Servers Accuse Waldorf-Astoria Of Tip-Skimming

Law360 - Julie Zeveloff
February 25, 2010

The Waldorf-Astoria, a Manhattan landmark, is facing a new class action accusing it of skimming gratuities customers believed went directly to the waitstaff at the Hilton Worldwide Inc.-owned hotel’s private dining events.

According to a complaint filed Wednesday in the U.S. District Court for the Southern District of New York, the hotel has violated New York’s labor laws by retaining service charges and banquet gratuities intended for banquet waiters.

The nine lead plaintiffs, most of whom have been employed by the hotel for over 20 years, brought their claims on behalf of all banquet waiters who worked at private dining events since February 2004. The group could include at least 100 members, the complaint says.

According to the lead plaintiffs, the Park Avenue hotel staffs its smaller, private dining events using waiters from its banquet waitstaff.

Customers who book private dining events with the hotel contractually agree to pay a percentage service charge in addition to the cost of their food and drinks. But those service charges do not go directly to the event waitstaff, the plaintiffs contend.

“Defendant has led its customers to reasonably believe that the service charges are gratuities to be paid to the workers who served the food and drinks at their events,” the complaint said. “In reality, however, defendant pays only a portion of the service charges to its workers, and keeps the remaining portion for itself.”

The New York Court of Appeals has already held that practice to violate New York Labor Law in Samiento v. World Yacht Inc. in 2008, the suit says.

According to the plaintiffs, customer invoices state that a 21.5 service charge of percent will be added to the tab. But only 15 percent of that sum goes to the waitstaff, with the rest going to the hotel, the plaintiffs claim.

Additionally, the hotel receives “special banquet gratuities” from customers who presume the money will go to waiters who worked at their event, but those tips are actually distributed to other hotel employees, the plaintiffs contend.

The suit asks the court to hold both the Waldorf Astoria and Hilton liable for unpaid portions of service charges and special banquet gratuities, interest and other unpaid wages under state labor laws. It also seeks class certification, a judgment that the defendants violated the law, injunctive relief, attorneys’ fees and other costs.

“The Waldorf-Astoria, which claims to offer “peerless service standards’ and “an unrivaled palette of resources and talent,’ should have been careful to follow the labor laws in doing so,” said Justin M. Swartz of Outten & Golden LLP, who represents the plaintiffs. “The Waldorf’s “unforgettable’ private dining experience should not have been provided at the expense of the hardworking banquet waiters, many of whom have been employed at the hotel for decades.”

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The plaintiffs are represented by Outten & Golden LLP and Berke-Weiss & Pechman LLP.

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The case is Orlando Colon et al. v. Hilton Worldwide Inc. et al., case number 10-cv-01575, in the U.S. District Court for the Southern District of New York.