When many people see a service charge included on their bill, they assume that it is part of a gratuity which goes to pay the wait staff. However, this is not usually the case. A gratuity, or a tip, is optional and is left entirely to the customer’s discretion. A tip gets paid directly to the server. A service charge, on the other hand, is a mandatory charge which is included in the final bill. Sometimes, these charges get distributed among the wait staff, but other times they go to management and are used to pay for things like event setup. However, when customers see a service charge on their bill, and think that it is a gratuity, they often fail to leave a tip.
In order to prevent this confusion, several states have developed laws which state that a company cannot include a service charge on their bill that does not get paid to the staff. If the company does include a service charge that is not used to pay the wait staff, the company must provide an explanation that the service charge is not a tip.
New York is one such state that makes this a legal requirement in order to protect employees working in service positions, such as waiters and bartenders. According to a recent class action wage and hour lawsuit, Yankee Stadium included a mandatory service charge in its contract for events which were privately hosted at the stadium. Three banquet servers who worked as waiters during these events have filed the lawsuit on behalf of themselves and all other similarly situated employees who worked for Yankee Stadium any time between 2009 and 2011.
According to the wage and hour lawsuit, the bills that Yankee Stadium provided allegedly did not contain any explanation of what the service charge was. In 2011, the contract was amended to say that only part of the service charge would be paid to the wait staff. However, that still leaves employees who worked as servers for the company for two years who have lost out on tips and wages which should have been paid to them.
The federal Fair Labor Standards Act (FLSA) and most state laws allow companies to pay employees working in service positions a lower minimum wage than the standard $7.25 per hour. This is because the law assumes that the employees are making at least minimum wage between their wages and the tips they earn from customers. If an employee earns less than minimum wage, the employer is required to make up the difference. According to the recently filed class action wage and hour lawsuit against Yankee Stadium, the practice of including a service charge without an explanation for that charge, allegedly resulted in employees working as waiters and banquet servers receiving less than minimum wage for the time that they worked.
Since a recent wage and hour lawsuit brought this law to the public’s attentions, employers have been faced with a flood of similar lawsuits by employees, all claiming that they were denied tips or wages as a result of their employer’s unfair service charge policy.
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, Outback Steak House, Taco Bell, Burger King, Wendy’s and hotels for misclassifying 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 Palos Hills and Orland Park. We protect unpaid workers who haven’t received overtime throughout the Chicago area including in DuPage, Lake, McHenry, Kane and Cook Counties.
Our Cicero, Berwyn and Highland 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 misclassify 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 not been paid for the overtime hours that they worked. If you believe that you are owed overtime wages, contact one of our Chicago class action attorneys by phone at (312) 869-4095 or through our online form.