What Would Raising the Minimum Wage Mean for the Restaurant Industry?

Most people assume that restaurant workers would be thrilled about a raise in the minimum wage, but that restaurant owners would not be in favor of it. An interesting situation took place in Maine last summer that is worthy of note regarding minimum wages. According to The Washington Post , the Maine House voted to lower minimum wages for tipped restaurant workers based on the workers’ request. The bill to reduce their minimum wages passed and restaurant workers were happy about it. Restaurant servers in Maine had campaigned to overturn the results of a November referendum that would’ve raised servers’ hourly wages from $3.75 in 2016 to $12 by 2024. They believed that such a raise would result in customers tipping less and consequently lower overall income. In addition, servers in New York, Massachusetts and D.C. were also beginning to move politically against minimum wage increases for servers in their states. The Explanation Behind Wanting a Low Minimum Wage Restaurant labor models differ from most industries. When tipped workers’ wages fall below the minimum wage, the employer must pay the difference. However, whether restaurants actually adhere that requirement or not is rather uncertain. Servers who make most of their income in tips do not want to upset management or change what is working well for them. Some servers believed that the added expenses of higher minimum wages for restaurant owners would result in raising prices and cutting work shifts, which would ultimately result in people tipping less, servers working less and lower incomes. Some workers stated that they witnessed customers tipping less after the referendum passed. It’s also possible...

Tip-Sharing Class Action Lawsuits Take Their Toll on Restaurant Owners

In recent years, restaurant owners have been subject to tip-sharing class action lawsuits that have cost them considerable amounts of money. Zahav in Philadelphia In July 2017, Eater.com published an article about Zahav, an award-winning Philadelphia restaurant that settled a tip-sharing class action lawsuit for $230,000. Toward the end of 2016, former server Tanya Peters filed a lawsuit against the restaurant and alleged that its tip-sharing practices violated the FLSA and Philadelphia Gratuity Protection Bill. Peters claimed that servers were required to share tips with silverware polishers during her 19 months of employment at the restaurant. This amounted to $5.00 per shift. Bill Hill Restaurants The previous July in 2016, Blue Hill at Stone Barns, which Eater named the “best restaurant in America” and which ranked 11 on the World’s 50 Best list, was subject to a class-action wage theft lawsuit. The restaurant settled for $2 million. The third parties that sued also brought a claim against the NYC sister restaurant Blue Hill. The lawsuit claimed that due to tip pool mismanagement, certain service employees did not receive money owed to them. In particular, Blue Hill engaged in sharing tips with non-service employees and did not share private event service charges with service employees. An estimated 250 eligible former and current employees receiving the settlement money included servers, buses, back-waiters, runners and hosts and hostesses. Divided equally, each class-action suit member will receive around $5,000 and the lead plaintiffs will receive an additional $25,000. Preventative Actions to Prevent Tip Pooling Class Action Lawsuits Consulting with an experienced employment law attorney can help you prevent tip-pooling lawsuits. Restaurants should have...