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U.S. Department of Labor calls company’s wage pool unlawful

New York City is a hotspot for some of the best restaurants in the world. There are many chefs and restaurant workers who flock to New York in hopes of securing a spot at one of these establishments. Servers and other workers in the industry rely highly on the tips they get every day. While each restaurant may have its own policies for how tips are received and processed, one business has found itself facing a lawsuit from the U.S. Department of Labor due to its tipping policies.

A.C.E. Restaurant Group, which owns a variety of restaurants including some on Long Island, apparently uses something called a wage pool. The company allegedly requires their bartenders and servers to contribute a percentage of the tips they make to this wage pool. The money collected in that pool is then distributed to non-tipped employees, an action the Department of Labor calls unlawful.

The lawsuit claims the company collected tips in an amount topping $40,000 from their employees. The lawsuit is attempting to get funds reimbursed on behalf of almost 1,500 workers. The reimbursement would include money for unpaid overtime compensation, tips and minimum wage.

The company is trying to get the lawsuit dismissed altogether, claiming that the lawsuit fails to support its allegations. They say the tip pool is fair and that the company often pays the employees more tips than the employees put into the pool. Not only that, the company claims it often advances tips to employees so they can have a predictable income each week.

It will be interesting to follow this case for employers and employees alike. It’s likely that this restaurant company is not the only one that uses a tip pool to pay non-tipped employees, so the outcome of this lawsuit could affect others in the future.

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