Restaurant Law Blog

Tuesday, June 12, 2012

Cautionary Advice for Employee Hiring

One of the greatest obstacles standing between the success or failure of your restaurant is your employees. Mario Batali settled a recent wage and tip lawsuit for $5.25 million dollars folowing employee claims that Batali deducted 4-5% of nightly wine sales from the tip pool to cover the cost of sommeliers and wine related expenses because his waiters often had nothing to do with the sale of the wine. The Department of Labor has spoken firmly on this issue and maintains that a tip is the sole property of the tipped employee regardless of whether a tip credit is claimed by the employer. Therefore, even though Batali's sommeliers were the driving force behind the sale of more expensive bottles of wine, the tips associated with those increased sales remained the property of Batali's waitstaff.

Threatening to further harm the already fragile bottom line of restaurant owners is legislation sitting at both the State and Federal levels calling for an increase of the minimum wage (New York is likely to see an increase to $8.50 by 2013). The operational costs of a restaurant are extremely high to begin and this increase will likely dampen efforts to stop the employment of illegal aliens. That is not to suggest that the government does not have other ways to incentivize the end of this practice.

On December 27, 2011 I published a blog on my website asking “How long will it be until the Federal Government starts to crack down on New York City restaurant owners for employing illegal aliens? It may happen soon.” Turns out, it was sooner than expected. Recently, the Federal government temporarily closed several Chipotle and Pei Wei locations for hiring illegal employees, prompting Chipotle to fire 450 employees throughout Minnesota. According to Jordan Melnick's article published on QSR.com, 2010 figures (apparently recently released) demonstrate that Immigration and Customs Enforcement criminally charged 180 business owners, employees and managers. Fines associated with these violations are very expensive and at this point, appear nearly unavoidable. The proposed solution offered by Mr. Melnick is to verify your employees’ citizenship status through www.e-verify.com.


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