Tag Archives: NYS Department of Labor

Average Wage of New York City Waiter and Waitress is $23.34 According to a Pay Survey

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The average wage of a server in a New York City restaurant is $23.34 per hour, according a tip wage survey conducted by New York City Hospitality Alliance.

The pay survey, which was taken by employers at 486 New York City restaurants and bars employing approximately 15,000 tipped employees, revealed that besides the average $23.34 hourly wage for servers, bartenders earn approximately $27.48 per hour, and bussers and food runners earn about $17.11 per hour. Cocktail servers and bartenders at clubs and lounges make approximately $31.21 an hour and $32.35 an hour, respectively, and bussers and food runners at those nightlife establishments make an average of $18.84 per hour.

The survey was released by the New York City Hospitality Alliance, an industry advocacy group, on October 17, 2014, in anticipation of a Wage Board hearing that was held by the New York State Department of Labor on October 20. At the hearing, advocates were pushing for the elimination of the tip credit, which would require employers to pay tipped employees an additional $4.00 after the minimum wage increases. Restaurant employers and industry representatives, however, argued that the elimination of the tip credit would have devastating economic effects, resulting in among other things, hiring freezes, layoffs, lower wages, and few restaurants openings.

The New York City Hospitality Alliance proposed freezing the $5.00 per hour for tipped employees making a living wage of about one and one-half times the current minimum wage when their tips are added to the base wage. If the $5.00 per hour plus tips equals less than that, the employer pays a higher hourly tip wage.

Program on “How to Handle a Wage and Hour Case” at NYCLA

A program on “How to Handle a Wage and Hour Case” will be held at the New York County Lawyers’ Association on January 31, 2013. Faculty for the program are Terri Gerstein, the Labor Bureau Chief, New York State Attorney General’s Office; Justin Swartz, attorney with Outten & Golden LLP; and Noel Tripp, attorney with Jackson Lewis LLP.

Louis Pechman, founder of waiterpay.com, will moderate the program. For more information on the program, visit NYCLA’s site.

Legislation Proposed to Limit Effect of World Yacht Service Charge Decision

The scope of liability under Samiento v. World Yacht, the landmark 2008 decision by the New York Court of Appeals, is facing a challenge from New York legislators.  A proposed Senate Bill and an Assembly Bill in the New York State Legislature seek to eliminate past liability for catering halls and restaurants for improper retention of mandatory service charges held out to customers to be gratuities.

The battleground of the proposed legislation is Section 196(d) of the New York Labor Law, which currently provides that an employer or his agent cannot accept “any part of the gratuities, received by an employee, or retain any part of a gratuity or of any charge purported to be a gratuity for an employee.”  The New York Court of Appeals, in Samiento v. World Yacht, Inc., 10 N.Y.3d 70 (2008), interpreted this provision to mean that a restaurant cannot add a “service charge” or gratuity to the bill without passing it on to the waitstaff.  In other words, a restaurant cannot keep a “service charge” or gratuity that it leads customers to believe will be given to the waiters.  However, if the restaurant adequately conveys to the customer that the charge is not going to the waitstaff (i.e., by referring to it as an “administrative fee”) then the restaurant is allowed to keep all or a portion of the charge, but not any additional amount the customer intends for the waitstaff.

Under the Hospitality Wage Order, which went into effect on January 1, 2011, a charge for the administration of a banquet, special function, or package deal must be clearly identified as such and customers must be notified that the charge is not a gratuity or tip. However, the employer has the burden of demonstrating, by clear and convincing evidence, that the notification was sufficient to ensure that a reasonable customer would understand that such charge was not a gratuity. Under the Hospitality Wage Order, adequate notification includes a statement in the contract or agreement with the customer, and on any menu and bill listing prices, that the administrative charge is for administration of the banquet, special function, or package deal, is not a gratuity, and will not be distributed as gratuities to the employees who provided service to the guests. The statements must use ordinary language, which can be readily understood and appear in a font size similar to the surrounding text, but no smaller than a 12-point font.

The proposed legislation is intended to give the effects of the Samiento v. World Yacht decision only prospective treatment.  From the point of view of the restaurant lobby, the decision in Samiento v. World Yacht reflected a change in the law, and restaurants and caterers should not be punished for the Court of Appeals’ interpretation.  From the point of view of workers, an employer who infers to its customer that a service charge or gratuity will be given to its service staff should be held accountable for actually paying those gratuities to the servers.

The significant liability for restaurants and catering halls under the Samiento v. World Yacht, Inc. decision was underscored by the recent $8.5 million settlement of servers with Pier Sixty. The complaint against Pier Sixty, a premier banquet hall in New York City, alleged that the banquet facility misappropriated gratuities when it charged its customers a 20-22% service charge but failed to distribute the service charge monies in full to its waitstaff.

