Wage Issues Facing Tipped Employees in New York

By Leeds Brown Law | January 29, 2017

Restaurant’s Tipped Workers Fight for Wages

Living and working in New York, employment law attorneys at Leeds Brown Law, P.C. see how difficult it can be for waiters, waitresses, and other food service workers to make ends meet. With the thousands of restaurants in the New York City area alone, the opportunities for employment in the hospitality and food industries are plentiful. However, when you rely on tips to supplement your hourly wages, there are no real guarantees that you will earn enough in a given week to cover all of your expenses. Unfortunately, there are business owners out there who make it more uncertain by unlawfully withholding wages from their staff.

Rules and regulations about paying employees are complicated. Laws cover nearly every aspect of wages such as record keeping, tax withholding, minimum wage, overtime pay, deductions, tips, and other requirements. These rules can vary depending on the industry you work in and the location of your job. For example, the minimum wage in New York City is different than the minimum wage on Long Island, and there are special regulations that apply to wage calculations and gratuities for workers in the restaurant and hospitality industries.

Employees Sue Another New York City Restaurant for Unpaid Wages

There has been a slew of cases filed against restaurant owners in New York City recently that highlight some of the unpaid wage problems that waiters and waitresses encounter in their jobs. The most recent of these is a class action lawsuit brought by David Bobb against Jungsik and its chef-owner Jung Sik Yim alleging the restaurant stole tips from the staff, distributed them in an unlawful manner and failed to pay minimum wages.

The Fair Labor Standards Act (FLSA) states that tipped workers are those regularly earning more than $30.00 per month in tips. According to the law, with few exceptions, tips are the sole property of the regularly tipped employee.

While tipped employees have the right to receive the legal minimum wage under both the FLSA and New York Labor Law (NYLL), employers may use a portion of their tips as a credit toward the minimum wage. The amount of the tip credit is not discretionary, the law sets it. Misuse of the tip credit forms the basis of many lawsuits for unpaid wages.

The case filed against Jungsik calls attention to one of the most common problem tip employees encounter, sharing of tips. The law states that workers may be required to participate in a tip-sharing arrangement, but it must be a legal one. A valid tip pool requires that the tips only be shared among workers who regularly receive tips. Any other arrangement is unlawful. In New York, service charges added to a bill are considered to be gratuities belonging to the tipped employee unless the restaurant tells customers otherwise.

According to the complaint, the restaurant required tipped workers to pool their gratuities and did not properly distribute the tips to the staff. It states Jungsik had a scheme of “forcing tipped service employees to share and pool their tips with managers and tip-ineligible back-of-the-house employees such as Expeditors.” The suit also alleges that reallocating tips in this unlawful manner resulted in employees receiving less than the legal minimum wage. The complaint’s final allegation is that when the restaurant hosted private events, it did not distribute the service charges to employees as the law requires.

The class action seeks relief under the FLSA and New York State Labor Law and for each allegation asks for the actual amount of monetary losses, interest, liquidated damages and attorney’s fees.

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Several New York City restaurants have settled similar class actions for large sums of money. Perhaps as more and more employees learn about their rights and how to enforce them, restaurants will take precautions to see that tip workers retain the money they rightfully earn.

In the meantime, if you think your employer owes you unpaid tips, minimum wage or overtime, contact employment attorneys at Leeds Brown. Someone is here to take your call 24/7 at 1-800-585-4658.


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