What do Chili’s, Red Robin, Starbucks and even New York’s ritzy Le Cirque have in common? All have been accused of illegal tip-pooling practices that deprived restaurant workers of their rightful wages.
These restaurants have faced class action lawsuits brought by workers claiming tip-sharing violations, and some have paid significant settlements as a result:
- Starbucks paid $14 million to a group of baristas in Massachusetts to settle allegations their tips were shared illegally with supervisors.
- New York’s upscale Le Cirque restaurant paid servers $1.1 million to settle allegations of improper tip-pooling practices.
- A Red Robin franchisee in Philadelphia paid $1.3 million to settle a tip-pooling lawsuit brought by servers who said they were forced to share tips with underpaid kitchen workers to make it look like everyone received minimum wage.
- The owner of 46 Chili’s restaurants in Pennsylvania, Delaware, Indiana, Michigan, New Jersey and Ohio faces a tip-pooling class action.
When Is Tip-Pooling Wage Theft?
Under the federal Fair Labor Standards Act (FLSA), a tip is the sole property of the tipped employee and he or she cannot be forced to give it up. 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.
Restaurants are, however, allowed to implement tip-pooling policies. It’s not illegal if tips are shared among restaurant workers who customarily and regularly receive tips. The FLSA does not regulate how the sharing is calculated.
Which Restaurant Employees May Be Required to Share Tips?
The key language here, though, is “employees who customarily and regularly receive tips.” Some restaurants mandate tip-pooling with kitchen staff, such as cooks and dishwashers, who do not have a role in serving customers directly. In other words, as a general rule of thumb, “front of the house” employees cannot be required to share tips with “back of the house” employees. This can be a problem if the restaurant is using tip-pooling to avoid having to pay those workers minimum wage. Under the FLSA, that is illegal and tipped workers should not be forced to share tips with those employees.
Any violation of the FLSA when it comes to tip-pooling is wage theft – and restaurants can be held liable for depriving restaurant workers of their rightful earnings.