The Wage and Hour Division of the U.S. Department of Labor (DOL) has announced a proposal to allow some employers to use tip sharing among tipped and non-tipped workers, rescinding portions of the tip regulations in the Fair Labor Standards Act. The proposal would apply only to employers who pay the full minimum wage to employees and do not take a tip credit. DOL will accept public comment on the proposed changes until January 4, 2018.
Tag Archives tips
Danny Meyer, David Chang, Jonah Miller, Tom Colicchio and other restaurateurs have been named as defendants in a putative class action that alleges a business strategy to eliminate tipping and replace it with a service charge of at least 20 percent is price-fixing and a conspiratorial restraint of trade that violates the federal Racketeer Influenced and Corrupt Organizations Act and Sherman Act. Brown v. 140 NM LLC, No. 17-5782 (N.D. Cal., filed October 5, 2017). The complaint alleges that the restaurateurs' agreement constitutes price-fixing because the restaurants involved conspired to raise their prices simultaneously. Meyer, CEO of Union Square Hospitality Group, is alleged to have spearheaded the “conspiracy.” The complaint cites dozens of newspaper articles, television and radio interview transcripts, trade group meetings and tweets in which Meyer and other defendants discussed the reasons for implementing the change and explaining the competitive advantages of acting as a group. According to…
Restaurant trade organizations, an Oregon restaurant and one of its employees, a server, have filed a complaint for declaratory and injunctive relief against the U.S. Department of Labor (DOL), alleging that its interpretation of the Fair Labor Standards Act, forbidding restaurants from distributing a share of tips to non-tipped employees, regardless of whether the restaurants use the tips as a credit toward paying their employees minimum wage, conflicts with a Ninth Circuit decision and will force the restaurants to incur significant costs or subject them to litigation. Or. Restaurant & Lodging Ass’n v. Solis, No. 12-01261 (D. Or., filed July 12, 2012). According to the Ninth Circuit ruling, restaurants can require that tips be shared with back-of-house and other non-tipped restaurant employees where the wait staff are paid at least full minimum wage and the restaurants do not take a tip credit. Cumby v. Woody Woo, Inc., No. 08-35718 (9th Cir.…
Starbucks Corp. has filed its response in the Second Circuit Court of Appeals in a dispute over tip sharing, asking the court to affirm the district court’s grant of summary judgment in its favor. Lawrence v. Starbucks Corp., No. 11-3199 (2d Cir., brief filed February 22, 2012). Additional information about related litigation involving Starbucks baristas and shift supervisors appears in Issue 256 of this Update. The company asserts that the district court correctly held that (i) New York labor law does not grant plaintiff assistant store managers the right to participate in a tip pool, and Starbucks did not “demand,” “accept,” or “retain” their tips; (ii) Starbucks’ policy of allowing only baristas and shift supervisors to share tips is consistent with state law; and (iii) assistant store managers exercise control over their subordinates’ employment status and are thus “agents” prohibited from sharing tips under state law.
A federal court in Massachusetts has certified a class of Starbucks’ employees alleging that the company’s policy of requiring tip-sharing by baristas and their supervisors violates state law; the court also granted the plaintiffs’ motion for summary judgment on that issue. Matamoros v. Starbucks Corp., No. 08-10772 (D. Mass., decided March 18, 2011). So ruling, the court rejected the defendant’s argument that “intractable intra-class conflict” precludes certification. According to the court, “an interest by certain putative class members in maintaining the allegedly unlawful policy is not a reason to deny class certification. Indeed, were the Court to hold otherwise, an employer could readily insulate itself from class liability simply by establishing a communal ‘tip pool’ for both managerial and non-managerial employees. Such an ‘end run’ clearly contravenes the purpose of the Tips law.”
Authored by the co-founders of the Zagat Survey, this New York Times op-ed examines a recent spate of class action lawsuits arguing that many prominent restaurateurs, including Lidia Bastianich and Mario Batali, “are routinely cheating their workers by confiscating waiters’ and busboys’ tips to share with managers and other ineligible employees.” Tim and Nina Zagat, however, question whether these culinary giants would continue to intentionally cheat employees while facing costly lawsuits and “draconian penalties” under the state’s new Wage Theft Protection Act. “The biggest worry for restaurateurs, though, is that one error—for example, just one ineligible employee found sharing in tips—could cost a restaurant its ‘tip credit,’ which permits restaurants to pay their waiters less than the full minimum wage because the state assumes that they get $2.60 an hour in tips,” write the Zagats. “If a restaurant’s tip credit is yanked, it has to repay that much for every…
Twenty-seven waiters, busboys and others at New York City’s Del Posto restaurant have reportedly filed a lawsuit against owner Mario Batali and partners Joseph and Lidia Bastianich, claiming that they were not paid a legal wage. The plaintiffs allege that the restaurant’s managers pooled workers’ tips in violation of state labor laws and wrongfully withheld a portion of the gratuities on wine and cheese sales. The tip pool was allegedly divided on the basis of a point system, and the plaintiffs also reportedly contend that staff working banquets did not get their proper share of the service charge billed to customers, instead receiving a flat fee. The suit, which is at least the third involving a Batali-owned facility, seeks back pay, unspecified damages and attorney’s fees. See msnbc.com, October 12, 2010.
Renowned restaurateurs Mario Batali and Joseph Bastianich have reportedly been sued by workers in their East and West Coast restaurants. A complaint filed in late July 2010 by current and former employees of New York City’s Babbo Ristorante e Enoteca was amended to include a class of employees who work in five additional east coast eateries. They reportedly allege that the Batali-Bastianich enterprise “unlawfully confiscated a portion of their workers’ hard-earned tips in order to supplement their own profit. At the end of every shift, instead of distributing customers’ credit card tips to the workers who earned them as the law requires, Mr. Batali, Mr. Bastianich, and their restaurants took from the tip pool an amount equal to approximately 4-5% of the restaurants’ wine sales (and sometimes other beverage sales) for the night and put it in their own pockets.” The New York plaintiffs are apparently seeking class certification and…
