A class action lawsuit was recently filed against Ansara Restaurant Group, which does business as Red Robin of Michigan, alleging that the company engaged in unlawful tip-sharing practices, denying the food servers of the compensation they earned on the job. The Ansara Restaurant Group owns 22 Red Robin restaurants throughout Michigan and northwest Ohio.
Specifically, the food servers believe restaurant management included expeditors –workers who deliver orders to customers’ tables – in the tip-pooling arrangements, which is a violation of the federal Fair Labor Standards Act. By improperly distributing the shared tips across a greater number of employees, the servers allege that their tips were diluted, resulting in lower pay than they rightfully earned.
Wage theft and compensation abuse in the restaurant industry 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 in Sommers Schwartz’s Wage & Hour Litigation Group are interviewing Red Robin servers employed by Ansara Restaurant Group to determine if they are entitled to damages under federal and state employment laws. If you worked as a tipped employee at a Michigan Red Robin restaurant at any time during the past three years, please contact us today!