Tag Archives: Service Charge

New York City’s Gramercy Tavern Will Pay $695,000 to Restaurant Workers for Wage Theft

Gramercy Tavern

Gramercy Tavern, the popular Danny Meyer-owned upscale eatery located in New York City’s Flatiron District has agreed to pay $695,000 to current and former restaurant workers for wage theft violations, including an allegedly illegal tip pool and failure to pay workers the minimum wage.  The lawsuit, brought by two former bussers, claims Gramercy Tavern engaged in unlawful tip pooling practices by requiring service employees, such as service staff, bussers, runners, captains, and other service workers to share their tips with non-service employees. According to the lawsuit, these non-service employees included expeditors, silverware polishers, wine managers, and other workers who did not regularly and customarily interact with customers.

The bussers had claimed Gramercy Tavern used a tip credit to pay its workers at the tipped minimum wage, despite retaining a portion of the tips shared by employees and requiring them to participate in the illegal tip pool with non-service employees.  Employers may not use a tip credit unless the service employees retain 100% of all tips and gratuities they receive.

The workers also alleged that Gramercy Tavern required clients to pay an automatic “service charge” of 20% of the total bill for private events, but that none of these gratuities were distributed to the event’s service workers, in violation of the New York Labor Law.

The settlement will be distributed to approximately 220 waiters, waitresses, captains, bussers, food runners, and coffee runners who worked at Gramercy Tavern at any time between June 23, 2011 and September 15, 2016.  The settlement was approved on May 17, 2017 by Judge James C. Francis, a federal judge in New York.

 

Waiterpay Founder Featured on Brooklyn TV

Louis Pechman, the founder of Waiterpay, was a featured guest on BK Live’s June 2, 2014 segment on Tipped Wages.  The segment focused on pay issues in New York City restaurants, including concerns about the increase in lawsuits for illegal pay practices.  Among the topics discussed were the differences between minimum wage and tipped minimum wage, the complicated set of laws involving the tip credit, spread of hours, and other worker rights issues.

Food Network Celebrity Willie Degel Agrees to Pay $900,000 to Settle Wage and Hour Lawsuit

uncle jacks steakhouse logo

Uncle Jack’s Steakhouse and its owner, Food Network Celebrity Willie Degel, will pay $900,000 to settle a wage theft lawsuit filed against its restaurants located in Bayside, Queens and Midtown, New York City.  Ironically, Degel was featured on Food Network’s Restaurant Stakeout, a show which followed Degel as he visited restaurants across the country with hidden cameras to capture their food service problems and attempted to fix them.

On May 22, 2014, Judge Loretta Preska, Chief United States District Court Judge in the Southern District of New York, approved a $900,000 settlement between the restaurants and its workers, who alleged that their worker rights were violated by the restaurant.  Approximately 239 restaurant workers who worked between September 2002 and September 2008 at the New York City and Queens restaurants are expected to benefit from the settlement.

The lawsuit, which was filed in 2008 by captains, waiters, runners, bussers, and bartenders, alleged that the restaurants failed to pay them at the legally required minimum wage, routinely shaved their hours when they worked over 40 hours and refused to pay them overtime wages for hours worked over 40, misappropriated gratuities belonging to the waitstaff, failed to pay spread of hours pay when the employees’ workdays exceeded ten hours, and refused to pay for employee uniforms or laundering of such uniforms.

Oheka Castle Hit with Wage Theft Lawsuit

oheka castle exterior

Oheka Castle, a catering facility for weddings and lavish events in Huntington, Long Island, has been hit with a wage theft class action by a former server and bartender.

According to the federal court Complaint filed by the attorneys for the workers, the catering facility (which was once the second largest residence in the United States) developed a fraudulent timekeeping scheme in order to avoid the payment of overtime premiums to their waitstaff.  When workers worked more than forty hours in a single workweek, they were required to carry over their hours to subsequent weeks, so that company records would not reflect that they worked more than forty hours in a given workweek.  In addition, the catering facility regularly required workers whose hours approached forty hours in a workweek to clock out of the company’s biometric timekeeping system and continue working.

Attorneys for the workers allege that the catering hall misappropriated tips belonging to servers and bartenders.  The Complaint alleges that owner Gary Melius personally confiscated cash tips left by patrons for other service staff.  Moreover, Oheka charges patrons of their restaurant and catering services, a “service charge” of up to 22% which is added to the bill, leading patrons to believe that the service charges would be paid to the service staff.  According to the lawsuit, however, Oheka violated the New York Labor Law because it did not remit any of those service charges to the service staff.

TGI Friday’s Settles Waiter Lawsuit for $2.8 Million Dollars

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A $2.856 million dollar settlement between ten TGI Friday’s restaurants in New York owned by the Riese Organization, and its waitstaff, has been approved by a New York federal court judge.

