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How Tip Credits Affect the Rights of NY Restaurant Workers

How Tip Credits Affect the Rights of NY Restaurant Workers

Overtime and wage hour violations are rampant in New York's restaurant industry. A common problem is the misapplication of the tip credit. While all employees must earn the state-mandated minimum wage, employers may claim a “tip credit” for certain employees, such as servers and bartenders, who customarily receive customer gratuities. The credit allows the employer to use tips to offset the amount of cash wages it pays to the tipped employee.

There are strict federal and New York State rules an employer must follow when claiming a tip credit against the minimum wage. For instance if a tipped employee is required to spend two hours or 20% of a shift (whichever is less) doing non-tipped work, then the employer may not claim a tip credit for that shift. To give an example, say a waiter is required to spend two hours helping the kitchen staff to prepare food before the restaurant opens. Under New York law, the restaurant would have to pay the waiter the full minimum wage for the entire day without taking into account any tips earned.

Manhattan Restaurant Denies “Misappropriating” Server, Bartender Tips

Recently a man who worked as a waiter at a high-profile Manhattan restaurant sued his former employer, alleging widespread violations of New York tip credit and minimum wage rules. The lawsuit, filed as a class action on behalf of all current and former tipped employees, accuses the restaurant and its owner of “misappropriating” waiter and bartender tips and distributing them to non-tipped employees–a practice forbidden by New York law. Additionally, the lawsuit claims the plaintiff and others in his position were required to “spend more than 20 percent of their work time and/or in excess of two hours engaged in side work duties” unrelated to customer service.

The named plaintiff in this case said he worked as a bartender for the defendants between July and November of last year. During his employment, the plaintiff said he typically worked five shifts per week, averaging between 40 and 60 hours during that time. He said the restaurant applied a tip credit to his wages, although it did not notify him in writing of this, as required by New York labor law.

Furthermore, the plaintiff said the defendants “unlawfully redistributed” some of his tips and those of other bartenders and servers to non-tipped employees including “bar directors and silverware polishers.” The bar directors are supervisory employees who, the plaintiff noted, had the authority to discipline, hire, and fire tipped employees such as himself. New York law generally forbids such supervisors from sharing in employee tips.

The plaintiff's lawsuit seeks damages including unpaid minimum and overtime wages, as well as the full amount of any misappropriated tips. The restaurant and its owner have publicly denied any wrongdoing. In a statement to the restaurant industry website Eater, the owner said, “We have always done everything by the book.”

Speak With a New York Employment Law Attorney Today

As always, a complaint is merely a statement of allegations and not a final adjudication of the underlying dispute. But complaints like this illustrate the kinds of problems restaurant workers face every day in New York. If you have reason to believe your employer is not complying with federal and state rules regarding tips and the minimum wage, you should speak with a qualified New York employment law attorney right away. Contact the Law Offices of Mahir S. Nisar at 646.760.6493 today.

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