Am I entitled to receive tips in New York?

Joseph A. Fitapelli - Employment & Labor - Super Lawyers

Answered by: Joseph A. Fitapelli

Fitapelli & Schaffer, LLP
New York, NY
Phone: 212-300-0375
Fax: 212-481-1333

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Many occupations receive tips/gratuities as part of their compensation, especially food service workers in restaurants, night clubs, and catering facilities. Under the New York Labor Law (“NYLL”) any amount of money left by the customer in addition to the total amount for food and drink, is considered a tip and must be given to the employee. Tips can be in any form (e.g., cash, check, or credit card). When a tip is received on a credit card, the employer must give the employee the amount of the tip no later than the next scheduled pay period.

Tip Pools and Tip Sharing

Employers can require tipped employees to share and/or pool their tips and they can even set the percentages for “tip-outs”; however, the employer cannot participate in this transaction. Only employees who regularly receive tips can participate in the tip pool. Examples of these employees are: wait staff; bartenders; captains; busboys; barbacks; food runners; and hosts who greet and seat guests. As you can see, employees eligible to participate in the tip pool primarily perform tasks to assist in the personal service of the guests. Employees who do not perform customer service (including managers, cooks, dishwashers, and maintenance workers) are not eligible to participate in tip pools.

Administration Fee/Service Charge

As stated above, all charges in addition to the total amount for food and drink are presumed to be tips and must be given to the employees. Frequently, employers will include an “administration fee” or “service charge” on the customer’s bill for a private event or banquet. There are strict requirements the employers must follow to ensure proper notification. The employer has the burden of proving that a reasonable customer would understand that such a charge was not a gratuity and would not be distributed to the employees. Unfortunately, many employers fail to notify their customers adequately that the “service charge” is not a gratuity and will retain a portion of, or the whole, charge. Therefore, if you’re employed as a food service employee for a banquet hall or during private events at a restaurant and your employer keeps all or portions of the service charge, you should consult an experienced employment attorney.

Potential Recovery

Tipped employees whose employers (or their agents) retain all, or portions, of their tips and service charges are entitled to the unpaid tips. These employees may also be entitled to interest, attorneys’ fees, and liquidated damages. In New York, there is a six-year statute of limitations; therefore, if your employer is retaining portions of your tips and/or service charges then please consult our experienced employment lawyers, to discuss your rights under the NYLL.

Disclaimer: The answer is intended to be for informational purposes only. It should not be relied on as legal advice, nor construed as a form of attorney-client relationship.

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