New York City Employer Tip Theft Attorney

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New York City employers who engage in tip theft violate federal and local laws. Tip theft occurs when employers keep tips earned by their employees. Employers are legally required to distribute tips to their workers. According to the Center for Urban Economic Development’s National Employment Law Project, 12 percent of employees surveyed reported that their employers had stolen tips from them. Workers in minimum wage jobs deserve to keep all of the tips that they earn.

Many tipped employees work in the restaurant and hospitality industries. Due to the high employee turnaround, employers may find it easier to engage in tip theft within these industries. Tip theft in itself is unlawful in New York City. When tip theft results in an employer failing to pay an employee the required minimum wage, employers may be guilty of other wage-based violations.

Employers who steal tips from their employees should receive punishment for violating the law. If you are a New York City employee and your employer is engaging in tip theft, you may have a right to compensation. Contact the skilled employment attorneys at Lipsky Lowe LLP to find out how we can help you fight for your right to your wages.

Tip Theft Under the Fair Labor Standards Act

Federal and local laws prohibit employers from engaging in tip theft. At the federal level, the Fair Labor Standards Act (FLSA) protects workers’ rights to all of their earned compensation. Congress amended the FLSA in March of 2018 to prohibit employers from keeping the tips their employees receive. Specifically, the amendment prohibits managers and supervisors from keeping any portion of their employees’ tips. Employers may still claim tip credits in certain circumstances but they cannot keep their employees’ earned tips outright.

What Is a Tip Credit Under the Labor Law?

According to federal labor law, a tip credit occurs when an employer pays a tipped employee less than the minimum hourly wage, called a minimum cash wage. A tip credit is a difference between the minimum wage and the cash wage that the employer pays the employee. The cash wage can be less than the minimum wage as long as the employee made enough tips to bring the cash wage amount up to the minimum wage amount. Employers may pay their employees less than the minimum wage when a tipped employee makes enough tips to meet the minimum wage threshold via a tip credit.

When an employer subtracts the tip credit amount from the minimum wage amount, he or she arrives at the minimum cash wage amount. For example, the current federal minimum wage is $7.25 per hour. The FLSA allows employers to claim a maximum tip credit of $5.12 per hour. Thus, the minimum cash wage amount is $2.13. As long as a tipped employee earns $5.12 in tip credits, an employer may pay the employee $2.13 per hour of minimum cash wages without violating minimum wage laws.

Tip Credits Under New York City Labor Law

New York City’s minimum wage is $15.00 an hour for employers that employ 11 or more employees. Employers with fewer than 11 employees must pay a minimum wage of $13.50. Employees with 11 or more employees must pay a cash wage of at least $10.00 per hour with a maximum tip credit of $5.00 per hour.

No matter how much an employee earns in tips, a New York City employer must pay at least $10.00 per hour. When an employee does not make enough money in tips to raise his or her hourly wage to the minimum wage of $15.00 per hour, the employer must cover the difference to raise the employee’s hourly wage to meet the minimum wage.

When an employee doesn’t make enough tips for meeting the minimum wage, the employer must pay the employee back pay for all of his or her lost wages and stolen tips. New York state laws and New York City impose further regulations regarding tip pooling. Employees concerned that their employer is engaging in unlawful tip credit practices should reach out to the skilled employment attorneys at Lipsky Lowe LLP.

What Happens When an Employer Keeps Tips or Hides the Tip Credit?

Federal labor law prohibits employers from keeping tips that an employee earned for him or herself, even when the employer pays the employee more than the minimum wage. For example, an employer cannot pay his or her employee the minimum wage and then keep or hide all tips that exceed the minimum wage amount. When employers violate tip credit laws, the employee is entitled to damages under federal and local labor laws.

First, the employee is entitled to payment of the full minimum wage for all hours worked the past two or three years, multiplied by two. The employee is also entitled to the full amount of any misappropriated tips during the past two or three years, multiplied by two. Finally, the employee is entitled to an amount covering attorneys’ fees and costs. Thus, the employee is entitled to recover all of the stolen and hidden tips.

Tip Theft Under New York City’s Wage Theft Prevention Act

New York City’s Wage Theft Protection Act (WTPA) requires employers to provide written notice of the employee’s wage rates to new hires. In addition to other requirements, the notification must include which types of tip credits the employer takes in calculating the employee’s minimum wage. Employers that fail to provide notice within 10 days of hiring a new employee face significant daily fines. The fines will continue until the employer rectifies the wage violation. Individual employees can recover monetary compensation in a civil lawsuit against the employer under the WTPA.

Proving Tip Theft in New York City

Every year, the New York Department of Labor forces employers to pay some employees back wages for minimum wage violations involving accounting of tips and tip credits. In some instances, employers wrongly calculate the tip credit amount. In some other cases, employers fail to pay employees the minimum cash wage amount per hour. For example, in New York, employers must pay service industry employees a minimum of $11.10 per hour. The maximum tip credit available is $3.60. Thus, employers can pay tipped employees $7.50 per hour as long as the employee received at least $3.60 in tips, bringing his or her hourly rate up to $11.10. New York City, Long Island, and Westchester County must pay an even higher minimum wage amount.

Many New York City employers require employees to keep their records regarding their tips. Some employers need employees to record and determine whether or not their tips brought their salary up to meet the minimum wage. Employees in charge of recording their daily tips and tip credit amount should carefully review their records for any errors made on behalf of their employer.

While an employee can confront his or her employer about tip theft, it is often advisable to speak to a skilled employment law attorney. Some employers may have accidentally engaged in tip theft by unlawfully calculating tip credits. Other employers may participate in tip theft by intentionally stealing employee tips. In these circumstances, employers might deny accusations of tip theft.

Unfortunately, some New York City employers engage in retaliation when their employees bring forth a complaint about tip theft. Employers have threatened employees who raise concerns about tip theft with termination or assigning them to less favorable work. Nonetheless, New York City’s employment wage laws are broad. Employees have a legal right to seek damages when their employer retaliates against them for questioning tip theft. Additionally, New York State’s Department of Labor has the authority to enforce laws that prohibit employers from appropriating their employee’s tips.

Contact Our NYC Tip Theft Attorney

At Lipsky Lowe LLP, our employment law attorneys have decades of combined experience fighting against employer wage abuses. One of the best ways to respond to an employer’s tip theft is to speak with a skilled New York City wage attorney. Our lawyers have helped many clients succeed in their claims against employers who violate tip theft rules. Contact Lipsky Lowe LLP today to schedule your initial consultation.