Tag Archive: No-Tipping Policy

Mar 01

New York City Restaurants Adopt a No-Tipping Policy

By Charles Lazo on March 2, 2016.

In the past few decades, Fair Labor Standards Act (“FLSA”) lawsuit filings have been increasing at a steep rate. This can partly be contributed to FLSA, but also to states’ parallel wage and hour laws. In particular, state laws that pertain to tip credit.

Under FLSA, a restaurant can take a “tip credit” towards its minimum wage obligation for tipped employees equal to the difference between the required cash wage of at least $2.13 per hour and the federal minimum wage of $7.25 per hour. Under New York Labor Law (“NYLL”), restaurants may take a tip credit of $1.50 per hour toward their $9.00 per hour minimum wage obligation. However, for a restaurant to take a tip credit, it must comply with both FLSA’s and NYLL’s strict notice requirements—something that many restaurants fail to meet, despite their good intentions.

To avoid costly wage and hour lawsuits, some restaurant employers are deciding to forgo the advantages of the tip credit and instead pay its waitstaff a higher hourly wage. In effect, the restaurant employers do not need to meet the strict notice requirements, and consequently, do not need to protect themselves from wage and hour lawsuits.