TGI Friday’s and Houlihan’s restaurants in New York and New Jersey are facing allegations that they ignored federal minimum wage, overtime, and record-keeping laws for their tipped employees.

The potential class-action complaints filed against the national restaurant chains claim numerous violations of the federal Fair Labor Standards Act, as well as state wage and hour laws.

If the claims succeed, TGI Friday’s and Houlihan’s could be hit with a hefty payout to those workers who are reportedly owed back wages, tips, and additional damages.

Claims against TGI Friday’s 

A former TGI Friday’s server has filed suit in a New York federal court, claiming the restaurant took a tip credit against her wages without giving her notice and without her acknowledging the policy in writing, as required by state regulations.

Under New York law, a restaurant that pays pay tipped employees less than minimum wage must give notice of how large a credit will be taken. Workers must also be told that, if their combined tips and wages are less than the hourly $7.25 minimum wage, the employer will make up the difference.

According to Law360 (subscription required), the ex-employee has requested that she be reimbursed for all tip credits for her and other similarly-situated workers, and has also asked for an order requiring TGI Friday’s to stop violating the wage-notice regulations.

The suit is not the first that has been filed against TGI Friday’s for allegedly violating wage and hour laws. The restaurant chain is currently facing a potential class action accusing it of paying tipped workers at a rate affected by the tip credit for hours spent performing tasks that did not involve serving customers, such as cooking and washing dishes.

Claims against Houlihan’s 

The U.S. Department of Labor recently charged the operator of 17 Houlihan’s restaurants in New York and New Jersey of skimming from the tips and wages of more than 1,400 current and former employees, denying them money that they earned.

The DOL claims the former workers are entitled to millions in back wages, tips, and damages, according to Law360 (subscription required).

The suit, filed in a New Jersey federal court, alleges that Houlihan’s:

  • Required servers and bartenders to contribute a percentage of tips to a tip pool, then used those tips to pay non-tipped workers for custodial and kitchen tasks.
    Made employees work off duty so they earned only tips.
  • Denied overtime pay to employees who worked at more than one Houlihan’s restaurant when the put in more than 40 hours in a week.
  • Docked pay for employees’ meal breaks.

Under wage and hour laws, employers can only use tips as credit against the minimum wage obligation to the employee (tip credit) or in furtherance of a valid tip pool among employees who are regularly tipped. According to the DOL, a valid tip pool does not include workers who don’t usually make tips, including cooks and dishwashers, and employees are not required to give tips to employers.

The current federal minimum wage is $7.25 an hour and the FLSA requires employers to pay time and a half for hours exceeding 40 in a work week. Workers who receive tips must get paid no less than $2.13 an hour in direct wages and employers are responsible for making up the difference if tips and direct wages do not equal $7.25.

The attorneys inSommers Schwartz’s Wage & Hour Groupare knowledgeable in all aspects offederal wage and hour regulations. If you are a worker who receives tips and you suspect that your employer has violated the laws,contact usto learn how we can help.

Jason J. Thompson

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Jason J. Thompson

Jason Thompson is a nationally board certified trial attorney and co-chairs Sommers Schwartz’s Complex Litigation Department. He has a formidable breadth of litigation experience, including class action and multidistrict litigation (MDL), and practices nationwide in both state and federal courts.