While the federal Fair Labor Standards Act (FLSA) requires that all employees working within the United States be paid at least the federal minimum wage of $7.25 per hour, there are certain exceptions to this rule, including servers such as waiters and bartenders. Because these types of employees frequently receive tips from patrons in addition to their wages, the law allows employers to pay these workers less. However, the tips and wages that the waiter receives must add up to at least $7.25 per hour, otherwise the employer is required to make up the difference.
In some instances, a company will charge its customers an automatic gratuity of a percentage of the total bill, usually twenty percent. This is legal so long as the employees actually receive this money. More and more wage and hour lawsuits have been filed lately which allege that employers are charging their customers a gratuity without then giving that money to their servers.
Recently, Robert Atkins, a former bartender for Metronome, the Manhattan events company, filed a wage and hour class action lawsuit against his former employer. The lawsuit alleges that, despite the fact that Metronome added a twenty percent gratuity charge to all of its bills for the banquets it ran in Manhattan, Atkins and other servers never saw any of that money. Instead, Atkins was allegedly paid a flat rate of $150 per event. While such a rate is high enough to be within the parameters of the FLSA, Metronome violated the law by charging its customers a gratuity which was not actually given to the employees who worked as servers at Metronome’s events.
Atkins began working for Metronome in 2010 and continued working for the events company through 2013. In that time, he worked about 140 events hosted by Metronome, including a birthday party for Johnny Depp, a Miss Universe event commissioned by Donald Trump, and a New York Film Critics Circle Awards event with Angelina Jolie, Brad Pitt, and Meryl Streep.
Based on the number of events that he worked and the gratuity charges that Metronome made in that time, Atkins alleges that the company owes him as much as $375,000. Depending on how many other current and former Metronome employees decide to join the class, the total back wages that Metronome might be made to pay could easily reach millions of dollars.
The lawsuit further alleges that Metronome deceived its patrons into thinking that the bartenders were tipped when, in fact, they were not. It is this deception, more than the actual failure to pay the bartenders their tips, that constitute a violation of the law. Not only is it unfair to the bartenders who do not receive their tips, but it is also dishonest to the patrons who have already paid a fee to the event company before the gratuity. Had Metronome simply left the gratuity charge off of its bills, it still could have paid its bartenders a flat rate for each event without any tips and remained within the parameters of the law.