Tag Archives: Tips

by | December 11, 2013 · 9:24 am

Hospitality Industry Employment Risks: New York Restaurants Settle Federal “Wage Violation” Lawsuit For $288,000; Failed To Pay Workers Overtime, Operated “Illegal Tip Pool”

“…The restaurants’ failure to pay them overtime dropped their pay below the federal minimum of $7.25 an hour, the department said. Employees Hospitality Industry Wage Violation Lawsuitscovered by federal minimum-wage and overtime laws must be paid at least 11/2 times their regular hourly wage they when they work more than 40 hours a week…the restaurants operated an “illegal tip pool” in which tipped employees were forced to share their tips with the kitchen staff…”

Two Nassau sushi restaurants and an executive have agreed to pay more than $288,000 to settle federal charges that they “willfully” failed to pay 70 workers minimum wage and overtime, the U.S. Labor Department said.

Xaga Sushi in Merrick and Hewlett, and their president, Mei Yu Zhang, agreed to pay $261,887 in back wages and $26,322 in penalties, the Labor Department announced Monday.

The department contends the restaurants failed to pay the servers, busboys and kitchen staff overtime, even when some employees regularly worked as many as 50 hours a week. Instead, they were paid a flat monthly rate no matter how many hours they worked, the department said.

For more: http://www.newsday.com/classifieds/jobs/2-nassau-sushi-restaurants-to-pay-288g-to-settle-wage-charges-1.6581960

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Hospitality Industry Employment Solutions: “Gratuity Guide” Released By American Hotel & Lodging Association

Gratuity Guide_R2(1)-page-001

http://www.ahla.com/

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by | November 27, 2013 · 9:36 am
by | October 13, 2013 · 6:27 am

Hospitality Industry Legal Risks: IRS Rules That “Automatic Gratuities” Are Now “Service Charges”; Restaurants Must Add To Paychecks As Wages

“…The IRS has signaled its intent to scrutinize auto-gratuity patterns to determine whether they are tips, or if there has been more coercion so it Restaurant Tips And Service Chargesbecomes more of a service charge…rather than receiving automatic gratuities at the end of the night, under the new IRS rule, those payments would be tacked onto paychecks as wages…Darden Restaurants – which operates Red Lobster, Olive Garden, Longhorn Steakhouse Seasons 52, The Capital Grille and other chains – is testing a concept that eliminates 18 percent automatic gratuities for parties of eight or more, and instead leaves tip percentage calculations at the end of a bill…”

Even with automatic tipping, customers have always faced a decision over how much to leave a server. Now, thanks to an IRS ruling, restaurants are being thrown into the debate – and are faced with a decision of their own: Should tipping for large parties be left to the customer or should the restaurant tack it on to the bill?

The IRS ruling, which takes effect in January, will treat automatic gratuities as service charges, rather than tips. The switch means servers will no longer be responsible for reporting those automatic tips as income. And it also means automatic gratuities will be considered a part of a server’s wages, making that money subject to payroll tax withholding and delaying receipt until the next paycheck.

Understandably, many servers aren’t happy about the tax policy, but neither are restaurant owners. The change will create additional accounting and bookkeeping work, because automatic gratuities will have to be factored into hourly pay rates that could vary depending on the number of large parties served by the employee.

The IRS policy change also could mean the loss of an income tax credit, which restaurants receive for paying Medicare and Social Security taxes on employees’ reported tips. Service charges are not eligible for the credit.

For more:  http://www.news10.net/news/national/260375/5/Tip-ruling-could-prove-taxing-to-servers-restaurants

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by | September 4, 2013 · 8:35 am

Hospitality Industry Legal Issues: Restaurants Beginning To Replace “Tipping” With Surcharges Or Higher Menu Prices In Response To “Wage Violation Lawsuits”, Cultural Changes

 “…Front-of-house workers are suing one respected restaurant after another, including Dovetail, last month, accusing them of playing fast and Hospitality Industry Wage Violation Lawsuitsloose with the laws on tips. The charges include sharing tips with workers who aren’t eligible for them and making tipped employees spend too much time on what is called sidework, like folding napkins between meals…One such lawsuit was settled for more than $5 million. Some owners now think they can avoid the suits by eliminating tips…”

