Embassy Suites and Hilton Franchise Holding to Face New York Class over Unpaid Gratuity

Embassy Suites Franchise LLC, Hilton Franchise Holding LLC, Congress Hotel LLC and Veeder Hospitality Management LLC lost their motion for judgement on the pleadings on February 17, 2022, when they attempted to end a potential class action regarding allegations of underpaid gratuity earnings.

The judge noted that the employers failed to include information required by New York Wage Theft Prevention Laws: “The statements failed to provide the employer’s phone number… did not even identify the name of the employer… simply provided ‘Embassy Suites’ as the employer’s name without naming the actual individual or legal name of the company”.

Plaintiff, represented by Schneider Wallace Cottrell Konecky, allege that as a former server at the Saratoga Springs Embassy Suites they were only partially paid gratuity. Customers were given a “gratuity charge” on their bill, frequently 20%, but allegedly the employers kept three quarters of the gratuity and only paid 5% out to workers. The plaintiff alleges that Embassy Suites Franchise LLC and Hilton Franchise Holding LLC are joint employers of the Saratoga Springs Embassy Suite, given the control exerted over the location regarding training, operations and hotel appearance.

New York Gratuity Pay – Labor Law Section 196-d

New York Labor Law Section 196-d states that all private employees receive the full amount of any gratuity, tip, or charge purported to be a tip.  The private employers cannot retain any portion of the gratuity or tip.  The tip can be given in cash, check, by credit card or any other form of payment, the type of payment does not change whether it is a gratuity.

The allegations in this case include the hotel keeping the majority of gratuity charges, which fit the definition of a charge purported to be a tip. While New York does allow a portion of wages to be paid through hourly tip credit, or use of tips to offset part of an hourly wage, New York also imposes limits of the amount of the minimum wage that can be offset by tip credits.

The Hospitality Wage Order, which sets minimum wages and maximum tip credits by New York county, applies to food service workers primarily engaged in serving of food or beverages. The wage order includes these positions: wait staff, bartenders, and bussing staff.

Tips collected by any means, cash or card, are due by the next paycheck. For credit card payments, employers may deduct a pro-rated portion of the bill that went toward credit card processing fees. Tipped employees must also consent in writing to the use of any gratuity funds for healthcare deductions, 401k, retirement contributions or union dues.

Unpaid Gratuity Class Action

The proposed New York class contains all current and former nonexempt workers from the locations for the last 6 years, working for these employers:

  • Embassy Suites Franchise LLC
  • Hilton Worldwide Franchising
  • Congress Hotel
  • Veeder Hospitality Management

The plaintiff seeks full restitution for all alleged unpaid wages, unpaid gratuity, and other violations of New York Labor Law on behalf of the proposed class.

Employee Class Action Law Firm

If you believe you are not being paid for the time you have worked, for all the gratuity you have earned, are not being paid overtime properly, or other labor and wage violation, we invite you to schedule a consultation with our employment law firm. Schneider Wallace Cottrell Konecky LLP is a national law firm that represents employees in a wide range of employment law cases, including class action lawsuits involving the failure to pay wages, overtime pay and commissions.

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