. The settlement is subject to approval by United States Magistrate Judge Ronald L. Ellis.

 

 

Department of Labor Rescinds Tip Pooling Rule

tip tip pooling tip theft

The United States Department of Labor announced that it will revoke an Obama-era regulation prohibiting restaurants from pooling customers tips with back-of-the-house workers.  Although this change could have a significant impact in many areas of the country, New York State still has restrictions on who can participate in a tip pool.

The Legal History

Unless state laws require higher amounts, as is the case in New York State, the Fair Labor Standards Act (“FLSA”), a federal law, requires employers to pay employees at least the federal minimum wage rate of $7.25 per hour worked.  The FLSA allows restaurants to pay employees who regularly receive tips as little as $2.13 per hour if they make the difference (i.e., $5.12) per hour in tips.  The $5.12 difference is known as a “tip credit,” which is a privilege that the FLSA gives to restaurants.  The FLSA also allows restaurants to require tip-receiving employees to pool their tips for distribution among employees.

Before 2011, there was much debate about which employees could participate in a restaurant’s mandatory tip pool.  Some courts concluded that only employees who regularly receive tips and who spend at least 80% of their time serving customers at tables, known as “food service employees,” could participate in a tip pool.  These courts concluded that if a restaurant forced food service employees to share their tips with non-service employees, such as cooks or other back-of-the-house employees, then the restaurant violated the FLSA and had to pay back tips and other wages to the food service employees.  Other courts reached the opposite conclusion.  They reasoned that any employee should be allowed to participate in the mandatory tip pool as long as the restaurant did not take a tip credit and, instead, paid its employees the full minimum wage rate ($7.25 under federal law, but higher under New York State law).

In 2011, the US Department of Labor enacted a regulation that back-of-the-house employees cannot participate in a tip pool with front-of-the-house food service employees regardless of whether the restaurant takes a tip credit. The 2011 regulation mirrors the New York Labor Law and the New York State Department of Labor’s Hospitality Wage Order, which limit tip pooling to food service employees only.  In New York, back-of-the-house employees can never participate in a mandatory tip pool with front-of-the-house food service employees.

The Recent Change and Effect in New York

Under the Trump Administration, the US Department of Labor has announced that it will revoke the 2011 regulation.  The effect of this revocation is that in many areas of the country, but not in New York, restaurants that do not take a tip credit can require front-of-the-house employees to share their tips with any other restaurant employee.  Note that, restaurants that take a tip credit against front-of-the-house food service employees still cannot require them to share their tips with back-of-the-house workers.

These changes at the federal level have no impact in New York, whose laws and regulations already require that tips left by customers be given to front-of-the-house employees.  Under New York laws, food service employees can be required to share their tips only with other food service employees.   For example, a tip pool in a New York restaurant is lawful if it is composed of non-managerial bartenders, servers, bussers, and runners.  However, it would be unlawful for a New York restaurant to require servers and bartenders to share tips with a cook or manager.

“Best Restaurant in America” To Pay $2 million to Settle Tip Theft Lawsuit

Blue HIll tip theft lawsuit

Dan Barber’s Blue Hill restaurant has agreed to pay its waitstaff $2 million to settle an unpaid wages and tip theft  lawsuit.

Recognized by Eater as the Best Restaurant in America for its locally-sourced farm-to-table cuisine, Blue Hill at Stone Barn and its sister restaurant in Manhattan was sued by two former servers in 2016 on behalf of themselves and all servers, bussers, bartenders, runners, and hosts and hostesses.  In their lawsuit, the servers claimed that Blue Hill required them to share their tips with expeditors, who were kitchen employees that did not interact with the restaurant’s customers.  The servers argued that this tip pooling system was unlawful.  Under the law, waitstaff should not be required to share their tips with restaurant employees who do not interact with customers, such as kitchen employees.

Attorneys for the workers also claimed that whenever there was a private event or banquet at Blue Hill, the restaurant led customers to believe that the “service” or “administrative” fee that they paid was a tip that would be distributed to the waitstaff.  According to the servers, Blue Hill unlawfully pocketed all service charges that customers paid, even though those amounts should have been given to the waitstaff as tips.

The wage theft lawsuit claimed that Blue Hill did not pay them minimum wages, as required under New York State law.  Because Blue Hill required the waitstaff to share tips with kitchen employees, like expeditors, in an unlawful tip pool, the restaurant could not pay waitstaff at a reduced minimum wage rate and take a tip credit.  Normally, if a restaurant meets several legal requirements, it may pay employees who regularly receive tips at a reduced hourly wage rate.  The restaurant loses this privilege if it pockets any part of the waitstaff’s tips or creates an unlawful tip pool.  For this reason, the servers claimed that they were owed the difference between the reduced hourly rates they were paid and the full minimum wage rates in New York.

Since the settlement, Blue Hill has eliminated tipping at its restaurants, a growing trend among New York restaurants.

 

SUBWAY Restaurant Settles Overtime Pay Lawsuit

subway overtime pay tip theft

A SUBWAY restaurant located in Times Square has paid $42,500 to a sandwich preparer to settle a lawsuit alleging that the popular sandwich chain did not pay him overtime pay, in violation of the Fair Labor Standards Act and the New York Labor Law.  The lawsuit was filed against the individual franchise restaurant, as well as the SUBWAY corporation.

The sandwich preparer, also referred to within the Company as a “sandwich artist,” alleged that he worked up to 60 hours per week making sandwiches and preparing toppings, and was not paid overtime pay.  The lawsuit also alleged that a store manager regularly took tips from a tip jar meant for the sandwich preparers.  Federal and New York State law provides that an employer must pay overtime pay to its non-exempt employees, and that employers may not take a share of gratuities left by customers to food service employees.  The sandwich artist also claimed that SUBWAY did not give him required wage notices and correct wage statements.

This is not the first time that SUBWAY has been hit with a wage lawsuit.  In fact, as of 2014, SUBWAY restaurants violated the wage payment laws more than any other fast food restaurant.  Indeed, in July 2016, SUBWAY entered into a SUBWAY Agreement with USDOLwith the U.S. Department of Labor’s Wage and Hour Division to promote and achieve compliance with labor laws.

Vivianna Morales, an attorney with Pechman Law Group, was the lead attorney on behalf of the worker at SUBWAY.

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