Court Rules "World Yacht" Can Be Sued For Not Distributing Gratuities To Its Servers

“Hold on,” you say to yourself—”If it’s a gratuity, doesn’t that by definition mean it goes to the wait staff?” Not if you’re a server for World Yacht, a “luxury dining fleet” in Manhattan that will now be sued by its employees for slapping automatic gratuities on diners’ bills, then keeping the extra money for itself. New York labor laws require “employers to pass on to workers any payments that customers understand to be tips,” but World Yacht argued that the banquet industry was exempt, and its servers should get nothing. Thanks to last week’s ruling, the employees can move forward with their suit.

Almost a year ago, a New York Appelate Court said that the company only had to share “voluntary” tips with workers, not automatic ones. Last week, however, the New York Court of Appeals overturned that ruling and said World Yacht had to share the tip bounty.

Oddly, though, they left an earlier verdict stand that found the company did not engage in deceptive consumer practices by collecting gratuities and then not distributing them to employees. It’s funny, because we always thought the price of a meal/room/whatever was what the company collected, and tips and gratuities—however they’re collected—were intended directly for the person doing the work. Redirecting that money anywhere else without advance warning certainly seems deceptive to us.

(Thanks to Nelson!)

“Court of Appeals rules in favor of luxury dining fleet servers” [Newsday]
(Just to be clear: we doctored that image.)