In New York and across the country lawyers like the ones at Leeds Brown, represent workers in actions against employers who misappropriate tips and commit other violations of labor laws. Restaurant workers and tipped employees, as a group, are often subjected to wage and hour violations. Tips and gratuities belong to employees. But there are many ways that employers “steal” or misappropriate them to the detriment of hard-working staffers.
Some companies just do not understand how to apply minimum wage and tip credit laws and pay tipped workers less than the amount to which they are entitled. Others purposefully violate the laws and steal money that belongs to their employees. Violations against tipped workers tend to occur repeatedly and can affect the entire staff employed by a business. Whether the violations are intentional or the result of indifference, employees deserve the tips and wages they rightfully earn.
At Leeds Brown, our attorneys have spent decades representing tipped workers in actions to recover unpaid wages and gratuities. When your employer withholds all or some of your tips, forces you to share them or gives you less than your full pay, you may have a claim against the business. Understanding your rights is the first step toward protecting yourself against tip and wage theft and ensuring your employer pays you every dollar to which you are entitled.
The general premise of wage law is that gratuities rightfully belong to employees, not employers. A company may not take any portion of workers’ tips for itself. Even if there is a valid tip pooling arrangement, should not partake of it.
For a tip pooling or sharing agreement to be lawful in NY, its participants must be other regularly tipped workers. Examples of employees commonly eligible for participation includes wait staff, bartenders, barbacks, food runners, servers, captains, counter staff, and hosts who greet guests.
What about “mandatory service charges” often added to a bill for large dinner parties or catered events? Most state and federal laws indicate that those fees belong to the employer as they are part of a contract between the customer and the business and have nothing to do with the service or work of the employee.
In New York, however, all mandatory service charges added to a bill belong to the employees unless the employer explicitly notifies the customers that the establishment will be keeping the money.
An important exception to this rule involves credit card charges. When a customer leaves a tip on a credit card in New York, the employer may withhold a pro-rated portion of the credit card company’s transaction fee from the tip.
Say, for example, a customer with a $100.00 dinner bill leaves a $20.00 tip. The credit card transaction fee is 5% of the total which equals $6.00. The restaurant can legally withhold 5% of the tip which would be $1.00 and give the employee $19.00 instead of $20.00.
Under federal and most state laws, employers may pay tipped employees less than the minimum wage, as long as employees receive enough in tips to make up the difference. This difference is called a tip credit or tip allowance.
For example, the applicable minimum wage for most workers in New York is $9.00 per hour. Employers are required to pay tipped works in restaurant and hospitality industries a cash wage of at least $7.50 per hour. Employers may apply a tip credit of not more than $1.50 per hour to reach minimum wage.
The federal minimum wage and tip credit amounts are lower than the NYS amounts, but the calculation is the same. The federal minimum $7.25 an hour. Tipped workers must receive at least $2.13 per hour in cash wages, allowing for a tip credit of up to $5.12. If after the addition of tips, the full amount of wages does not meet the minimum, an employer must increase the cash wage accordingly.
Tip credit rules can be confusing to employers and employees. Calculating the correct amount of pay can be complex and may vary from week to week depending on the number of hours you work, the nature of the work, and the amount of tips you earn. Do you spend time doing work for which you don’t receive any tips? If so, does the tip credit apply to those times?
What about overtime pay? For instance, many employers in New York do not know that tipped workers are entitled to overtime pay and that the rate is one and a half times the minimum wage minus the tip credit. It is not one-and-a-half times the cash wage. The tip credit amount does not change. Employment lawyers at Leeds Brown can help you understand the correct amount of wages your employer is legally obligated to pay and help you get the money to which you are entitled.
People who work for tips are often some of the most dedicated employees. Their hard work and meaningful interactions with customers can directly impact their earnings. Unfortunately, these employees fall victim to employers who either don’t know or don’t care about the wage and hour laws that directly impact them. In addition to tip theft and minimum wage violations, hospitality and restaurant workers often endure:
One of New York’s leading employment law firms, Leeds Brown, can help if you think you are not getting your fair wages from a restaurant or other hospitality business. As service industry workers you must understand that you are entitled to minimum wage, overtime, and gratuities. Your employer may not lawfully withhold money that belongs to you. Find out more about the rights of tipped workers by calling our legal professionals.
Our attorneys can help you determine if you have a claim for unpaid wages including overtime and tips. Someone is here to take your call 24/7 because we know your schedule demands flexibility. Contact Leeds Brown today for a free case evaluation. 1-800-585-4658.