Restaurant employers in some states rely on their employees' tips to supplement their income. It is, in some states, perfectly legal to pay employees less than minimum wage, provided the employee receives enough in tips to make up the difference. Using this so-called "tip credit" means that the employer pays less in wages and therefore has fewer expenses. However, some of these employers are then using the employees' tips to subsidize their managers' wages. This is simply not right. These employers already get a break by not having to pay employees minimum wage, why should the already underpaid employees have to support the wages of management employees?
The practice is actually more common than many people think. However, employees are fighting back against the unfair policy by filing lawsuits against their employers. In 2007, waiters at the Old Homestead Steak House in New York filed a $1 million lawsuit against the restaurant, alleging they were forced to share their tips with management and other employees. The defendants, who were meant to share the tip pool amongst themselves, alleged that even the restaurant's general manager profited from sharing the waiters' tips.
In 2006, six waiters at Jing Fong, a popular restaurant in New York's Chinatown, filed a lawsuit against the restaurant alleging that management violated minimum-wage laws by using waiters' tips to pay other employees. Among the allegations:
• That the restaurant used money from the tip pool to pay employees who push the dim sum carts (while not paying those employees an hourly wage);
• That the restaurant took up to 35 percent of the automatic service charge added to bills for large groups; and
• That around $2,500 a week was taken from the tip pool for inappropriate uses.
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Many more waiters are now investigating whether or not their employer's tip sharing policy violates labor laws. Furthermore, the courts are siding with employees when employers have forced them to share tips with management and other employees who work in a supervisory capacity. If you believe you have been unfairly forced to share your hard-earned tips with management and other supervisors, contact a lawyer who can determine if you are eligible to join a lawsuit.