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Unlawful Use of a Tip Credit

Wage and Hour Attorneys Committed to Helping New York City Workers

Restaurant employees work hard for their tips, which many of them need to in order to make ends meet. Unfortunately, employers sometimes take advantage of their authority and deny employees their hard-earned wages by taking an unlawful tip credit. The knowledgeable wage and hour lawyers at Phillips & Associates have helped New York City restaurant employees recover money for tip credit abuses and pursue the compensation that they were rightfully entitled to receive.

Protection for Restaurant Employees’ Tip Credits

The federal Fair Labor Standards Act (FLSA) allows an employer to take tip credit toward its minimum wage requirements for tipped employees. In order to qualify as a tipped employee, the employee must customarily and regularly receive over $30 in tips per month. The law makes it very clear that tips are the property of the employee, and the employer is prohibited from using the employee’s tips for any purpose other than allocating tip funds towards its minimum wage requirements for that employee. Additionally, the FLSA limits the tip credit an employer takes towards its minimum wage obligation to the difference between the required cash wage of $2.13 and the current federal minimum wage, $7.25. This difference amounts to $5.12 per hour.

The FLSA requires employers to provide sufficient notice to employees about their tip credit rights. First, the employer must notify the employee of the amount of cash that the employer is paying to a tipped employee. The employer must also provide information regarding the additional amount that the employer claims as a tip credit, which cannot exceed $5.12. An employer must also have notice that the tip credit claimed by the employer cannot exceed the tips that an employee actually receives. Additionally, the employee must have notice that any tips that he or she earns will remain the property of the employee unless the employee participates in a valid tip pooling agreement. Lastly, the employer must inform the employee that the tip credit will not be applied to any tipped employee unless the employee has been provided notice of these rules and requirements.

Under the New York Labor Law, notice that an employer is utilizing a tip credit must be given to the employee in writing. Failure to provide written notice may result in unpaid wages to the employee.

State and federal laws impose severe penalties against employers that fail to comply with applicable wage and hour laws. Not only do these laws allow employees to bring lawsuits against employers who fail to pay employees appropriately, but they also may provide additional monetary compensation to the employee. In some instances, employers may face a monetary penalty for each incident of a wage and hour violation. Also an employee, who has not been paid their wages due, may be entitled to an additional amount in liquidated damages. In many instances, this amount may exceed 100% of the wages owed. Many employees of larger companies that engage in pervasive wage and hour abuses join forces and bring a class action lawsuit to assert their rights. This can provide a useful mechanism for employees who may not have sufficient individual resources to bring a lawsuit against their employers.

Consult a New York City Lawyer to Hold Your Employer Liable

If you think that your employer is not properly observing tip credit laws or complying with applicable wage and hour requirements, the skilled team of professionals at Phillips & Associates can help. Our New York City attorneys have guided employees through wage and hour as well as overtime claims. Our clients have come from Manhattan, Queens, the Bronx, and other areas across the five boroughs of the city. We are prepared to help you aggressively assert your rights. Call us at (833) 529-3476 or contact us online to set up a free initial consultation.

What Our Clients Say?
"Phillips & Associates did a wonderful job. I would recommend Brittany Stevens." Angel
"Employment dispute I had a dispute with my former employer, Jesse Weinstein was patient and thorough with my case. He covered every angle and was able to help me with my dispute. I would recommend Jesse Weinstein and Phillips and Associates in the future to anyone." Margaret
"Hands down the best law firm for labor disputes in NYC. Being in the restaurant industry for more than 30 years I can say that this law firm is the number one choice for workers in the restaurant business that need to sue their company for wrongful termination. A special compliment to my lawyer Brittany Stevens. An amazing person and well prepared experienced lawyer. She was professional and empathetic to my case and worked in a time appropriate manner. She never miss a phone call at any hour of the day. Brittany and her team helped me with what I needed, when I needed it. I want to thank them all (especially Brittany), for a job well done." Massimo
"Jesse Weinstein handled my discrimination case. He was extremely patient and understanding throughout the process and remained professional and consistent even when I could not. I really felt like he had my back and I didn't have to worry. His expertise, combined with the experience of the Firm, resulted in the best possible outcome of my case. Although I wouldn't wish what I went through on anyone, things do and always will happen and I would highly recommend Jesse and this Firm to anyone facing discrimination or other workplace issues." Karen
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