Published on:

Ritz Carlton in Hawaii Sued for Allegedly Failing to Share Tips Thus Allegedly Failing to Pay Minimum Wage


While there are federal laws, such as the Fair Labor Standards Act (FLSA) to make sure that employers to not abuse their workers, state laws also exist and the requirements placed on employers may differ from state to state. For example, most states allow companies to include a service charge on their bills, but these states may differ in their requirements for providing these extra charges. Unlike a gratuity, a service charge does not get paid to the wait staff of a facility. Instead, the extra charge goes to pay for things like set up and ambience. Many customers are unaware of the difference, though, and will fail to leave a tip when they see a service charge, thinking that the charge is an automatic gratuity. In order to prevent this, New York state law requires establishments to specify that a service charge will not be paid to the servers.

Hawaii also has state labor laws which govern the use of service charges. In that state, companies are allowed to include a service charge on their bills only if the charge gets paid directly to employees or if the company explicitly states that the money is not going to employees. Two employees working at a Ritz-Carlton Hotel in Hawaii allege that the hotel chain included a service charge without complying with either of these two requirements. As a result, employees working as waiters, servers, or cooks, often went without tips.

Because employees working in service positions, such as waiters and bartenders, generally receive tips, the FLSA allows employers to pay these workers a lower minimum wage. However, the law assumes that the employees’ tips and wages reach at least the federal minimum wage of $7.25 per hour. If this is not the case, then the employer is required to make up the difference. If employers are still withholding service charges when the employees are making less than minimum wage, then the employees have a right to try to collect their missing wages.

The lawsuit was filed by two food and beverage service workers on behalf of all similarly situated employees working for the hotel chain. The lawsuit sought several different types of damages, including recovery of the money charged from the service charges. It also asked for a cy-pres award, meaning that, if not all of the eligible employees come forward to claim their share of the settlement, then their share may go to a charity or some other cause which may indirectly benefit class members.

The Ritz-Carlton Hotel Company agreed to settle the wage and hour class action lawsuit for $1.8 million.

Courts have been seeing an increase in wage and hour class action lawsuits regarding service charges lately. It is generally believed by employment attorneys that the Great Recession had an effect on both an increase in violations of labor law and employees’ silence on the matter. Now that the job market has begun to stabilize, employees have begun speaking out and demanding that they be treated fairly and paid fair wages.

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 La Quinta, Microtel, Best Western, 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 Palatine, Skokie and Lincolnwood. We protect unpaid workers who haven’t received overtime throughout the Chicago area including in DuPage, Lake, McHenry, Kane and Cook Counties.

Our West Chicago and Wheaton 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.