Lawsuit Investigations: Illegal Tip Pooling in the Restaurant Industry
Berger Montague is investigating potential class action lawsuits on behalf of workers in the restaurant service industry who are forced to share their tips with managers, janitors, dishwashers, cooks, bouncers, or other non-tipped employees. This type of tip pooling is illegal.
What is tip pooling?
In the service industry, tip pooling is when employees who receive tips have to contribute a portion of their tips to a larger pool, which is then divided among a group of employees. Only employees who regularly receive tips can be part of the pool. Employees can’t be required to share their tips with employees who don’t usually receive their own tips, such as dishwashers or cooks. Additionally, employers, managers, and supervisors are not allowed in the tip pool.
Are there laws that regulate tip pooling? Yes.
Under the Fair Labor Standards Act (“FLSA”), a federal law that establishes minimum wage, overtime pay eligibility, recordkeeping, and child labor standards, valid tip pools only include employees who customarily and regularly receive tips. Valid tip pools may not include employees who do not customarily and regularly receive tips.
In addition, employers must notify tipped employees of any required tip pool contribution amount, may only take tip credit for the amount of tips each tipped employee ultimately receives, and may not keep any of the employees’ tips for any other purpose.
Who is included in a valid tip pool?
Any employee who customarily and regularly receives tips may be included in a valid tip pool. Examples include:
Who is not included in a valid tip pool?
Employees who do not customarily and regularly receive tips may not be included in a valid tip pool. Examples include:
Previous illegal tip pooling settlements
Numerous illegal tip pooling class action lawsuits in the restaurant service industry have settled over the last few years.
- Mario Batali: In March 2012, celebrity chef Mario Batali agreed to pay $5.25 million to settle a class action with waitstaff at his New York City restaurants alleging that he deducted a share of alcohol sales from their tip pool.
- Le Cirque: In August 2015, the high-end French restaurant Le Cirque agreed to pay $1.1 million to settle a class action alleging that the restaurant’s service workers were subjected to an illegal tip pooling policy.
- Red Robin: In December 2015, a Red Robin franchisee agreed to pay $1.3 million to settle a class action alleging the company bypassed minimum wage laws by allowing kitchen workers to receive tips from the servers’ pools.
If you are a current or former service worker in the restaurant industry who was forced to share your tips with non-tipped employees, contact Berger Montague. You may be able to file a class action lawsuit.
Do I have to pay to consult with an attorney?
We are happy to talk with you about your potential claims free of charge. If we decide to represent you in a lawsuit, we will enter into a written contingent fee agreement with you. A contingent fee agreement means we only get paid if we win, and that we will receive our fees from the amount paid by the Defendant in the case.
Please contact us to discuss the details of your case. You may:
Your information will remain confidential and we will work to protect your rights.
Related Information About Employment Law
- Wage & Hour Class Actions
- Discrimination Class Actions
- Worker Adjustment and Retraining Notification Act (“WARN Act”) Class Actions