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“Tip Pooling” Leads To Lawsuit Against Famous Steak House

Four former waiters with the famous Peter Luger Steak House in Great Neck, New York are suing the company, claiming the restaurant failed to pay them overtime and minimum wage for work done as far back as 2007.

The lawsuit, which was filed last week in the U.S. District Court in Central Islip, claims that Peter Luger’s restaurant did not pay waiters for prep work performed before and after their shifts. The workers claimed that they were also not paid for time they spent working through their breaks. Finally, the workers argue that they had money deducted from a daily tip pool to pay kitchen staff.

The waiter’s attorneys claim that the actions on the part of the restaurant management violated both federal and state labor law and should be punished by the Court overseeing the case. The lawsuit also seeks a class action certification to represent other former waiters and waitresses of the restaurant who were denied the money they were owed.

The basic rule of tips is that they belong to employees, not the employer. Employees cannot be obligated to hand over their tips or any part of them to the company, except as part of a legal tip pooling arrangement. Even then, the tip pool must meet certain requirements and the employer cannot be a part of the pool.

Tip pooling is a practice common in many restaurants and something we discussed in an earlier post about a similar lawsuit against Mario Batali that resulted in a whopping $5.25 million wage-and-tip class action settlement. The practice occurs when employees that work for tips such as servers and bartenders are required to share tips with others.

A tip pool is valid if and only if two requirements are met. First, the employee must be paid the tipped employee minimum wage (currently, $2.13/hour under federal law and different in each state). Second, and where Peter Luger is alleged to have gone awry, the tip pool must not be shard with managers or supervisors or with other employees who do not interact with customers. This includes those that work in the back of the house, such as kitchen staff, cooks, dishwashers, janitors and chefs. Only those that work in the front of the house, such as waiters, waitresses, bartenders, bussers and hostesses are allowed to share in the tip pool.

Source: “Former Waiters Sue Peter Luger Steak House Over Pay,” by Carrie Mason-Draffen, published at NewsDay.com on March 18, 2013.

Source: “Former Waiters Are Suing Peter Luger Steakhouse,” by Linette Lopez, published at BusinessInsider.com on March 19, 2013.

See Our Related Blog Posts:
Famous Chef, Mario Batali, Settles Tip Case for $5.25M
Chinese Overtime, Bonuses and Incentive Pay: Not a Good Mix?

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