“…Another change is cultural. The restaurant business can be seen as a class struggle between the groomed, pressed, articulate charmers working in the dining room and the blistered, stained and profane grunts in the kitchen. The rise of chefs that are also owners has brought a few of the grunts to power. But as the average tip has risen to 20 percent or so from 15 percent, the pay for line cooks, dishwashers and others has stayed low…”

“…The self-interest calculation (for servers) may be different now. Credit card receipts and tougher oversight have virtually killed off unreported tips…”

Sushi Yasuda joins other restaurants that have done away with tips, replacing them with either a surcharge (Atera and Chef’s Table at Brooklyn Fare in New York; Next and Alineain Chicago; Coi and Chez Panisse in the San Francisco Bay Area) or prices that include the cost of service (Per Se in New York and the French Laundry in Healdsburg, Calif.).

These restaurants are numerous enough and important enough to suggest that a tip-reform movement is under way. On the other hand, they are few enough and exceptional enough to suggest that the movement may remain very small, and move very slowly.

Americans have stuck with tipping for years because all parties thought it worked in their favor. Servers, especially in restaurants from the mid- to high-priced, made good money, much of it in cash, and much of that unreported on tax returns. Owners saved on labor costs and taxes. And customers generally believed that tips brought better service.

For more:  http://www.nytimes.com/2013/09/04/dining/leaving-a-tip-a-custom-in-need-of-changing.html?pagewanted=all&_r=0

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by | August 29, 2013 · 5:59 am

Hospitality Industry Legal Risks: Ohio Restaurant Operator Sued For “Fair Labor Standards Act” Violations And “Unjust Enrichment”; Employees Forced To “Tip Out” Managers And Others Not Regularly Receiving Tips

“…According to the lawsuit, restaurant employees weren’t allowed to keep all of their tips because they were required to “tip Hospitality Industry Wage Violation Lawsuitsout” managers and other employees who do not regularly and customarily receive tips. That resulted in employees’ being paid less than minimum wage…a tip pool can’t include managers or other workers, such as chefs or dishwashers, who don’t typically receive tips…The lawsuit requests a jury trial for five counts of Fair Labor Standard Act violations and a count of unjust enrichment. It seeks an unspecified amount in damages that (the attorney) said would ultimately prove “substantial.””

A federal lawsuit filed Monday alleges that Jeff Ruby Culinary Entertainment, which runs Jeff Ruby’s Steakhouse and Jeff Ruby’s Carlo & Johnny, forced employees to share tips with managers and other workers in violation of the Fair Labor Standards Act. The practice allegedly stopped about a year ago, but lawyers for three former employees aim to recoup losses from a two-year period beginning in 2010.

Lawyers Sarah Clay Leyshock and Kristen M. Myers – both of the law firm Beckman Weil Shepardson LLC – filed the class-action suit on behalf of the three former employees as well as anyone else who might step forward in the case. Two of the represented employees worked at Carlo & Johnny in Montgomery while the third worked at the Downtown steakhouse, Leyshock said.

“Under the Fair Labor Standard Act, employees are required to retain their own tips. The one exception is that employees can be required to share their tips in a valid tip pool,” Leyshock said. She said invalid tip pools are fairly common, but still illegal.

For more:  http://news.cincinnati.com/article/20130827/NEWS/308270075/Suit-Two-Ruby-eateries-skimmed-tips

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by | July 17, 2013 · 7:56 am

Hospitality Industry Legal Risks: Hawaii Hotels Violate State Law In Collecting Tips And Service Charges And Not Passing It On To Employees; State Supreme Court Rules Workers Can Also Collect Damages

 “Legal experts say they’re likely settle the cases for millions of dollars since the hotels do not contest the amount of tip money that they took Hospitality Industry Wage Violation Lawsuitsin…Some of the hotels have already settle cases or were hit by adverse rulings. They include the Fairmont Hotel on the Big Island which paid $2.2 million and the Pacific Beach and Pagoda hotels, which paid a total of $2 million…the ruling came in the case involving two Maui hotels: the Wailea Marriott Resort and the Westin Maui. Several banquet service workers alleged in their lawsuit that the hotels imposed a 20 percent service charge but did not distribute the proceeds to workers…”

For years, Hawaii hotels regularly collected millions of dollars in tips from customers but only passed a portion of those service fees to the employees who earned them. Under a ruling by the Supreme Court today, that practice now violates Hawaii law. The high court said hotels and other businesses can only collect the tips if they disclose that they are going to keep some of the money.