The class action lawsuit, which was filed by the workers in 2012, alleged that TGI Friday’s failed to properly pay its tipped workers, including its servers, bussers, runners, bartenders, and barbacks.  In particular, the restaurant workers alleged that the restaurants did not pay their employees minimum wage or proper overtime compensation, failed to pay spread-of-hours pay or call-in pay, made unlawful deductions, encouraged workers to work “off the clock” when performing side-work, and engaged in other violations of the restaurant workers’ rights under the Fair Labor Standards Act and the New York Labor Law.

This settlement, which was approved by Judge Richard Sullivan on March 7, 2014, will provide back pay and damages for waiters, waitresses, and other waitstaff who worked between November 20, 2006 through June 30, 2013 at the TGI Friday’s restaurants in Manhattan.  Approximately 2,600 employees are covered by the settlement.

Service Charge Case Against Madison Square Garden Moves Forward

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The claim of workers at Madison Square Garden that service charges imposed by the Garden were “gratuities” that were not passed on to the workers has been given the green light by an appellate court in New York.  The servers all worked during the last decade as food and beverage servers at Madison Square Garden.

Attorneys for the workers brought the class action wage lawsuit, based on New York Labor Law §196-d, claiming that the Garden retained a portion of a mandatory “service charge” that should have been allocated to them as a gratuity. The Garden argued that the labor law lawsuit should be dismissed the gratuities claims are preempted by federal law and, alternatively, that the claims are subject to mandatory grievance and arbitration under a collective bargaining agreement. Both arguments made by MSG were rejected by the Court and the case has been allowed to continue.

The servers at MSG claim that at sports and entertainment events, MSG charges and collects “service charges” in the amount of 20 percent of the total charge assessed for all food and beverages. This charge is added to the bill because, unlike ordering restaurant services during which customers tip servers individually, the servers in the Garden are presumably not permitted to collect tips from customers attending Garden events. The workers claim that MSG led its customers and patrons to believe that the service charges were entirely gratuities for the service staff who served the food and drinks at these events.

The complaint alleges that MSG did not distribute to the service staff all the service charges it collected. The Court found that the servers stated a valid claim under New York Labor Law §196-d. Section 196-d states, in relevant part, that “[n]o employer or his agent or an officer or agent of any corporation, or any other person shall demand or accept, directly or indirectly, 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.” Judge Renwick, writing for a unanimous panel of the Appellate Division, First Department, noted that the “plain language of section 196-d prohibits any retention or withholding of gratuities by the employer” and that “under New York’s Labor Law, an employer cannot withhold from its employees any portion of a mandatory service charge that is added to a customer’s bill unless the employer makes it clear to the customer that it is retaining some or all of the charge.”

Restaurant Worker Rights Group Is Accused of Misconduct

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Restaurant Opportunities Center (ROC), a restaurant worker rights advocacy group has been accused of misconduct.  In an opinion piece published in the New York Post, Mike Paranzing accused the ROC of being a labor union front that doesn’t practice what it preaches.  Acccording to Paranzing, ROC exploited its own workers and cheated its employees at the restaurant Colors, and is guilty of the same labor abuses and health violations that it has leveled against other restaurants.

The FLSA at 75

The Fair Labor Standards Act (“FLSA”), which was signed into law by Franklin Delano Roosevelt on June 25, 1938 outlawed “oppressive child labor,” imposed a federal minimum wage of 25 cents per hour, and required overtime for hours worked over 40 in a week. But the America we live in is far different from that which existed 75 years ago and both employee advocates and company executives have raised serious questions as to how well the FLSA is currently working.  Read the full article written Louis Pechman, founder of waiterpay.com, on The Huffington Post.

Rainforest Café’s Tip Out Policy Challenged in Lawsuit

Servers at the Rainforest Café have filed a lawsuit against the restaurant alleging that its tip out policy unlawfully requires its waitstaff to share tips with non-service employees.

The lawsuit, which was filed in Massachusetts Superior Court by two waitresses, alleges that the Burlington, Massachusetts wild animal themed restaurant required them to give a portion of their tips to hosts and hostesses to supplement the wages of these non-waitstaff workers.  The workers also allege that the restaurant retained a portion of their gratuities for bussers, hostesses, and bartenders even when no bussers, hostesses, or bartenders were working during their shifts.

Lawyers for the waitresses claim that because of the illegal tip share policy, along with the improper deductions from the waitstaff’s pay, the company failed to pay its workers the lawful minimum wage as required by Massachusetts wage and hour law.

Explosion in Overtime Lawsuits Reported by CNBC

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Overtime lawsuits have hit a record level according to an article by CNBC.  Attorney Louis Pechman, founder of waiterpay.com, was quoted in the article, noting that “workers are becoming more aware of their rights” and that there is still “incredible non-compliance with the FLSA.”