Failure to follow wage payment rules for tipped employees can be costly, as discovered by Chef Andrew Carmellini’s restaurant group Noho Hospitality which has agreed to pay $5.5 million to settle a lawsuit brought against its high-profile restaurants around New York City, as a result of tip credit and tip misappropriation violations.
The class action lawsuit covered anyone who worked in a front-of-house, tipped position at Noho Hospitality restaurants, including Bar Primi, Westlight, Lafayette and Locanda Verde between September 2012 and January 2019. Four employees initiated the lawsuit, claiming that the company didn’t pay the proper minimum wage and misappropriated tips from private events. The lawsuit claimed that contracts for private events contained an “administrative fee” that was purported to be gratuities yet was never distributed to the employees. In addition, the restaurants failed to provide tipped employees with notification of the tipped minimum wage rate or tip credit provisions of the FLSA and New York Labor Law. Due to these violations, the employees should have been paid at the full minimum wage rate for all hours worked.
In New York City, tipped employees are entitled to a “tipped minimum wage”, which ranges from $9.00 to $10.00 per hour depending on the size of the restaurant. A restaurant may only pay a tip credit if it meets all the requirements of the law. Tipped employees should also retain their gratuities, and tips should not be split with management or non-tipped workers such as kitchen workers. Under both the FLSA and New York Labor Law, tipped-employees should retain all their earned gratuities, less they are part of a lawful tip-pool that includes other employees who customarily and regularly receive tips (bartenders, servers, food runners, baristas, sommeliers, hosts, barbacks, bussers, etc.).
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