Attorneys who filed class-action lawsuits on behalf of the employees say the hotels are liable for big damages. “I would say it’s going to be north of $10 million. we have $3 million on one hotel on Kauai alone,” said attorney John Perkin, whose firm has filed eight of these suits.

Boston attorney Shannon Liss-Riordan, whose firm is also handling eight different class-actions against Hawaii hotels, said the ruling has broad applications beyond the hospitality industry.

“This will affect the food and beverage industry in Hawaii,” she said. “It will affect hotels, restaurants and other food and beverage establishments, catering companies, country clubs.” The cases are potentially costly because the ruling says that hotel workers can collect damages of up two times the amount in tips that the hotels took.

For more:  http://www.hawaiinewsnow.com/story/22848740/hotel-workers-could-get-millions-from-lost-tips

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by | June 5, 2013 · 6:33 am

Hospitality Industry Legal Risks: Texas Restaurant Group Faces “Wage Violation Class-Action Lawsuit” Over Tip Sharing, Food Discount Deductions

“…(the lawsuit) alleges that a Rainforest Cafes policy illegally required servers to share their tips with some employees who were not part of the wait staff…(plaintiffs were forced) to split tips with hosts, who do not qualify as wait staff because they do not serve food or beverages, or clear Hospitality Industry Wage Violation Lawsuitstables…The suit also targets a “discount program” at Rainforest Cafe that deducts a flat fee from employee paychecks to cover any drinks consumed at work and provides a discount on food…the deduction is too high and violates state law by requiring employees to pay more for food than it costs the employer…”

A Boston law firm filed a suit seeking class-action status Monday against one of the nation’s largest restaurant groups alleging the company’s Rainforest Cafe in Burlington violated state wage laws. Two servers employed at the Rainforest Cafe since 1998 are named plaintiffs in the case. Hundreds of workers might qualify for damages, according attorney Hillary Schwab of Fair Work, P.C.

The defendant, Landry’s Inc., is the Houston parent company of more than 40 restaurants chains across the county with total US sales of about $1.67 billion last year, according to restaurant industry research firm Technomic. Landry’s, run by chief executive Tilman J. Fertitta, a Houston billionaire, owns a number of restaurants groups with a presence in Massachusetts, including Morton’s The Steakhouse, Chart House, McCormick & Schmick’s, and the Oceanaire Seafood Room.

The plaintiffs are seeking restitution for all gratuities not received, wages not paid in full, money deducted from pay, and all court and attorney fees. Schwab said she will attempt to determine whether the tip practice is limited to the Rainforest Cafe or is a Landry’s corporate policy that might affect other restaurants in the state.

For more:  http://www.bostonglobe.com/business/2013/06/03/rainforest-cafe-servers-sue-restaurant-over-tip-policy/IOwix0twRIooe1FP8Cz4fJ/story.html

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by | February 8, 2013 · 7:52 am

Hospitality Industry Legal Risks: New York Restaurant Sued By Former Delivery Workers For Deducting Money To Pay For “Online Order Service Fees”

“…the judge (stated) that tip deductions “were only permissible to the extent that they ‘did not enrich [the employer], but instead, at most, merely restored it to the approximate financial posture it would have occupied Hospitality Industry Lawsuitif it had not undertaken to collect credit card tips for its employees…the restaurant unlawfully retained almost $17,000 and compared the practice to passing on the cost of rent or materials to delivery workers…”

A lawsuit brought by former delivery workers against an Upper West Side restaurant that deducted money from their tips to pay the service fees of food-delivery Web sites can proceed, a federal judge has ruled. The ruling came in a suit filed against Indus Valley, on Broadway at West 100th Street, where eight former delivery workers say the restaurant kept 12 to 15 percent of their tips when customers placed their orders through services like Seamless and Grubhub.com.

