In May of this year, NY Federal Judge Richard Howell dealt a huge blow to famed restauranteur Mario Batali and his partner Joseph Bastianich by granting class action certification to a lawsuit filed by about a dozen or so employees of their famed eateries. The Wage and Hour lawsuit makes several claims against the pair (who are named individually as defendants along with their restaurants including Babbo, El Mono, La Loggia and Pane Sardo) but the most unusual is that the restaurants deduct from the employee tip pool a portion of all credit-card tips equal to approximately 4-5% of the nightly wine sales. One plaintiff, a former server at Otto Enoteca Pizzeria, alleges that several managers told him the deducted amount went to the “wine program,” while a general manager told him it went “back to the house.”
Having the house share in tip pools is a big no-no and a violation of the Federal Fair Labor Standards Act. The FLSA allows successful litigants to not only collect back all the wages and tips they were entitled to but also to collect a matching 100% penalty plus attorneys fees. The granting of class certification means that all eligible employees may get a return of money even if they did not join the lawsuit directly. A quick review of the court’s electronic record of the case shows that more and more employees are in fact getting on the bandwagon and joining the litigation. Last week, the court set January 31, 2012 as the date for completion of discovery and February 10, 2012 as the final conference before a trial date is fixed.
In discussion with high-ranking members of the US Department of Labor’s enforcement division, I learned that both the US government and many states are stepping up enforcement of fair wage violation cases in the restaurant industry. Failing to pay overtime; failing to pay minimum wage and sharing in tips are the most common claims being pursued.
That a high-end group of restaurants could be hit with this type of claim shows the need for all restaurant owners to be diligent in their operation. Taking a “hands off” approach and letting your staff run the store could expose you to significant FLSA and State law claims in this area.