With the holiday season here and many bars and restaurants hosting events, tip pooling can be a common practice. It is legal for managers to require some types of employees to participate in tip pooling at these events.
However, it is unlawful for managers and ownership to take a percentage of pooled tips in New York.
Is there a ‘service charge’?
One example of unlawful tip pooling may involve a service charge. For large parties and events, restaurants and bars may charge extra and label it as a service charge or fee. This is legal, provided that the restaurant clearly defines what is a tip and what the owner or manager will be taking. Under New York law, the employer must prove that a reasonable customer would know that any charge not directly for food and drink is not a tip.
If the bill includes a “15 percent service fee,” but doesn’t clearly state that this isn’t for tips, the servers and bartenders at the event may have a wage-and-hour claim if management keeps it.
Servers and bartenders have a right to tips
Employees losing out on tips is a serious problem in New York City. Many servers and bartenders assume that all tip pooling practices are legal, or they may feel that questioning their share could lead to being fired. Employees who are unsure of their immigration status may also fear being deported if they report wage theft.
While these concerns are understandable, the law protects employees from wage theft. Firing an employee for reporting concerns about wage theft is prohibited. Immigrants without current legal documentation can still get compensation for wage theft.
Talking to an attorney can provide options
If you are a server or bartender concerned about wage-and-hour violations such as unlawful tip pooling, speak to an employment law attorney about your rights. You deserve to be paid all of what you rightfully earn.