Study Describes Restaurant Industry's "Race to the Bottom"

The Chicagoland Restaurant Industry Coalition, a group of academics, workers rights advocates, unions and restaurant owners and employees brought together by the Restaurant Opportunities Center of Chicago, has released a report entitled "Behind the Kitchen Door: The Hidden Costs of Taking the Low Road in Chicagoland's Thriving Restaurant Industry". According to the report, a living wage (pay that would allow a worker to support him/herself and a family without government assistance) is about $16.48 an hour. Unfortunately, more than 80% of restaurant workers in the Chicago metropolitan area reportedly make less than $10 an hour, with worker as fast food restaurants averaging only about $9 an hour. The report also notes that a majority of workers reported minimum wage and overtime violations, health and safety issues and other serious legal violations at the restaurants where they work, while more than a quarter reported working "off the clock" without pay. In this news article about the study, one author describes the restaurant industry's "race to the bottom" with regard to treatment of their employees. A copy of the study, as well as similar data for other metropolitan areas, can be found here.

Nobu Sushi To Pay $2.5 Million to Settle Tip Claims

Lawyers recently asked a court to approve a $2.5 million class action settlement on behalf of 500 current and former employees of Nobu in New York. The lawsuit alleged that Nobu improperly required servers to share their tips with sushi chefs and management employees,

Domino's Drivers File Suit Over TIps

Delivery drivers for Domino's Pizza have filed suit alleging that Domino's failed to pay them minimum wages. According to the complaint, Domino's paid drivers on the "tip credit" system. In other words, Domino's took a credit against the full hourly minimum wage that ordinarily would be paid to drivers on the theory that driver tips would make up the difference. This is legal under federal law and the laws of many states as long as certain rules are followed. In this case, the drivers contend that Domino's took the credit even when the drivers were performing work for which they did not receive any tips (e.g., car maintenance). An analogous example would be a restaurant server paid on the tip credit system for hours spent cleaning the restaurant.

Waitresses Sue Hooter's Over TIps

The orange-shorted waitresses of two Hooter's restaurants in New York have filed a lawsuit contending the restaurant misappropriated their tips and forced them to pay for uniforms. According to the suit, Hooter's illegally required waitresses to share their tips with kitchen staff. The waitresses also contend that Hooter's was required to cover the cost of uniforms because they were not "ordinary street wear."

Tip Pooling a Hot Topic at NYC Restaurants

The attached article discusses the wave of litigation against NYC restaurants relating to illegal tip pooling policies. Coming from a restaurant industry trade publication, the article has a distinct bias. As one would expect, the article attributes the litigation to lawsuit-happy lawyers rather than to law-breaking restaurants.

USDOL Files Amicus Brief in Cumbie Tip Credit Case

As discussed in earlier posts, Cumbie v. Woody Woo, Inc. asks whether an employer can take an employee's tips as long as the employer does not take a tip credit against the employee's minimum wage. The issue is on appeal to the Ninth Circuit Court of Appeals. The United States Department of Labor recently filed the attached "friend of the court" brief on behalf of the plaintiff in the Cumbie case. USDOL argues that tips are the property of the employee who receives them whether or not a tip credit is taken.

NELA Files Amicus in Cumbie Tip Case

Attached is a "friend of the court" brief filed by the National Employment Lawyers Association in the Cumbie v. Woody Woo, Inc. case pending before the Ninth Circuit Court of Appeals. As discussed in earlier posts, the appeal concerns whether the FLSA allows employers to divert employee tips if they do not take a tip credit against the minimum wage. In other words, is the general rule that employee tips belong to employees nullified if an employer pays the full minimum wage rather than the server minimum? The brief is of particular interest in that it provides a succinct overview of the development of the FLSA tip rules and the policy concerns behind those rules.

California Ruling Doesn't Slow Starbucks Tips Suits

Recently, the California Supreme Court declined to review a Court of Appeals decision overturning a $105 million verdict against Starbucks relating to its tip policy. Starbucks has a policy of dividing tips between counter service "baristas" and supervisors. Based on the narrow facts of the case, the California Court of Appeals found the Starbucks system was not a violation of the California tips law. Since state tips laws vary greatly, however, the California ruling has had little impact on similar lawsuits filed around the country including in Massachusetts, New York and Minnesota.

Airline Skycaps Launch FLSA Suit Over Tips

Attached is a lawsuit recently filed on behalf of skycaps for United Airlines. The suit alleges that United's decision to start charging a $2 per bag fee for curbside check-in resulted in skycaps being deprived of tips they otherwise would have received. Since the skycaps apparently are paid on the "tip credit" system, federal law requires that they be allowed to keep all of their tips.

