Can you confiscate employee tips?
This is one of the questions being asked in a lawsuit filed against Morrell Caterers, one of the largest of such companies on Long Island. Approximately 500 servers, busboys and maitre d's claim they were forced to turn over cash tips they received while on the job.
The Morrell Caterers lawsuit further accuses the company of fraudulently telling customers a "service charge" would be distributed amongst wait staff.
Employees are asking for at least $10 million, according to the Long Island Press. That could mean thousands in tips per employee.
If Morrell Caterers did confiscate cash tips, or any tips specifically left to employees, then the company may be on the wrong side of the law. Though many states permit tip pooling, gratuities belong to the employees. An employer generally can't keep any part of the monies.
Though former customers may be able to sue for fraud, service charges are different and may not necessarily be considered tips. As explained by the California Department of Industrial Relations, a mandatory service charge is "an amount that a patron is required to pay based on a contractual agreement." It's an extra charge owed to the establishment, which means sharing is discretionary.
Check with your state's labor department to see if it agrees.
As a side note, this is the second Morrell Caterers lawsuit currently pending. A former chef and general manager own a stake in the company and are suing for a full accounting of the books. They've accused the Kosher caterer of keeping a not so Kosher kitchen. Shrimp, pork and lobster have apparently made frequent appearances.
- Class Action Lawsuit Brought Against L.I. Catering Company Accused Of Breaking Kosher Rules (CBS New York)
- App Lets Employees Track Hours, Wages on Phones (FindLaw's Free Enterprise)
- Batali's Restaurants Sued Over Waiters' Tips (FindLaw's Free Enterprise)