Workers in the restaurant industry, particularly servers, depend on tips for their income. Under both state and federal law, employers are not required to pay the full minimum wage amount to employees who customarily receive tips. Instead, they pay a “tip credit” that, when combined with a worker’s tip income, totals at least the minimum wage. This can put restaurant workers in a vulnerable position. A restaurant server may worry about lost income if they object to harassment by a customer. A report published by Mic in late 2017 examined reports of sexual harassment by tipped restaurant employees. It found that restaurant workers have one of the highest rates of reported sexual harassment.
The federal Fair Labor Standards Act (FLSA) defines a “tipped employee” as one who “customarily and regularly receives more than $30 a month in tips.” 29 U.S.C. § 203(t). Tipped employees’ compensation is a combination of wages paid by their employer and tips paid by customers. An employer of a tipped employee must pay a minimum wage, or tip credit, of $2.13 per hour, plus any additional amount needed to raise the employee’s total compensation to the minimum wage of $7.25 per hour. Id. at §§ 203(m), 206(a)(1)(C); 29 C.F.R. § 531.59. New York City mandates higher minimum wages than the FLSA. N.Y. Lab. L. § 652(1)(a). For tipped employees in New York City restaurants, the minimum wage as of December 31, 2017 is $8.00 per hour for employers with ten or fewer employees, and $8.65 per hour for those with eleven or more employees. The tip credit is $4.00 and $4.35, respectively.
Laws at the federal, state, and city level in New York City prohibit employment discrimination on the basis of sex. This includes sexual harassment in situations where unwelcome and pervasive sexual conduct creates a hostile work environment. A claim could arise from a single incident, if it is severe enough, but most hostile work environment claims are based on an ongoing pattern of behavior. The conduct that gives rise to a hostile work environment could come from one or more supervisors, coworkers, or customers. If, as is the case in the Mic report mentioned above, customers are responsible for the alleged hostile work environment, the employer must have known about the conduct and failed to act in order to be liable.