July 8, 2015
By Stephanie West
New York, NY – Attorney General Eric Schneiderman has announced that his office reached a settlement with Per Se, a Manhattan fine-dining establishment, for failing to pay its waitstaff a 20% surcharge designated as a “service charge” in its contracts with customers. Per Se must pay $500,000 in restitution to workers for keeping tips.
The Attorney General’s investigation revealed that Per Se charged its private dining customers an additional 20% for service and listed the 20% service charge on its receipts and printed materials. Per Se informed customers that the 20% charge was a gratuity. Instead of directing it to the workers, Per Se used the service charges for its restaurant operations in violation of the law. These gratuities should have been distributed to employees.
“This agreement will compensate workers at Per Se who were shortchanged out of their hard-earned tips,” said Attorney General Schneiderman, “And it reaffirms the right of satisfied restaurant-goers not to be misled about whether a ‘service charge’ is actually paid to workers as a tip, which the law requires.”
New York Labor Law prohibits an employer or his agent from accepting or retaining any portion of an employee’s gratuity or a charge “purported to be a gratuity.” In 2008, the New York Court of Appeals held that if a customer believed that a charge was a gratuity, it had to be turned over to the employees. And since 2011, New York regulations have contained very specific rules for employers about “service charges,” including the requirement that employers must notify their customers when a service charge is not a tip or gratuity.