Waiters File Lawsuit Against The Waldorf For Unpaid Tips

Berke-Weiss & Pechman LLP filed a lawsuit against The Waldorf-Astoria hotel on February 26, 2010 alleging the hotel retained service charges which should have been paid to its banquet waiters. The case is Orlando Colon v. Hilton Worldwide, Inc., 10 Civ. 1575 (SDNY).

It Is Illegal For a Restaurant or Hotel to Keep Gratuities or Tips Meant For Its Waiters

The lawsuit seeks to recover misappropriated service charges and special banquet gratuities for banquet waiters which The Waldorf led customers to believe were gratuities or tips to be paid in their entirety to their service staff, but were actually kept by the house. This practice was held by the New York Court of Appeals to be unlawful in the case of Samiento v. World Yacht Inc. In that case, the Court of Appeals concluded that a mandatory service charge may be a “charge purported to be a gratuity” within the meaning of the New York Labor Law.

The Samiento case relied on Section 196 New York Labor Law, which requires that:

No employer or his agent or an officer or agent of any corporation, or any other person shall demand or accept, directly or indirectly, any part of the gratuities, received by an employee, or retain any part of a gratuity or of any charge purported to be a gratuity for an employee.

Country Clubs and Catering Halls Have Also Been Sued

The practice used by The Waldorf is not uncommon. Indeed, many catering halls, country clubs, and restaurants add a service charge or gratuity to the bill but do not pass on these gratuities or tips to their waitstaff.  Given the pervasiveness of this unlawful practice, we believe that disputes over banquet service charges will be the next lawsuit du jour in the New York hospitality industry.