The hospitality industry is being swept away by state and federal agencies due to the wage and hour rules violations. Of late it has become the target of these agencies audits and also plaintiff class actions that involve the above allegations including the overtime rules. In the recent headlines, tips and gratuities with lawsuits have been in the rise. Many upscale restaurants management have been charged due to failure of distributing pooled gratuities in the appropriate manner to the service staff. Among the lawsuits is the one below against a hotel owner. The Fair Labor Standards Act (FLSA) requires the qualified employers to pay their employees (hourly ones) the required federal minimum wage of $7.25.
The eligible employees who are supposed to receive tips are those that hold positions of bartenders, waiters and waitresses and customer servers. Those that do not are kitchen staff and managers. However, FLSA allows for restaurant owners to claim for a tip credit for every tip that that eligible employees collect. According to FLSA, the collected tips are for the employees only and the employer should not withhold any of it. It also permits for employers to conduct voluntary pooling schemes whereby tipped employees pool their tips and later distribute amongst themselves in the formula by which they have agreed.
Bobby Flay, a food network star, is the owner of three Manhattan eateries namely, Mesa Grill, Bolo and Flay's Bar American. The company is being sued by its former employees (number not given). The employees are suing for $ 800,000 of the damages caused. The law that the hotels violated are the New York's state labor law and the Fair Labor Standards Act (FLSA). The legal rule of harassment liability used in this case is the Fair Labor Standards Act which is concerned about employers paying minimum wage, overtime as well as abide with the child lbor restrictions. The employer violated the law by not making sure that the employees worked in a non harassment environment.
He also did not give the employees their mandatory gratuity portion that is charged to large and private parties as well as he forced them to buy and wash their own uniforms that they used in the hotels. When the harassment was reported, Flay denied that he had committed any wrong but said he preferred to settle the claims made other than being tried in court. The result of case is that Bobby Flay agreed to pay the lawsuit of $800,000. The employer should make sure it does not happen again buying the employees uniforms and washing for them. They should also pay the un-tipped employees in full.
The management should communicate with the employees in order to avoid such cases that cost an organization a lot whereas it would have been avoided. In instances where tip credit is not taken, tip pooling scheme is allowed by FLSA. The court only finds it illegal in instances where tip credit is collected and at the same time tip pooling scheme is conducted. the main aim of FLSA is to make sure workers are free from substandard wages as well as oppressive working hours.