Take it from a former restaurant industry employee turned employment lawyer, employers in the restaurant and bar industry repeatedly skirt your rights, cutting into your pay. Evidence suggests that wage theft is ubiquitous and costs workers billions of dollars a year, a transfer from low-income employees to business owners that worsens income inequality, hurts workers and their families, and damages the sense of fairness and justice that a democracy needs to survive.
A three-city study of workers in low-wage industries found that in any given week, two-thirds experienced at least one pay-related violation. The researchers estimated that the average loss per worker over the course of a year was $2,634, out of total earnings of $17,616. The total annual wage theft in the three cities approached $3 billion. If these conclusions in New York, Chicago, and Los Angeles are generalizable to the rest of the U.S. low-wage workforce of 30 million, wage theft is costing workers more than $50 billion a year.
Wage Theft Rampant in New York Restaurant Industry
For example, Veranda, an upscale Manhattan restaurant, was paying its employees less than minimum wage, failing to pay overtime and cheated them out of tips. Veranda reached a settlement over its illegal theft of wages from 25 employees.
Two Mexican immigrant busboys, Marco Jacal and Isidro Suarez, were paid no wages at all for their work and had to subsist solely on their share of pooled tips. Then, once a manager began to oversee tip distribution, their meager earnings shrank further. After checking with waitresses, they realized the manager was illegally taking a share for himself.
After he was sued, restaurant owner Moutaz Ali requested the working papers of his employees (as an intimidation tactic) and shortly retaliated against the two known whistleblowers — first cutting their hours and then firing them. The case settlement required the restaurant to pay restitution of $25,000 to each of the two busboys and $150,000 to the other 23 workers.
Or take the case of Mystique Boutique. It settled for $925,000 in restitution to workers whom the company had deprived of wages. The clothing chain often worked employees 11 hour days, but failed to pay them overtime. Some Mystique workers were making as little as $5.15 per hour and many were immigrants.
To make matters worse, once the AG’s office began looking into the matter, owner David Cohen tried to forcibly prevent employee cooperation with the investigation. He reportedly threatened several of his workers and even attempted to pay one $50,000 to provide him with the names of employees speaking to investigators
The only thing that stops them is when they’re sued by a group of their employees–often called a “collective action” or “class action”, depending on which laws are used. In New York, the statute of limitations on unpaid wage claims is six years, so a group of employees can sue their employer for the past six years of unpaid wages, and include former employees as well.
The “Top Ten” Most Common Violations in the Restaurant Industry You Should Know About.
Tip Pooling/Tip Sharing. It’s unlawful in New York for a restaurant to mandate a tip-sharing/pooling program and include managers, or other “back-of-house” staff in the pool.
“Spread of Hours”Law. In New York, a restaurant must pay hourly/tipped employees an extra hour of wages for every day they work over ten hours. Currently that rate is $9.00 per hour.
Service Charges. If a restaurant in New York charges a “service charge” on a customer’s bill, and does not kick that service charge down to the waitstaff, the restaurant may be violating the law if the bill lacks any language that states that the service charge is not a gratuity. The customer must somehow be put on notice that he/she also needs to tip.
Overtime Pay/Signage. The minimum overtime pay rate for New York restaurant workers who are paid the minimum wage is $13.50, and for “tipped” employees the overtime rate is $12.00 per hour (effective 12/15). A restaurant is liable to pay a worker monetary damages for every week it fails to have clearly posted signage explaining the hourly rates, and a employee cannot waive his right to those wages by contract.
Unlawful Deductions. You are not responsible for theft of restaurant property or financial loss because a customer “walked” on his bill. Restaurants in New York cannot make you pay for broken dishes, or penalize you for misconduct or tardiness.
Meals. A restaurant in New York must pay you if you are made to eat your meal while continuing to work. Additionally, it’s unlawful for a restaurant to deduct money from your paycheck for a meal if the deduction causes your hourly wage to fall below the minimum wage.
Call-in Pay. When a New York restaurant calls you in to work, but then sends you home when you arrive, you are owed for your time at least three hours at minimum wage of $9.00 per hour (effective 12/15)
Unrelated Pay. A tipped employee who spends more than twenty percent of his time performing work which does not generate tips should receive the full federal minimum wage of $9.00 per hour (effective 12/15) and not the reduced wage for tipped employees allowed under the law.
Uniforms. If the New York restaurant requires you to buy a uniform, you must be reimbursed for the cost. If it does not launder the uniform, you must be reimbursed $11.20 per week if you work more than 30 hours per week (effective 12/15).
Credit Card Fees. An employer can only deduct from your pay the percent of the tip that is charged by the credit card processor to process the transaction. For example, a bill totals $100.00 The customer leaves $100.00 payment of the bill, as well as a $20.00 tip. Both the tip and the bill are processed through a credit card company which charges a 5% fee on all transactions. The total charge levied by the credit card company on the $120.00 charge is $6.00. Of that $6.00, $5.00 is for the bill (5% of $100) and $1.00 is for the tip (5% of $20). The employer must provide the employee $19, which represents the $20 tip minus $1.00 pro-rated employee’s portion of the surcharge.
What Can be Done?
In 2014, there were over 8,000 lawsuits brought against employers for violating the wage and hour laws. In New York, employers can be liable for punitive and liquidated damages up to three times the amount of unpaid wages, plus attorneys fees and pre-judgment interest.