Tim and Nina Zagat, “Adding Fairness to the Tip,” The New York Times, December 13, 2010

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 hour worked by every tipped employee for up to three years.”

The Zagats instead suggest that noncompliance stems from “a confusing
hodgepodge of outdated wage and hour laws and opinion letters from the
State Department of Labor,” in addition to a 2008 New York State Court of
Appeals decision that “unleashed a new wave of lawsuits” related to service
charges for banquets and private parties. They credit the labor department
with proposing a new hospitality wage order to help clarify regulations, but
ultimately view the order as “only the first step in a much-needed overhaul of
the current system of laws and regulation.”

According to the Zagats, the New York Legislature should also (i) “grant the industry amnesty from the retroactive application of the 2008 State Court of Appeals decision,” (ii) “reduce from six years to three the statute of limitations for which restaurants might be liable for back wages,” and (iii) appoint a special judicial board “to hear all pending and future cases, on an expedited basis.” Additional details about pending lawsuits in the restaurant industry appear in issues 361 and 368 of this Update.