Waiters File Lawsuit Against Gallagher’s Steakhouse for Unpaid Wages

Food Service Workers Sue New York City Restaurant for Wage Violations

According to Law 360, an “iconic Manhattan steakhouse” is one of the latest to get “slapped in New York federal court with a proposed wage and overtime class action.” In April 2017, Christian Beauchamp, a former server at Gallagher’s Steakhouse sued the restaurant, its parent company, and the owner Dean Poll. The suit raises allegations that the defendants violated the Fair Labor Standards Act (FLSA) and New York Labor Law during the time Beauchamp worked as a server for the restaurant from August 2015 until November 2015. Beauchamp claims that the employees did not receive minimum wage or overtime pay because the restaurant misused the tip credit and violated other wage and hour rules.

How Do Tip Credits and Tipped Minimum Wages Work?

The FLSA and New York law require that employees receive minimum wage and overtime pay.

Food servers like Beauchamp, are classified as tipped workers. The law defines a tipped worker as someone who regularly receives tips. If an employee is a tipped worker, a restaurant is entitled to pay the employee the tipped minimum wage. This tipped minimum wage is lower than the regular minimum wage because the employer is permitted to use a tip credit. In other words, an employer may “use” a portion of the worker’s tips as a credit toward the full minimum wage. The law or a wage order determines the amount of the allowable tip credit.

For example, as of December 2016 and until December 2017, wages in New York City are as follows:

The minimum wage for an employer with 11 or more employees is $11.00 per hour.

The minimum wage for a tipped food service worker is $7.50 per hour.

The maximum tip credit allowed for an employer with 11 or more employees is $3.50.

The employer must provide a minimum cash wage of at least $7.50 per hour and may use a tip credit of $3.50 per hour. If the employee receives tips of less than $3.50 per hour, the employer must provide a cash wage that brings the worker’s hourly wages up to the regular minimum wage.

Use of Tip Credit Requires Proper Notice

According to the US Department of Labor (DOL), an employer must provide notice to employees before it is allowed to use a tip credit toward wages. New York law requires the notice is in writing. The law states that “Prior to the start of employment, an employer shall give each employee written notice of the employee’s regular hourly pay rate, overtime hourly pay rate, the amount of tip credit, if any, to be taken from the basic minimum hourly rate, and the regular payday. The notice shall also state that extra pay is required if tips are insufficient to bring the employee up to the basic minimum hourly rate.”

Complaint Alleges Misuse of Tip Credit and More

Beauchamp’s complaint filed in the Southern District of New York contains allegations that the restaurant did not pay him the correct minimum wage because they used the tip credit without providing adequate notice. Without proper notice, an employer is not permitted to use the tip credit. The complaint further states, “Because defendants’ misapplied the tip credits to the plaintiff’s wage, the rate under which they paid plaintiff for overtime was also incorrect.”

The complaint further alleges that the restaurant automatically deducted one half hour from every shift Beauchamp worked for meal breaks. However, according to Beauchamp, the restaurant knew that he never took said breaks and still deducted 2.5 hours from his time/pay each week.

Beauchamp brought his case as an opt-in class action alleging that Gallagher’s violations short changed many front-of-house employees during the three years before his filing of the complaint.

Contact Us

This matter is exemplary of the wage theft issues that arise in the restaurant industry. The case alleges some of the most common wage and hour violations that tend to affect food service workers such as:

  • Misuse of tip credits
  • Violations of wage notices
  • Unpaid overtime
  • Minimum wage violations
  • Unlawful hour and pay deductions

If you work in a restaurant in New York City and are concerned that your employer is not providing you the proper notices or the correct wages, contact our employment lawyers at Leeds Brown Law, P.C. Our attorneys have decades of experience handling wage and hour cases for employees in New York City and the surrounding areas including Long Island. We may be able to help you and your coworkers recover back pay and other wages your employer owes you. Call 1-800-585-4658 if you are a victim of wage theft, tip theft or any other wage violation.


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