Lawyers see another way to get a restaurant reservation
The Wage Theft Prevention Act (WTPA) has been the law of the land in New York since April of 2011. While most restaurateurs, who are New York State employers, have met the increased record keeping stipulations of the Act, one of the lesser-known elements of the WTPA is providing new exposure to lawsuits. This provision requires that employers include allowances or credits applied against wages on employees' pay stubs.
Sounds like a fairly simple technical provision, but if you don't address it, you can be opening yourself up to civil litigation by the new breed of lawyers who are making their careers out of organizing class action lawsuits against New York's restaurant owners.
And sure enough, it did not take long for the plaintiffs' bar to begin capitalizing on this technical requirement of the WTPA. One law firm with which I am familiar says, "We have seen a number of plaintiffs' lawyers file claims against restaurants where one of their primary claims is that the pay stubs that the employer provided to employees neglected to identify the allowances (primarily the tip credit allowance) taken."
Michael Busch, the president of the Restaurant Division at Valiant Payroll explained, "Allowances or credits toward wages are unique to the restaurant industry. Most New York restaurants take a $2.25 per hour credit against minimum wage for tipped employees. The restaurants must show these allowances claimed, on the employee's pay stub. And while this is a relatively minor, technical issue that can be easily addressed, I haven't seen any other payroll service providers doing it."
Busch continued, "The larger issue is that there is a new breed of plaintiff's lawyers out there who are relentless in finding even the smallest technical violations and leveraging them to extract large financial settlements from restaurant owners. So even if you think you're in compliance with all state, federal and local mandates, just one oversight can cost you plenty."
Rick Casmass / Rick has spent more than 25 years serving the restaurant industry, both as a service provider and participant. Currently, Rick is vice president of sales for Valiants Restaurant division, where he leads a team of sales consultants who perform risk mitigation audits for restaurant operators.