Calculating the True Costs of “Nickel and Diming” Employees

Our New York employment law firm has filed numerous lawsuits against high-profile businesses, restaurants, and organizations for wage and hour violations, tip pool violations and other instances of flouting New York Labor Laws and the Fair Labor Standards Act (FLSA).

But what motivates this mission? Why bother compelling a restaurant to stop “nickel and diming” its wait staff, for instance, when the financial damage seems to be rather limited?

First off, we believe that people should be paid fairly for the work that they do. Period. An employee who loses $50 a week due to an unfair and illegal tip pool violation, for instance, will really feel that loss, particularly when he or she is struggling to get by in an expensive city, like New York.

However, “nickel and diming” has more insidious costs, too. Let’s put that lost money in context. Assume a loyal restaurant employee works for 30 years at an establishment. Thanks to his employer’s labor law violations, he is not able to collect $50 a week in tips that he legally should be entitled to get. That means, over a 50 week year (assuming two weeks’ vacation), that employee will lose $2,500 annually. Over a 30 year career, that loss adds up to $75,000. That’s a lot of money. But the cost is actually greater. Imagine if that same employee had obtained that $50 a week and invested it into a compounding interest savings account with a 5% interest rate. By the end of 30 years, he would have over $175,000, when you crunch the numbers!

Obviously, not every employee is circumspect enough to invest extra money into compounding savings accounts. But the point is that the long term damage done wage and hour and tip pool violations is anything but subtle.

If you or someone you love has been subjected to wage theft or other workplace wrongdoing, call the team here at Joseph & Kirschenbaum at (212) 688-5640, or e-mail us at info@jhllp.com for an intake evaluation.