BY YANNIC RACK | The owner of two shuttered restaurants in Chinatown has to pay $15,000 to delivery workers who were hired to carry out food orders through Web sites like GrubHub and Seamless but were cheated out of their tips — a practice seemingly spreading nationwide.
In a settlement, restaurateur Wallace Lai admitted to violating labor laws by pocketing tips meant for the workers after customers ordered through the online delivery services, according to State Attorney General Eric Schneiderman.
“Delivery workers travel at all hours of the day and through all kinds of weather to provide food to customers, who can order from their homes with the click of a button,” Schneiderman said in a statement announcing the deal.
“It is outrageous that a business would cheat its workers and hoodwink customers, by keeping tips that are meant for these hardworking employees,” he said.
Lai formerly owned two Chinese restaurants, both called Hong Kong Station, at 45 Bayard St. and 45 Division St. in Chinatown, near the foot of the Manhattan Bridge.
From May 2014 until January 2015, according to prosecutors, the restaurants delivered food to customers through Delivery.com, GrubHub.com and Seamless.com, with customers usually paying with credit cards.
All three Web sites offered an option to include tips, which Lai routinely kept, according to prosecutors. New York labor law prohibits employers from keeping any part of the tips that are intended for service employees, including delivery workers.
The settlement now requires Lai to pay $15,000 for the full amount of withheld tips, as well as for minimum wage and overtime violations, according to the A.G.’s office.
The money will be distributed to around 10 workers who formerly worked at Lai’s eateries.
Seamless announced last April that it would revamp its fee structure after an investigation by Schneiderman’s office found restaurants could easily cheat delivery workers out of tips.
Three months later, in July, drivers in California filed a class action lawsuit for $5 million in unpaid tips against another delivery service, Eat24, after the company was bought by restaurant review site Yelp.
In that case, Eat24 also encouraged its customers to enter a tip amount for the food they ordered, but then failed to pass on that money to drivers or even notify them of the tips, according to reports.
