Phillips & Associates

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 1-212-248-7431 or contact us online to set up a free initial consultation.

45 Broadway, #620,
New York NY, 10006
Tel: 212-248-7431
Fax: 212-901-2107

Client Reviews
I was a client with this law firm. I can't stress enough how awesome and professional the people are here. Silvia & Erica made me feel so comfortable and welcome. I never had to guess anything. Anytime I call, emailed, or even texted. They were always there. If not they would get back to me as soon as possible. My case was not an easy situation for me but I tell you these guys made it seem like it was. I'm so glad that I use Phillip & Phillip. I thank you guys from the bottom of my heart. I am so grateful to have met such awesome, honest, and caring people. Thank you again. Djuana
I highly recommend Parisis (Gerry) Fillippatos with Phillips & Associates to represent you for employment related matters. He and his team were professional, attentive to every detail and brilliant at identifying the legal grounds to win the case. Parisis's communication and delivery were highly articulate and precise. He is personable and makes you feel comfortable in the maze of legal jargon. Finally, his confidence, perseverance and masterful negotiation skills deliver the win. Anonymous
I had an excellent experience with this team! Thanks, Marjorie, Brittany, and Candy for your great support and prompt answers to all my questions. I highly recommend this firm. This team works very hard and I am extremely happy with the results. Ana
They were articulate, compassionate, persistent, and they wrote superbly. I felt as if they were truly in my corner, and I have recommended them to others. Susan
Mr. Phillips' law firm is dedicated to providing excellent service. Your case is explained step by step. All questions and concerns are addressed promptly and accurately. I am extremely satisfied and highly recommend Mr. Phillips. Ingrit