Press Release

NY’s Highest Court Rules Restaurants Must Give Automatic Gratuities to Wait Staff


Ruling will Impact Large Restaurants and Banquet Halls Throughout New York State

Advocates Hail Ruling’s Impact on Chinatown Banquet Industry

New York – Today the New York State Court of Appeals ruled that service employees of World Yacht, a luxury dining fleet in Manhattan, are entitled to proceed with their lawsuit to recover automatic gratuities and service charges withheld by their employer, in a ruling that should have significant effect in the restaurant and service industries. Restaurant workers and their advocates hailed the ruling as a landmark decision for the thousands of restaurant employees and service workers across New York City and State whose incomes depend heavily on tips.

“Today’s ruling should finally put to rest the notion that restaurants and banquet halls can legally take a cut of the tips and service charges that customers leave for the waitstaff,” said David Colodny, Senior Staff Attorney at the Urban Justice Center, which has litigated cases involving improper tip practices at major banquet halls in New York City’s Chinatown and filed an amicus brief in support of the workers at World Yacht. “This decision will help protect many thousands of low-wage workers throughout the state for whom gratuities make up a significant portion of their income,” stated Colodny.

“The Court’s decision is well-reasoned and reflects a common-sense approach to the protections for workers mandated by the New York Labor Law,” stated Marc Falcone, a partner at Paul, Weiss, Rifkind, Wharton & Garrison LLP, Co-Counsel to the Urban Justice Center in today’s ruling.

The case, Samiento v. World Yacht, will have a major impact on several large Asian American banquet-style restaurants in Chinatown, Flushing and Long Island that routinely serve large groups and host special events but often fail to pay their employees gratuities.

“This is an important ruling for employees in banquet restaurants throughout the City because it makes clear that they are entitled to receive all the tips that the banquet customers have left for them,” stated Ken Kimerling, Legal Director of the Asian American Legal Defense & Education Fund (AALDEF), which also was an amicus in the case together with the Urban Justice Center. “Now management will no longer be able to take a share.”

For years the types of practices at issue in this case have been prevalent in the Chinese restaurant industry. Recent high profile cases involving these issues involved the 88 Palace and Jing Fong restaurants in Chinatown.

“This victory is very significant for our community because the owners take all the workers’ tips in the name of a service charge,” said Wing Lam, Executive Director of the Chinese Staff and Workers Association (CSWA). “A lot of restaurants in Flushing like East Buffet and East Manor often easily seat 500 people at a time. We have many cases pending similar to today’s case, and this victory will help thousands of workers in the Chinese community,” stated Lam.

The NYS Court of Appeals ruling overturns a decision of the First Department Appellate Division of the New York Supreme Court last March. At that time, the court ruled that employers were only obliged to share voluntary tips with workers – not those charged automatically for large parties. Today’s ruling clarifies that any payments that customers understand to be tips – whether automatic or voluntary – must be treated as such by employers.

For more information:
Asian American Legal Defense and Education Fund (AALDEF)