In recent years, restaurant owners have been subject to tip-sharing class action lawsuits that have cost them considerable amounts of money.
Zahav in Philadelphia
In July 2017, Eater.com published an article about Zahav, an award-winning Philadelphia restaurant that settled a tip-sharing class action lawsuit for $230,000. Toward the end of 2016, former server Tanya Peters filed a lawsuit against the restaurant and alleged that its tip-sharing practices violated the FLSA and Philadelphia Gratuity Protection Bill. Peters claimed that servers were required to share tips with silverware polishers during her 19 months of employment at the restaurant. This amounted to $5.00 per shift.
Bill Hill Restaurants
The previous July in 2016, Blue Hill at Stone Barns, which Eater named the “best restaurant in America” and which ranked 11 on the World’s 50 Best list, was subject to a class-action wage theft lawsuit. The restaurant settled for $2 million. The third parties that sued also brought a claim against the NYC sister restaurant Blue Hill. The lawsuit claimed that due to tip pool mismanagement, certain service employees did not receive money owed to them. In particular, Blue Hill engaged in sharing tips with non-service employees and did not share private event service charges with service employees. An estimated 250 eligible former and current employees receiving the settlement money included servers, buses, back-waiters, runners and hosts and hostesses. Divided equally, each class-action suit member will receive around $5,000 and the lead plaintiffs will receive an additional $25,000.
Preventative Actions to Prevent Tip Pooling Class Action Lawsuits
Consulting with an experienced employment law attorney can help you prevent tip-pooling lawsuits. Restaurants should have a written policy that addresses tip pooling. An attorney can help you draft a policy that complies with laws. Your policy should designate which categories of employees share tips and how much is shared. You should make clear in the policy which employees are service employees and which employees are not. Restaurant owners should also allow employees to share tips if that is their desire but without pressure to do so.
Stephen Hans & Associates has decades of experience assisting restaurant owners with employment related issues.