Unpaid Gratuities

Many employees, most notably the hundreds of thousands of waiters, busboys and food runners across the country, receive the bulk of their compensation in the form of tips or mandatory service charges applied to customers. In light of that, it is vital for employers to follow specific laws pertaining to tipped employees. First of all, no matter how much an employee receives in tips, the employer must also pay the minimum hourly wage. Many states, including New York, allow employers to “take the tip credit,” lowering the minimum wage by a set percentage. In New York, the standard minimum wage is $7.25 per hour, but the tip credit minimum wage is $5.00 per hour.

If you receive a significant portion of your income through tips and are paid no hourly wage or an hourly wage less than $5.00 per hour, contact Pelton & Associates, PC today. You may be able to file a claim for lost wages.

Second, even if an employer “takes the tip credit,” the employer must pay overtime at a rate of $7.50 per hour ($5.00 x 1.5) for all hours worked beyond 40 per week.

Third, employers are permitted to institute a “tip pool,” meaning that tips are all pooled together and then redistributed according to a preset plan. However, a tip pool may not include managerial employees or back-of-house employees such as chefs, line cooks and dishwashers. If you believe that portions of your tips are being unlawfully distributed to managers or back-of-house employees, contact Pelton & Associates, PC today.

Finally, employers may not require tipped employees to forfeit some of their tips in order to receive their hourly wages. This practice, known as a “kickback,” is illegal under the New York Labor Law. If your employer forces you to forfeit some portion of your tips in order to receive the rest of your wages, contact Pelton & Associates, PC today.