WHITE PLANS, N.Y. — A group of tipped restaurant workers filed a class action suit against Union Square Hospitality Group for violations of the Fair Labor Standards Act (FLSA). The representative plaintiffs were bussers in Gramercy Tavern, one of the company’s restaurants in Manhattan. They are attempting to represent cooks, reservationists, dishwashers, and other tipped workers. Relatedly, the company’s CEO announced in October that he would phase out tipping at all of his company’s restaurants, calling the practice unfair as it left other workers in the back of the house unpaid. The company believes the change would allow the company to provide better wages to its 1,800 workers.
Tipping Policies Challenged
The plaintiffs in this case allege that Gramercy Tavern normally pooled the tips of service employees and distributed them among all the workers, including managers and other non-tipped employees. According to the suit, the restaurant was trying to illegally augment the wages of non-tipped employees with tips that were placed in the pool that were meant for service employees. The company did so in order to help inflate its profits, according to the lawsuit. Additionally, the plaintiffs allege that the restaurant hosted private events where clients were required to pay a service charge, leading customers to think the charge was for gratuities. However, the workers never received any payment for these charges. Therefore, the suit claims that the employees were denied minimum wage.
FLSA’s Rules on Tips
Under FLSA, employers are permitted to claim a tip credit towards meeting their minimum wage obligations for any employees in a valid tip pool which must be equal to the difference between the required cash wage (at least $2.13) and the federal minimum wage ($7.25). Therefore, the maximum tip credit that an employer can claim under the current minimum wage is $5.12 per hour for each tip-eligible employee. Tipped employees are those who customarily and regularly receive more than $30 per month in tips and are usually involved in customer service positions. These employees can be part of a tip pool – if even a single employee who does not customarily and regularly receive tips is included, it may invalidate the entire tip pool. If an employer creates a tip pool, then it must notify tipped employees of any required tip pool contribution amount and may only take a credit under FLSA for the amount of tips each eligible employee ultimately receives.
A tip pool may be permitted under FLSA, but it requires employers to look closely at the duties of each employee to determine whether they should share in the tips received. You should call (855) 754-2795 or complete the Free Unpaid Overtime Case Review form on the top right of this page if you or a loved one suspects that your employer is denying you of your wage rights. Our top-rated team of wage lawyers will evaluate your situation to determine your best course of action. We will also determine if it is in your best interest to file a lawsuit against your employer. There are strict time limitations for filing, so it is important that you call our experienced attorneys today.