Yet Another NYC Tip Lawsuit

Servers at an upscale New York sushi restaurant have won class certification in a case alleging misappropriation of tips and gratuities. The lawsuit alleges that Masa forced servers to share with "back of the house" non-service employees.

Another NY Restaurant Hit With Tip Pooling Lawsuit

Japonais restaurant in New York City has been sued over its tip pooling practices. In particular, the suit alleges that Japonais allowed management employees to share in server tips and failed to provide meal breaks. Apparently, the Judge in the case recently granted conditional certification of a Fair Labor Standards Act collective action. What this means is that the plaintiffs in the case now will be able to send notice to all current and former Japonais employees with potential claims so they can decide whether to join the lawsuit.

Tip Rules Also Protect Dancers

Recently, there has been a minor wave of litigation by exotic dancers claiming the nightclubs that employed them stole their tips. As discussed in this Boston Globe article, the suits generally argue that dancers are employees and not independent contractors and, therefore, are subject to the same wage and hour rules that protect other tipped employees such as restaurant servers. Many employers attempt to circumvent the law by misclassifying their workers as independent contractors, who are exempt from the Fair Labor Standards Act, rather than employees. At heart, the issue is one of control. If an employer has significant control over how a worker does his job, then that worker is an employee not a contractor.

Can Management Share in Automatic Gratuity Charges?

Here are articles regarding two recent tip-pooling cases, one involving the Maui Westin in Hawaii and one against the Sheraton Colonial Hotel & Golf Club in Massachusetts. Both concern so-called "automatic gratuity charges" applied to restaurant customer bills. The suits allege the resorts violated state tip-pooling laws by allowing management personnel to share in such charges rather than distributing them solely among service staff.

Wave of Tip-Pooling Lawsuits in NYC

After learning of the Nobu lawsuit mentioned in my last post, I learned that there has been a wave of similar litigation against restaurants in the New York City area. According to this article, a number of the city's finest dining establishments have been sued over illegal tip-pooling practices and failure to pay overtime to staff.

N.Y. Celebrity Hot-Spot Sued Over Tips

The New York Times reports that Nobu, a sushi restaurant in NYC famous for its celebrity clientele has been sued for illegal tip pooling. The lawsuit contends that Nobu forced waiters to share tips with management employees. Apparently, Nobu tried to skirt the law by euphemistically titling the managers "floor captains."

"Whoever dares to sue, you're gonna die"

Here is an example of why workers need the protections of wage and hour laws (as well as attorneys willing to represent them). Workers at a restaurant in Maine have sued their employer claiming they worked 70 hours or more per week with no overtime pay, were paid only in tips and never received rest breaks. As can be seen from the quote above, the employer apparently threatened to kill any employees who dared to sue him. According to the article, the employees who filed the suit are immigrants who speak very little English.

Earl's Restaurant to Pay $500,000 for Illegal Tip Pooling

As discussed here, the Colorado Earl's Restaurants along with one location in Arizona will refund $500,000 to 234 current and former servers who were forced to participate in an illegal tip pool. Apparently, Earl's required servers to share their tips with managers and cooks and also required contributions to a customer walkout fund.

Casino Dealers Claim Wynn Tip Pool is Illegal

As discussed here, a group of dealers has sued the Wynn Casino in Las Vegas claiming that Wynn illegally required its dealers to share their tips with managers. One interesting issue raised in this lawsuit is whether the Fair Labor Standards Act imposes any requirements on a tip pool when the employer takes no "tip credit" against the minimum wage. The case is based, in part, on a Department of Labor opinion that, for the first time, takes the position that a tip pool can be invalid even if no tip credit is taken.

Servers Win Tip-Pooling Case Against Chili's

As discussed here, a federal jury in Texas has awarded $270,000 to 54 former Chili's servers forced to participate in an illegal tip pool. The lawsuit, filed against Chili's parent corporation Brinker International, alleged that Chili's violated the Fair Labor Standards Act by requiring servers to share their tips with "quality assurance" workers or "expeditors" who had little customer contact. Under the FLSA, workers forced to sue to convince their employers to pay minimum wage are entitled to recover attorney's fees and expenses incurred in fighting the battle. By all accounts, Chili's fought the lawsuit "tooth and nail" and, as a result, the Court is considering whether Chili's should pay over $2 million in legal expenses incurred by the former servers. Moreover, it is likely that Chili's spent much more than that on high-powered defense lawyers in order to fight the servers. Wouldn't it just be easier to pay a living wage?

USDOL Recovers More Than $600,000 for Tipped Employees in Kansas

The Wage and Hour Division of the United States Department of Labor, Southwest Region, has recovered more than $600,000 on behalf of 19 employees of a Kansas restaurant. Among other violations, USDOL established that the employees were paid solely in tips, without receiving an hourly minimum wage. An article about the case is here.