A class action was recently filed alleging that Landry’s – owner of large restaurant chains including Bubba Gump Shrimp Co., Rainforest Café, and Morton’s Steakhouse (and other recognized names) – has been unlawfully withholding compensation from tipped employees in violation of the federal Fair Labor Standards Act. In particular, servers, waitstaff, bartenders, and hostesses from Landry’s McCormick & Schmick’s restaurants claim they were denied compensation by way of improper deductions from tips and improper tip pooling.

This type of compensation abuse is not new. In July 2013, the U.S. Department of Labor’s Wage & Hour Division issued Fact Sheet #15, in which it alerted tipped employees of certain abuses prevalent in the service industry. In particular, the publication specifically condemns employer practices of not paying tipped employees all of their tips or requiring them to pool their tips with non-tipped employees:

  • Retention of Tips: A tip is the sole property of the tipped employee regardless of whether the employer takes a tip credit. The FLSA prohibits any arrangement between the employer and the tipped employee whereby any part of the tip received becomes the property of the employer. For example, even where a tipped employee receives at least $7.25 per hour in wages directly from the employer, the employee may not be required to turn over his or her tips to the employer.
  • Tip Pooling: As noted above, the requirement that an employee must retain all tips does not preclude a valid tip pooling or sharing arrangement among employees who customarily and regularly receive tips. The FLSA does not impose a maximum contribution amount or percentage on valid mandatory tip pools. The employer, however, must notify tipped employees of any required tip pool contribution amount, may only take a tip credit for the amount of tips each tipped employee ultimately receives, and may not retain any of the employees’ tips for any other purpose.
  • Dual Jobs: When an employee is employed by one employer in both a tipped and a non-tipped occupation, such as an employee employed both as a maintenance person and a waitperson, the tip credit is available only for the hours spent by the employee in the tipped occupation. The FLSA permits an employer to take the tip credit for some time that the tipped employee spends in duties related to the tipped occupation, even though such duties are not by themselves directed toward producing tips. For example, a waitperson who spends some time cleaning and setting tables, making coffee, and occasionally washing dishes or glasses is considered to be engaged in a tipped occupation even though these duties are not tip producing. However, where a tipped employee spends a substantial amount of time (in excess of 20 percent in the workweek) performing related duties, no tip credit may be taken for the time spent in such duties.

Attorneys from the law firm of Sommers Schwartz, P.C. are investigating the reports that Landry’s restaurants improperly withheld overtime pay in direct violation of federal and state employment laws. These claims are similar to allegations made in class action lawsuits brought by the firm on behalf of tipped employees working for Darden Restaurants.

If you worked as a tipped employee by a Landry’s restaurant in the U.S. at any time during the past three years, please contact us today – we will help you determine if your rights were violated and if you may be owed unpaid wages.

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Charles Ash, IV

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Charles Ash, IV

Charles R. Ash, IV is a Shareholder in Sommers Schwartz’s Complex Litigation groups. A substantial portion of Rob’s practice is devoted to collective and class actions arising under the Fair Labor Standards Act (FLSA) and similar state laws.

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