Workers can sue restaurant owners for allegedly misusing tips

Lawsuit alleges bosses pocketed waiters’ gratuities

The Legal Intelligencer

A federal judge has cleared a group of restaurant workers to move forward with their class-action lawsuit against their bosses, who they claim kept them in the dark about their tips and used that money to pay others.

However, U.S. District Judge Barclay Surrick of the Eastern District of Pennsylvania said the four waiters and two other workers at the Pin Wei restaurant in King of Prussia dismissed their claims that they were paid less than the state minimum wage.

The Fair Labor Standards Act allows employers to pay tipped employees less than the $7.25 hourly minimum wage if an employee’s combined pay, including tips, is greater than the minimum wage. If this “tip credit” system is used, a restaurant can pay its waiters $2.13 per hour.

In this case, Judge Surrick said the plaintiffs made a strong enough argument to continue with their lawsuit against defendants Chao Hsiung Kuo and YengLung Kuo, specifically with allegations that they were not informed that a tip credit system was being used at Pin Wei, and that the Kuos were retaining their tips.

“Plaintiffs have made sufficient allegations to state a claim for illegal retention of tips under the FLSA/PMWA [Pennsylvania Minimum Wage Act] provisions,” Judge Surrick said in his Oct. 12 opinion.

“They allege that defendants made use of the tip credit, did not inform plaintiffs they were doing so, that defendants used the tip credit even though plaintiffs were made to do a significant amount of non-tipped work and, finally, that plaintiffs’ tips were used by defendants to pay non-tipped employees.”

He continued, “Plaintiffs explicitly allege that they were kept in the dark about the tip credit and tip amounts, so they would not be able to allege with any specificity at this time whether any portion of their income was derived from tips. … Moreover, plaintiffs explicitly allege that defendants took their tips from waiting tables and making deliveries and also used these tips to pay non-tipped employees, a clear violation of the tip credit rules apart from any issue related to the overall amount of tips taken from them.”

Judge Surrick said the plaintiffs’ calculations as to their exact pay was not precise enough, but they were given the opportunity to refine their complaint.

The plaintiffs, Rui Tong, Weijian Tang, Ya-Tang Chi, Chuan Geng, Kun Yang, and Junyi Xie, are represented by New York-based attorney John Troy, who did not return a call seeking comment.

Bala Cynwyd, Pa.-based lawyer Vincent Pentima represents the defendants and also did not return a call seeking comment.