Understanding the Rights of Employees Who Receive Tips in NYC

By Leeds Brown Law | February 24, 2017

Tips about Tips for Employees in New York City

Employment law attorneys, representing workers in New York, like those at Leeds Brown Law, P.C., know it is not easy to earn a living wage in New York City. For this reason, it is imperative that you hold on to everything the law entitles you.

Tip theft is a real problem across the country but especially in our area, given that there must be thousands of restaurants in the metropolitan area. Many are owned and run by professional and fair employers that treat workers with respect. Others, by individuals or corporations that routinely violate one or more of the wage and hour laws that exist to protect employees.

There are federal and state laws that apply to the payment of wages and gratuities, and whether your employer violates one willfully or by accident, you may be entitled to recover damages. Below is some basic information food service workers should consider.

Are You a Tipped Employee?

The rights and obligations associated with tipped employees only apply to an individual who regularly receives more than $30 per month in tips. If you regularly receive more than this, you are, for purposes of wage and hour laws, a tipped employee.

Tipped Employees May Not Share Tips with “Regular” Employees

Workers commonly participate in tip-sharing arrangements or tip pools. A tip pool is when all of the regularly tipped employees combine their earned gratuities and distribute them evenly among themselves.

However, regularly tipped workers should never be asked or required to share their tips with any other employees who do not also regularly receive tips.

  • Valid tip sharing: waiters, waitresses, bartender
  • Unlawful tip sharing: waiters, waitresses, restaurant manager, line cook

Tips on Credit Cards Belong to Employees

In New York, employers must pay workers their tips customers leave on credit cards on or before the next payday. The law on this issue varies from state to state, but here, an employer may deduct from a tip, a pro-rated amount, to help cover the credit card company’s transaction fee. For example, if the credit company charges 3%, the employer can separate the tip from the bill and use a portion from each to pay the cost.

Service Charges Added to Bill Belong to Employees

When large groups come into a restaurant, or there is a big event, restaurant owners or caterers sometimes add a service charge onto the bill. In New York City and the entire state, that money is presumed to be a gratuity and, as such, belongs to the employees. Unless someone notifies the customer that it is NOT a tip, that money must go to the workers.

Application of Tip Credit

The amount of the tip credit varies from state to state and even city to city. Applying it is complicated and confusing to most. For tipped workers, there is a minimum cash wage they must receive that is lower than that of other workers. Employers are allowed to use a predetermined portion of tips and apply that money toward their total minimum wage obligation. Many employers misuse the credit and apply more gratuities to minimum wage than allowed by law. This misapplication allows them to pay a lower cash wage: less money out of their pockets, less money in their employee’s pockets.

That is until someone speaks to an attorney at Leeds Brown Law, P.C. and files a claim for unpaid wages.

Contact Us

Don’t let your employer steal your tips or any other part of your wages. You work too hard to go home empty handed. Contact Leeds Brown 24/7 at 1-800-585-4658. Let us help you collect the tips and wages you have earned.



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