​Tip-Related Claims Will Continue to Be Served Up as the Lawsuit du Jour Against the Hospitality Industry in 2015

Luxury Hoteliers

Jeffrey H. Ruzal, Senior Counsel in the Labor and Employment practice, in the firm’s New York office, authored an article in Luxury Hoteliers, titled “Tip-Related Claims Will Continue to Be Served Up as the Lawsuit du Jour Against the Hospitality Industry in 2015.”

Following is an excerpt:

The hospitality industry is particularly fertile ground for a wide variety of wage and hour issues, which continue to plague management through steadily increasing federal and state department of labor investigations and enforcement actions and the seemingly endless onslaught of private wage and hour lawsuits filed by an overzealous plaintiffs’ bar. Tip credit claims are government regulators’ and plaintiffs’ favorite, and there are no signs that such claims will abate in the coming year.

Employers may take a credit against the prevailing minimum hourly wage earned by employees performing tip-earning duties, such as servers, bartenders, bussers, hosts, housekeeping personnel, and bell staff. Before taking a tip credit, however, employers must comply with very specific federal and state tip credit laws, rules, and regulations, which form the basis of the various tip credit lawsuits commonly filed against employers in the hospitality industry. Five of the most common tip-related wage and hour issues that are often the focus of litigation are properly providing tip credit notice; correctly applying the tip credit allowance; properly computing tipped employees’ overtime pay; ensuring that tipped employees actually perform tipped work; and, complying with tip pooling or sharing requirements.

This article is based on Mr. Ruzal’s recent Take 5 Newsletter.