Servers at Pier Sixty Catering Hall To Receive Record Back Pay Settlement

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Pier Sixty has agreed to pay $8.5 million to settle the overtime and tip misappropriation claims of its servers, according to court documents filed in federal court last week.  Approximately 2,500 workers will share in the settlement.

The Complaint against Pier Sixty, a premier banquet hall in New York City, alleged that the banquet facility misappropriated gratuities when it charged its customers a 20-22% service charge but failed to distribute the service charge monies in full to its waitstaff.  The lawsuit also alleged that the banquet hall failed to pay its workers overtime pay as required under the Fair Labor Standards Act.

The Pier Sixty case underscores the potential liability that restaurants, banquet halls, and caterers face when they do not pay servers the money they receive for service charges for customers in New York.  In Samiento v. World Yacht Inc., 10 N.Y.3d 70 (2008), the New York Court of Appeals stated that, “a charge that is not a voluntary payment may be a ‘charge purported to be a gratuity’ within the meaning of the New York Labor Law statute.”  The New York State Hospitality Industry Wage Order, which went into effect January 1, 2011, prohibits employers from demanding, accepting, or retaining, directly or indirectly, any part of an employee’s gratuity or any charge purported to be a gratuity, and specifically states that a charge purported to be a gratuity must be distributed in full as tips to the service employees or food servers who provide the service.  A charge for the administration of a banquet, special function, or package deal must be clearly identified as such and customers must be notified that the charge is not a gratuity or tip.

The proposed $8.5 million settlement, which still must be approved by U.S. District Court Judge Paul A. Engelmayer, is the largest payment to date of any reported wage and hour lawsuit in the New York hospitality industry.

The servers in the lawsuit were represented by D. Maimon Kirschenbaum and Denise Schulman of Joseph, Herzfeld, Hester & Kirschenbaum.  Pier Sixty was represented by Carolyn Richmond of Fox Rothschild LLP.

Notice Requirements Under the New York State Wage Theft Prevention Act Are Now in Effect

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Under the New York State Wage Theft Prevention Act, effective February 1, 2012, New York employers are now required to give annual notice to their employees of wage information, including:

•His or her regular rate(s) of pay and overtime rates of pay (if applicable);

•The basis of the employee’s wage rate (i.e. hourly, weekly, salary, commission, other);

•Any allowances claimed against the minimum wage (tip credit, meal credit, lodging allowances, etc.);

•The employer’s principal place of business, and mailing address (if different);

•The employer’s telephone number; and

•Additional employer information, such as the official name of the business and all “doing business as” names.

Employers are also required to obtain signed acknowledgements from each employee which memorialize the employee’s receipt of his or her wage notice.  These signed acknowledgements must be retained by employers for six years.

This Notice requirement is an important law with significant penalties for non-compliance.  Any new employee not provided with the notice within 10 business days of his or her start date may bring a claim to recover $50 for each workweek that a violation occurs and may recover up to $2,500, plus attorneys’ fees.  For statutory violations relating to a current employee, the employer may be liable for damages of up to $100 per week and may recover up to $2,500, plus attorneys’ fees.

The New York State Department of Labor has prepared a FAQ and sample form notices in English and Spanish.

How to Handle a Wage and Hour Program at NYCLA on October 25

How to Handle a Wage and Hour Case is the subject of a program that will be held at New York County Lawyers’ Association on October 25, 2011.  Speakers at the program include Terri Gerstein, Esq., Labor Bureau Chief of the New York State Attorney General’s Office, Rachel Bien of Outten & Golden LLP, and Noel Tripp of Jackson Lewis LLP.  Louis Pechman, founder of waiterpay.com, will moderate the program.  More information on the program can be found by visiting NYCLA’s website.

New Rule on Credit Card Tip Distribution Issued by New York State Department of Labor

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The Department of Labor has published a rule that New York restaurants can include credit card tips on a waiter’s next paycheck rather than be distributed on a daily basis.  The rule also provides that restaurants may subtract from the tips of the waitstaff a pro-rated share of the fee charged by the credit card company.

The full text of the rule, which is also published on the Department of Labor’s website, is as follows:

When tips are given by customers via credit card, the employer must pay the employee the amount due no later than the next regularly scheduled pay day.  The employer may subtract from the employee’s tips the pro-rated share of the charge levied by the credit card company.  An employer remitting tips to an employee must include a breakdown between the tips and the wages on the employee’s wage statement, which must meet all other requirements for wage statements.  The position reflects a change in DOL policy as set forth in DOL opinion RO-08-0032 related to this issue.  That opinion is hereby rescinded.

