Chung v. New Silver Palace Rest., Inc.

No. 00 CIV. 7353 (AKH) (S.D. N.Y. Sept. 13, 2002) ; Clearinghouse Number: 55050

Description

Restaurant Employer’s Tip-Sharing Arrangement Is Illegal Under Fair Labor Standards Act

Abstract

The district court held that defendant restaurant owner’s practice of decreasing the minimum hourly wage paid to restaurant waiters who were being forced to share their tips with management was unlawful under Section 3(m) of the Fair Labor Standards Act (29 U.S.C. § 203(m)) and Section 196–d of the New York State Labor Law. Plaintiff waiters sued to recover tips that they were forced to share with management and for damages under various federal and state labor laws. The dispute between restaurant employees and management began in 1995, when the union representing waiters and busboys at the old Silver Palace Restaurant challenged the legality of the tip-pooling arrangement there. Then the state court ruled that because employees shared tips with, among others, the restaurant’s general manager and several part owners, the sharing arrangement violated state law. With the opening of the New Silver Palace, its management instituted the same tip-pooling arrangement; management, commonly called ‘black jackets,” shared in the waiters’ tip pool. Finding forced tip sharing illegal under the Fair Labor Standards Act, the district court said that Congress did not intend to allow an employer to take both the tip credit and share in the employees’ tips. The court also said that state law clearly prohibited from sharing tips part-owner employees who, like the black jackets, wielded broad managerial authority and were clearly the “employers.” The court granted plaintiffs partial summary judgment and reserved the issue of damages for further proceedings.

Additional Information

Attorney Information
Plaintiff represented by Kenneth Kimerling, Asian American Legal Defense and Education Fund, 99 Hudson St., New York, NY 10013 (212.966.5932); William J. Harrington, Davis, Polk & Wardwell, 450 Lexington Ave., New York, NY 10017 (212.450.4000)
Docket Date
2002-09-13 00:00:00+00:00