Tag Archives: Tip Credit

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.

May 21st is National Waiters and Waitresses Day – Know Your Rights!

server restaurant image waiter tip credit

Today is National Waiters and Waitresses Day, but many restaurants in New York will continue to pay their waitstaff incorrectly today, as they do everyday.

If you are a server, runner, bartender, or busser in New York, you should know your rights.  Here are ten wage theft violations that you need to know about:

  1. Management Stealing TipsOwners and managers cannot take a share of the waitstaff’s tips for themselves or use tips to pay for kitchen workers or non-service staff.
  2. Minimum Wage 

    Restaurants in New York are required to pay their waitstaff either a minimum wage (ranging between $9.70 and $11.00 depending on size of employer and location) or a tipped minimum wage ($7.50 per hour in New York).

  3. Overtime Pay 

    Restaurants are supposed to pay their workers overtime at an overtime rate of one and one-half times the worker’s regular rate of pay for all hours worked above 40 per week.

  4. Notice of Tip CreditRestaurants must give waiters, waitresses, runners, bartenders, and bussers proper notice of a “tip credit” before paying them the reduced minimum wage of $7.50.
  5. Misappropriation of “Service Charge” 

    New York restaurants cannot keep the fixed gratuity or “service charge” charged to customers when the customers believe that it is a tip going to waitstaff.

  6. Spread-of-Hours Pay 

    New York restaurants are required to provide their workers with an extra hour of pay at the full minimum wage rate whenever the length of their work day exceeds ten hours.

  7. Credit Card Fees 

    An employer may deduct no more than the credit card processing fees assessed on the charged tips. In other words, the restaurant cannot deduct 5% from your tips for credit card fees if the credit card companies are only charging the restaurant 3% to process the payment.

  8. Charging for Customer Walkouts 

    Servers should not be charged for customers who dine and dash.

  9. Breakage Charges 

    Servers do not have to pay for broken plates or glassware.

  10. Uniform MaintenanceWaitstaff should not be charged for buying or cleaning a uniform.

Servers at Le Cirque Sue For Minimum Wage and Overtime Violations

le cirque logo

A waiter at Le Cirque restaurant, recognized as one of the best restaurants in New York City, has filed a class action complaint in Manhattan federal court on behalf of all front of the house employees, other than captains, employed at the restaurant since September 17, 2008.

The lawsuit alleges that the restaurant violated the minimum wage provisions of the Fair Labor Standards Act and the New York Labor Law when it paid service employees a reduced tipped minimum wage rate without adhering to the laws’ requirements by which it could take the “tip credit.”  Attorneys for the workers claim that the restaurant should not have paid the workers the federal tipped minimum wage because the restaurant allowed captains, who were managerial employees, to share in the tips, and also failed to adequate notice of the tip credit to the service employees.

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. (Note: minimum wage in New York is now $8.00 per hour).  For example, the “tip credit” for waitstaff in New York is currently $3.00 per hour, meaning that waiters, busboys, and bartenders can be paid an hourly minimum wage of $5.00 per hour.  The Fair Labor Standards Act only allows employers to take this tip credit when the employees have been informed of the tip credit provisions of that law, and when the worker is allowed to retain all of the tips that he receives or is only required to share his tips with other workers who also customarily and regularly receive tips, such as servers, busboys, runners and bartenders.

The complaint against the restaurant alleges that the captains had authority to set schedules, discipline employees, grant or deny vacation requests, interview prospective employees, run pre-shift meetings, control station assignments, and recommend employees for hire, fire, and promotions.

The case against Le Cirque seeks back wages, penalties, and attorneys’ fees and costs.  This is the second lawsuit brought against Le Cirque for wage violations. Waiters who staffed private parties sued in 2009 over the restaurant’s retention of a mandatory service charge of as much as 20% paid on private parties.

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

nyc hospital alliance

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.

Sushi Yasuda to Pay $2.4 Million to Settle Wage Claims

sushi yasuda

Sushi Yasuda, widely recognized as one of the best Japanese restaurants in New York, has settled a lawsuit for $2.4 million dollars according to a proposed settlement agreement filed in New York federal court.

The restaurant’s front of the house staff alleged that Sushi Yasuda violated the Federal Labor Standards Act (FLSA) and New York Labor Law by failing to pay employees for all the hours worked, unlawfully taking a “tip credit” and paying the employees less than the minimum wage, and failing to pay employees spread-of-hours pay when they worked more than ten hours in a day.

Sushi chefs, bussers and the waitstaff at the restaurant will receive a proportional share of the Settlement Fund based on the number of shifts they worked from December 3, 2006 to May 12, 2013.  According to the attorneys for the workers, over 100 employees will be covered by the settlement.

The restaurant recently received wide press coverage for its elimination of tips when owners decided to give customers an authentic Japanese dining experience by following the Japanese custom of not tipping.  The restaurant rolled out its policy on its bills and menus, which stated, “Following custom in Japan, Sushi Yasuda’s service staff are fully compensated by their salary.  Therefore gratuities are not accepted.  Thank you.”

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.

Peter Luger’s Steakhouse Settles Wage Lawsuit for $250,000

peter luger steak house logo

Workers at Peter Luger’s, recognized by Zagat’s as the best steakhouse in New York, has agreed to a $250,000 settlement to resolve claims made against the Long Island location of the steakhouse for Fair Labor Standards Act (FLSA) and New York labor law violations, according to papers filed with the court.

Restaurant employees initially filed a complaint against the steakhouse in March 2013, alleging that the restaurant failed to pay them for all hours worked, specifically that the restaurant violated its workers’ rights by failing to pay proper overtime and minimum wages and spread-of-hours pay, and by maintaining an illegal tip pool.  The Complaint alleged that the management deducted $20.00 from the tip pool every day, which would then be given to the kitchen staff at the end of the year.

The workers have asked the Judge Wexler to approve the settlement and certify the proposed class, which would cover 62 employees who worked at the restaurant’s Great Neck location as servers, waitstaff, waiters, and bartenders.

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.