When customers pay tips in cash, employers may as a service to their employees, allow employees to leave cash tips earned over the course of a pay period with the employer.  The employer must issue a tip payment for the total amount of those cash tips along with any wage payment for the same pay period.   A request by an employee for the employer to provide this service must be voluntary, and the agreement cannot be a pre-condition of employment or a condition of continued employment.  The employer must still keep a daily record of the tips earned by each employee provided this service, and have those records available for inspection by the employee and/or the Department.  The wage statement provided with the tip payment must contain a breakdown of tips and wages, and meet all other requirements for wage statements.

Restaurant Owner’s Manual Issued By Tompkins County Workers’ Center

The Tompkins County Workers’ Center has issued a basic guide to labor and employment laws in the restaurant and hospitality industry.  The “Restaurant Owner’s Manual” provides a review of laws pertaining to hiring practices, minimum wage, tips, overtime, payroll, uniforms, record keeping, employment discrimination, harassment, and disability law.  The “Restaurant Owner’s Manual” was compiled in response to a Department of Labor investigation which found 17 Tompkins County restaurants in violation of labor and employment laws.  Those violations included: failing to pay minimum wage; making illegal deductions from workers’ paychecks; underpayment for uniform purchase and maintenance; meal compensation; incomplete records; and minor infractions.

Lenny’s Settles Overtime and Minimum Wage Case with New York State Department of Labor for $5.1 Million Dollars

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The New York State Department of Labor has reached a $5.1 million settlement with Lenny’s, a New York City-based sandwich chain with several locations, for minimum wage and overtime violations affecting over 800 workers. This settlement is the largest recorded settlement for workers in the Department of Labor’s 110-year history.

According to the Department of Labor’s press release, from 2002 to 2008, over 800 employees from eleven Lenny’s locations were cheated out of millions of dollars. The Department of Labor’s investigation found that employees were regularly paid less than the minimum wage and were not paid overtime wages. Employees worked 10 to 12 hours a day, six to seven days a week, at an average weekly salary of $275 per week. As required under the state’s minimum wage and overtime law, however, the workers should have been paid at least $500 per week for the same number of hours worked. In addition, time records kept by the employer were not accurate and wage statements were not provided to workers, as required by law.

As a result of its investigation, the Department of Labor has reached a $5.1 million settlement with Lenny’s for wages, damages, and penalties. The Department of Labor has received a $1 million down payment and Lenny’s will pay the remaining $4 million in full over the next twenty-four months. Lenny’s is paying $100,000 in penalties to the state.  Employees will receive the first installment of their unpaid wages beginning in June 2011.

New York State’s minimum wage is now $7.25 per hour. Employers are required to pay overtime for weekly hours past 40 at 1.5 times the employee’s regular pay rate.

Twenty Percent Rule for Tip Credit is Key Issue in Lawsuit By Applebee’s Waiters and Bartenders

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Under the Fair Labor Standards Act (“FLSA”), employers are allowed to take a “tip credit” and pay waiters, bussers, and bartenders below the federal minimum wage of $7.25 per hour.  For example, the “tip credit” for waitstaff in New York is currently $2.25 per hour, meaning that waiters, busboys, and bartenders can be paid an hourly minimum wage of $5.00 per hour.  The United States Department of Labor regulations provide, however, that a restaurant will not qualify for the “tip credit” for employees that spend more than 20% of their time performing non-tipped work.

In Fast v. Applebee’s International, a group of servers and bartenders filed a lawsuit alleging that Applebee’s had violated the Department of Labor’s “twenty percent rule” by requiring employees to work more than 20% of their time performing non-tipped tasks such as cleaning the bathrooms, sweeping the restaurant, cleaning and stocking service areas, and rolling silverware, while still taking the “tip credit” for all of the time worked.  Applebee’s argued that the Department of Labor’s “twenty percent rule” was contrary to the terms of the FLSA and that once an employee is classified as a “tipped employee” their employer may take a tip credit for all hours worked, regardless of the actual tasks performed.  Alternatively, Applebee’s argued that all work done by their tipped employees contributed to the enjoyment of their customers and was, therefore, related to the occupation of server or bartender.  A federal district court in Missouri ruled for the employees.  However, the court’s Order was appealed to the Eighth Circuit Court of Appeals.  A decision from the Court of Appeals on this important workers’ rights issue is expected in the months ahead and will have a significant nationwide impact.

Restaurant workers and employers in New York State should note that the twenty percent rule is already in effect for waiters, bussers, and bartenders in New York.  The New York State Department of Labor’s newly revised Hospitality Wage Order specifically provides a twenty percent rule for restaurants that take a “tip credit.”  Subpart 146-2.9 of the Hospitality Wage Order states:

On any day that a service employee or food service worker works at a non-tipped occupation (a) for two hours or more, or (b) for more than twenty percent (20%) of his or her shift, whichever is less, the wages of the employee shall be subject to no tip credit for that day.