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High End NYC Restaurant Settles Tip Case

While most restaurants leave it up to their customers to decide how much to tip their servers, some restaurants include a mandatory gratuity or “service fee” in their bills. Sometimes this is done only for large groups of diners. Other times it is included as an extra charge when customers choose the private dining option.

Mandatory gratuity is legal only if the money is used for the sole purpose of paying the server. Unfortunately, restaurants sometimes include mandatory gratuities and service charges on their bills without passing on any of that money to the servers. Instead, the money goes to pay for other aspects of running the business, or the owners take it as profit. Either way, the practice is unfair to both servers and customers.

To prevent this from happening, the state of New York enacted a labor law in January 2011 that prohibits restaurants from collecting mandatory service charges without using the money from those charges to pay tips for the servers, unless the bill explicitly states what the charges are for.

Per Se, an upscale restaurant at the Time Warner Center at Columbus Circle, allegedly violated this state law when it allegedly charged customers a 20 percent mandatory “service charge” for all private dining events. According to the lawsuit, although some of the money was used to pay the servers, much of it went towards other operational costs of the restaurant.

Per Se allegedly violated state labor law by calling the added fee a “service charge” (which is often used to refer to tips for servers) and failing to specify what the money from the charges was used for. When customers asked about the extra charge, employees of the restaurant allegedly told them it was a gratuity, which was not true.

Per Se voluntarily changed the language of its bills in September 2012 to more accurately describe the charges. The restaurant also released a statement in which it said it had been unaware of the new legislation and that the violation was the result of an unintentional oversight.

Per Se has agreed to pay $500,000 to employees who were denied tips as a result of the alleged practice. The restaurant will also make it easier for employees to make complaints about labor violations, train the staff responsible for private dining events to make sure they understand the all the relevant labor laws, and designate a compliance officer to monitor labor practices.

Unlike most servers, those working at Per Se are paid so well, most of them didn’t realize there was an issue. Hourly rates for Per Se servers vary between $16 and $28, with the average annual salary at $116,000 per year, putting them among the highest-paid servers in the food service industry.

It’s not just about the servers though. While making sure all employees are fairly paid is certainly important, it’s equally important to make sure you don’t mislead your customers. If a particular charge goes to help keep the lights on or pay taxes, diners should not be told it will be paid to their servers. The one paying the bill has a right to know where the money is going

The Chicago class action lawyers at the Chicago Overtime Law Center are investigating unpaid overtime claims by waiters and bus boys and other restaurant and hotel workers against national restaurant chains including Hilton, W, Marriott, Sheraton, Holiday Inn, Best Western, Chipotle, Red Lobster, Olive Garden, Cracker Barrel, Outback Steak House, Taco Bell, Burger King, Wendy’s and hotels for mis-classifying employees as managers or assistant managers, forcing employees to work off the clock at business, failing to share all tips, erasing or altering time sheets or time records, pressuring workers not to report or record overtime, and otherwise failing to pay workers for overtime and other wages. If you are the victim these wage theft practices call us at (312) 869-4095 or contact us online.

The Chicago class action attorneys at the Chicago Overtime Law Center have three decades of experience fighting to help employees who are victims of wage, overtime and tip theft by their employers. We have a team of Chicago unpaid overtime lawyers who concentrate on prosecuting state and nationwide class action lawsuits. Our attorneys work out of Chicago and Oak Brook offices and pursue claims for workers all over the Chicago area including Bollingbrook and Jolet. We protect unpaid workers who haven’t received overtime throughout the Chicago area including in DuPage, Lake, McHenry, Kane and Cook Counties.

Our Mundelein and Hanover Park overtime lawyers are intimately familiar with the issues that arise during wage claim litigation, and we know the laws that govern overtime cases well. Many employers mis-classify employees as being exempt from overtime laws and pay workers salaries instead of hourly wages in order to avoid paying them overtime. Some employers mistakenly classify employees as exempt and others intentionally do so in order to circumvent the law. In either case, workers do not receive the wages they should, and a lawsuit may be the only way to recover their earned wages.

The Chicago Overtime Law Center is based in Chicago, and represents clients throughout the country who have unpaid overtime and other employment right claims.