It may not be widely known among those outside the sector but the minimum wage for restaurant employees is lower than for workers in most other industries. For example, in Pennsylvania, that minimum wage is just $2.83 an hour, The Guardian reports.
These “tipped wages” exist in every US state. According to minimumwage.org, the tipped wage is as little as $2.13 an hour in 19 states and as high as $10 in New York.
In Pennsylvania: restaurant owners here have to pay their employees the federal minimum of just $2.83 an hour as long as they receive sufficient tips to top their total hourly wage up so it exceeds the state (and national) minimum of $7.25.
The logic of this is that state-based tipped wage rules were created to allow restaurant owners to lower their payroll costs and let customers make up the difference.
It sounds like a pitifully low amount of pay yet most restaurants do take advantage of the tipped wage rules. It’s a legal and common practice and a significant help towards keeping overhead (and prices) under control.
However, for some employers, being allowed to pay an employee $2.83 an hour is not enough of a saving, so they steal.
At the start of the month Bottle Bar East restaurant in Philadelphia, was found in violation of these wage (and other) rules and ordered by a federal judge to pay $246,457.99 in back wages, as well as an equal amount of liquidated damages and civil money penalties to 73 bartenders, servers, cooks and dishwashers. Some employees were owed as much as $42,000.
In April, restaurant chain Maggiano’s was ordered to pay $116,308 in back wages for wage theft that affected 82 workers at its Little Italy location in Philadelphia. The restaurant chain grossed more than $400m in sales in 2019.
And such accusations of theft by business owners are increasingly common.
A class-action lawsuit filed in New York against a popular steakhouse reportedly alleges “wage theft and other illegal practices that shortchanged staffers’ pay”, which affected about 50 current and former employees. A San Francisco restaurant agreed to pay 22 workers roughly $73,000 each for wage violations in a settlement to avoid a costly lawsuit. Two well-known establishments in Nashville agreed, earlier this year, to pay a combined $1.03m to settle separate lawsuits alleging tip and wage theft. And a casino in Pennsylvania agreed to pay $6m to settle a class action lawsuit alleging a failure to pay its tipped employees the proper amount under federal and state law.
It is true that the COVID-19 pandemic put additional pressure on some restaurants to survive financially, in common with so many businesses. However, good employees are in short supply and this makes it a very bad idea to play games with workers’ wages. Getting caught will result in significant penalties and a lot of bad press. But even more importantly it is almost guaranteed to ensure that the best workers will give those establishments a swerve. And customers will avoid them too.
Source: The Guardian
(Links via original reporting)
It may not be widely known among those outside the sector but the minimum wage for restaurant employees is lower than for workers in most other industries. For example, in Pennsylvania, that minimum wage is just $2.83 an hour, The Guardian reports.
These “tipped wages” exist in every US state. According to minimumwage.org, the tipped wage is as little as $2.13 an hour in 19 states and as high as $10 in New York.
In Pennsylvania: restaurant owners here have to pay their employees the federal minimum of just $2.83 an hour as long as they receive sufficient tips to top their total hourly wage up so it exceeds the state (and national) minimum of $7.25.
The logic of this is that state-based tipped wage rules were created to allow restaurant owners to lower their payroll costs and let customers make up the difference.
It sounds like a pitifully low amount of pay yet most restaurants do take advantage of the tipped wage rules. It’s a legal and common practice and a significant help towards keeping overhead (and prices) under control.
However, for some employers, being allowed to pay an employee $2.83 an hour is not enough of a saving, so they steal.
At the start of the month Bottle Bar East restaurant in Philadelphia, was found in violation of these wage (and other) rules and ordered by a federal judge to pay $246,457.99 in back wages, as well as an equal amount of liquidated damages and civil money penalties to 73 bartenders, servers, cooks and dishwashers. Some employees were owed as much as $42,000.
In April, restaurant chain Maggiano’s was ordered to pay $116,308 in back wages for wage theft that affected 82 workers at its Little Italy location in Philadelphia. The restaurant chain grossed more than $400m in sales in 2019.
And such accusations of theft by business owners are increasingly common.
A class-action lawsuit filed in New York against a popular steakhouse reportedly alleges “wage theft and other illegal practices that shortchanged staffers’ pay”, which affected about 50 current and former employees. A San Francisco restaurant agreed to pay 22 workers roughly $73,000 each for wage violations in a settlement to avoid a costly lawsuit. Two well-known establishments in Nashville agreed, earlier this year, to pay a combined $1.03m to settle separate lawsuits alleging tip and wage theft. And a casino in Pennsylvania agreed to pay $6m to settle a class action lawsuit alleging a failure to pay its tipped employees the proper amount under federal and state law.
It is true that the COVID-19 pandemic put additional pressure on some restaurants to survive financially, in common with so many businesses. However, good employees are in short supply and this makes it a very bad idea to play games with workers’ wages. Getting caught will result in significant penalties and a lot of bad press. But even more importantly it is almost guaranteed to ensure that the best workers will give those establishments a swerve. And customers will avoid them too.
Source: The Guardian
(Links via original reporting)