The New York Daily News recently reported on a potential settlement against Mario Batali and his business partner. Batali is likely to pay a significant portion of the $5.25 million settlement amount to 1,100 employees, from captains to bartenders to busboys, working in eight of his New York restaurants. Those working for Batali from mid-2004 until February of this year will be eligible to receive settlement money, if the settlement is approved. The payouts will be based on the number of hours each employee worked.
The lawsuit claimed employees were forced to share their tips with employees who were not entitled to them. Additionally, employees who joined the lawsuit claimed they were forced to work overtime, and were denied both minimum wage and overtime pay. Beyond the wage law violation claims, some employees also claim Batali’s business partner mocked some of the employees who brought the lawsuit two years ago. He also allegedly attempted to discourage others from joining the lawsuit. Both the mocking and the efforts to prevent others from coming forward or joining the lawsuit likely violate the anti-retaliation provisions of the Fair Labor Standards Act (FLSA), which governs employee wages and overtime.
Federal Minimum Wage & Tipping
While the federal minimum wage is currently $7.25 an hour, under the provisions of the federal minimum wage, employers only need to pay $2.13 an hour to tipped employees. The reason the minimum wage for these workers is so low is based on the assumption the employee will earn enough in tips to match or exceed the minimum wage. There is, however, a safety net of sorts for those who do not earn enough tips to reach the $7.25 minimum wage. If an employee does not reach $7.25 through tips, their employer has to provide enough additional wages for the employee to reach that wage.
Since tipped employees are dependent on their tips, and employers would prefer not to cover shortfalls, employees are entitled to all of the tips they earn. Tipped employees can create their own “tip pool,” where all tipped employees, such as servers, bartenders, and busboys, at a location contribute tips, and then divide them at the end of shift. One important restriction on “tip pools” is that they cannot include employees who do not regularly receive tips. This is likely what happened to Batali’s tipped employees.
Washington Minimum Wage & Tipping
Unlike workers in states using federal minimum wage levels, Washington tipped employees receive the states minimum wage of $9.32 plus any tips earned. Washington minimum wage laws also make
tipped employees eligible for overtime pay. However due to the same state law, the Department of Labor and Industry specifically states that tips given directly to employees by customers cannot be considered as a commission. This is important because if they were considered commissions, the employees would not be eligible for overtime. Washington’s blanket minimum wage makes it easier for employers to know how much an employee must be paid, but the tiny details like commissions versus tips can create some confusion and problems.
If you believe you have earned and been denied wages, tips or overtime, contact an HKM employment law attorney for assistance.