Unlawfully Withholding Employee Tips

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Unlawfully Withholding Employee Tips

Under federal and state wage and hour law, employers who employ regularly tipped employees may pay those employees an hourly wage rate below the minimum wage, as long as the employees’ tips result in them being paid at least the hourly minimum wage for all straight time worked.

To take advantage of this “tip credit”, an employer must ensure that tipped employees retain all of the tips they receive. “Tip-pooling” or “tip-splitting” arrangements are allowed, but there are strict guidelines for maintaining such arrangements lawfully. Among those requirements, tipped employees may not be required to share their tips with employees who have not customarily and regularly participated in tip pooling arrangements, such as dishwashers, cooks, chefs, and janitors – and management. Old Homestead and Nobu are just a couple of New York restaurants that were sued for violating these guidelines but there are many others.

Restaurateurs should take very careful precaution in ensuring that they are fully complying with New York’s wage and hour laws.

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