‘No Tipping’ Restaurant Settles in Wage Dispute with Workers

A ‘no tipping’ restaurant has settled a wage dispute with workers. In the custom of Europe and Asia, one of the minor trends in the American restaurant industry in recent years is the concept of the ‘no tipping’ restaurant. Purportedly, restaurant servers are paid higher wages or salaries, in lieu of tips, and menu prices reflect those higher wages. Diners are encouraged not to tip. However, as one New York City sushi restaurant found out, getting creative with hourly wages for workers was a no-go, regardless of how they do things in Japan.

Sushi Yasuda Ltd. had long ‘pooled’ tips, and, citing Japanese custom, in 2013 the restaurant finally implemented a ‘no tipping’ policy that was highly popular with diners. Unfortunately for Sushi Yasuda, the tipping policy prior to 2013 proved to be difficult for restaurant staff to swallow.

A group of sushi waitresses claimed that the restaurant operated in violation of the federal Fair Labor Standards Act and in violation of New York state labor laws starting in at least 2006. Workers alleged that when tips were collected, servers were required to turn those tips over to managers, which in turn deprived wait staff of gratuities. Workers also claimed that the restaurant did not pay overtime when servers worked more than 10 hours in a single work day and failed to pay minimum wage during worker training.

In June of 2013, Sushi Yasuda Ltd. formally announced that they would no longer be accepting tips. The restaurant has agreed to pay the class of bussers, servers, and sushi chefs $2.4 million in back wages, based on the number of shifts worked between December of 2006 and the policy change in 2013.

The bottom line? Restaurants do not have to accept tips, but if they do not, minimum wage for workers is mandatory.

When your California business employs hourly workers, and needs advice on employee wages, overtime, and other labor and employment matters, or you are an hourly worker and have not been paid for overtime hours worked, you can turn to Gray & Associates. Attorney Nancy Gray represents California businesses and individuals in all aspects of labor and employment law, including resolving hourly wage disputes, developing policies and best practices for human resources, and addressing potential labor and employment claims. Put a committed, knowledgeable labor and employment attorney to work for your business today. Call Attorney Gray at (310) 452-1211 or visit Gray & Associates online for a free consultation.


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