State Attorney General Eric Schneiderman announced the $500,000 settlement with Per Se, chef Thomas Keller's temple to haute cuisine in the Time Warner Center.
Per Se said the violation was an unintentional oversight.
The settlement covers the period from January 2011 through September 2012. Schneiderman said Per Se added a 20 per cent service charge for private banquets that customers thought would be used to tip the waiters.
But Per Se instead used the money for restaurant operations, he said.
"Today's agreement ensures that workers at Per Se will not continue to be cheated out of their hard-earned tips — tips that customers intended for them," Schneiderman said.
The restaurant's owners said in a statement that Per Se should have made it clearer that that the surcharge was not a gratuity. They said Per Se revised the contract language on its own and has been in compliance since September 2012.
Per Se's nine-course tasting menu is priced at $310.
Waiters earn about $116,000 a year including tips and overtime, Per Se's owners said.