Indus Valley sought to have the suit dismissed. It admitted to withholding the workers’ tips but said the practice was permissible to recoup fees charged by online delivery sites, in the same way that restaurants are allowed to deduct a percentage from tips left via credit card to cover credit card companies’ fees for converting those tips to cash.

But the judge, Alison J. Nathan of United States District Court for the Southern District of New York, rejected both Indus Valley’s argument and its request to dismiss the suit. A representative from Indus Valley declined to comment.

The service agreements with the delivery Web sites included charges for commissions and “advertisement fees,” in addition to  credit card processing fees. The agreements, Judge Nathan wrote, “suggest that Indus Valley deducted from gratuities costs beyond those incurred as the result of converting credit card gratuities to cash.”

A lawyer for the workers, Jane Chung, said that labor law bars restaurants from taking from workers’ tips without an explicit exemption, and said that the judge’s ruling effectively declares Indus Valley’s practice illegal.

For more:  http://cityroom.blogs.nytimes.com/2013/02/05/restaurant-loses-effort-to-have-ex-delivery-workers-suit-dismissed/

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by | January 2, 2013 · 8:35 am

Hospitality Industry Legal Risks: California Hotel Faces Class-Action Lawsuit Over “Fixed Percentage Withholdings” From Room Service Tips; Violation Of California Labor Law

“…(plaintiff) claims the hotel pools the tips of its room service delivery staff and withholds a fixed percentage of them…the withholdings, which have been standard policy since at least 2003, violate California labor Hospitality Industry Class Action Lawsuitslaw…he seeks compensatory and exemplary damages for unfair competition, conversion and money had and received…”

Hyatt Hotels and the Manchester Financial Group steal workers’ tips to cover “glass breakage,” whether employees have broken any glasses or not, a class action claims in Superior Court. Former room service delivery worker Leonardo Acosta sued Host Hotels and Resorts, Manchester Financial Group and Hyatt Hotels Corp.

“Hyatt and the other defendants maintain that the monies are withheld pursuant to Hyatt’s policy of reimbursing themselves for purported ‘glass breakage.’ The same percentage of gratuities was withheld from all room service delivery workers in plaintiffs’ tip pool, without regard to the amount of breakage, if any, during any pay period.

The same percentage of gratuities was withheld from all room service delivery workers in plaintiffs’ tip pool, without regard to whether any purported breakage was caused by any dishonest or willful act, or by the gross negligence of any employee … [and] without regard to the individual, if any, responsible for the alleged breakage,” Acosta claims.

For more:  http://www.courthousenews.com/2013/01/02/53536.htm

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by | December 24, 2012 · 7:32 am

Hospitality Industry Employment Risks: South Carolina Restaurants Ordered To Pay $391,000 In Back Wages To Workers; Servers Paid Below Mandated $2.13 Per Hour And Received Tips Only

“…the restaurants agreed to maintain future compliance with the FLSA by keeping accurate records of employees’ work hours, wages and other required employment information; paying all employees at least the Hospitality Industry Wage and Hour Litigationfederal minimum wage; and providing overtime compensation and informing employees in advance that the tip credit will be used…”

Three restaurants in South Carolina have been ordered to pay $391,000 in back wages to workers, as the result of a Department of Labor investigation. The restaurants, all individually owned branches of the San Jose Mexican restaurant chain, owe 37 employees wages for overtime and minimum wages. The DOL’s Wage and Hour Division also found violations in record-keeping provisions.

Following widespread noncompliance in the state’s restaurant industry, the Wage and Hour Division began a multiyear enforcement initiative. Since 2009, more than $2.5 million has been paid to workers, following 2,500 investigations.

All three of the restaurants failed to properly compensate employees. Servers were paid below the mandated $2.13 per hour and made to rely on tips for pay. Other employees were paid flat salaries below the minimum wage requirements, with no regard to hours worked.

For more:  http://ohsonline.com/articles/2012/12/21/three-restaurants-must-pay-391000-in-employee-back-wages.aspx?admgarea=news

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