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Chili’s Franchisee Allegedly Fails to Properly Allocate Tips

Although the federal Fair Labor Standards Act (FLSA) requires employers to pay all their workers no less than the standard, federal minimum wage (currently set at $7.25 per hour) the FLSA does provide exceptions to that rule. One of those exceptions covers employees who receive tips by working directly with customers. This category most commonly includes servers and bartenders, but it can also include barbers, drivers and delivery personnel, depending on their employment situation.

Because tipped employees are expected to receive most of their compensation directly from the customers they work with, the legal minimum wage for tipped employees is just a fraction of the standard minimum wage, although the FLSA does require employers to make up the difference if the combination of wages and tips earned by tipped employees is less than the standard minimum wage.

In order to prevent employers from taking advantage of the lower minimum wage for tipped employees, the U.S. Department of Labor (DOL) requires employers to make sure their tipped workers are spending no more than 20% of their time on un-tipped labor (cleaning, restocking supplies, etc.) If an employee does spend more than 20% of their work hours performing work in which they are not in direct contact with customers, then the FLSA requires their pay to be raised to the standard minimum wage.

According to a recent class action wage and hour lawsuit against Chesapeake Bay Seafood House Associates LLC, a Chili’s franchise that owns more than 30 restaurants in Maryland and Virginia, servers and bartenders allegedly spent 30%-50% of their time fulfilling un-tipped responsibilities, despite receiving the significantly lower tipped minimum wage for that time.

Morgan Barnhart, a server and bartender at a Chili’s Tex-Mex restaurant and the lead plaintiff in the class action wage and hour lawsuit, included in her complaint a detailed list of all her work duties.

Chesapeake filed a motion asking the court to dismiss Barnhart’s claims, arguing that the 20% rule provided by the DOL is not a law at all, but an internal guideline to be used by DOL investigators. Chesapeake also argued it is unreasonable to expect employers to keep the un-tipped work performed by tipped employees at or below twenty percent.

U.S. District Judge J. Frederick Motz disagreed with Chesapeake’s arguments, insisting there is nothing especially burdensome in asking employees to distinguish between the tipped tasks and non-tipped tasks performed by their workers, especially given the fact that it is already the responsibility of managers and supervisors to assign and review tasks given to workers. Judge Motz suggested Chesapeake comply with the 20% rule, either by hiring minimum wage workers to perform the non-customer-facing tasks, or by paying their tipped employees the higher, standard minimum wage for the time they spend performing non-tipped responsibilities.

Barnhart filed the wage and hour lawsuit against Chesapeake last year under the FLSA and the Maryland Wage Payment and Collection Law for unpaid wages she is allegedly owed as a result of Chesapeake’s employment practices. Other current and former bartenders and servers working for Chesapeake have since joined the class action wage and hour lawsuit.

The Chicago class action lawyers at the Chicago Overtime Law Center are investigating unpaid overtime claims by waiters and bus boys and other restaurant and hotel workers against national restaurant chains including Hilton, DoubleTree, W, Marriott, Sheraton, Holiday Inn, Extended Stay America, Staybridge Suites, Best Western, HomeTown Buffet, Old Country Buffet, Applebees, Chipotle, Red Lobster, Olive Garden, Cracker Barrel, Outback Steak House, Taco Bell, Burger King, Chili’s, Kentucky Fried Chicken, Starbucks, Dunkin’ Donuts, Wendy’s and hotels for mis-classifying employees as managers or assistant managers, forcing employees to work off the clock at business, failing to share all tips, erasing or altering time sheets or time records, pressuring workers not to report or record overtime, and otherwise failing to pay workers for overtime and other wages. If you are the victim these wage theft practices call us at (312) 869-4095 or contact us online.

The Chicago class action attorneys at the Chicago Overtime Law Center have three decades of experience fighting to help employees who are victims of wage, overtime and tip theft by their employers. We have a team of Chicago unpaid overtime lawyers who concentrate on prosecuting state and nationwide class action lawsuits. Our attorneys work out of Chicago and Oak Brook offices and pursue claims for workers all over the Chicago area including Oak Lawn and Naperville. We protect unpaid workers who haven’t received overtime throughout the Chicago area including in DuPage, Lake, McHenry, Kane and Cook Counties.

Our Joilet, Aurora and Elgin overtime lawyers are intimately familiar with the issues that arise during wage claim litigation, and we know the laws that govern overtime cases well. Many employers mis-classify employees as being exempt from overtime laws and pay workers salaries instead of hourly wages in order to avoid paying them overtime. Some employers mistakenly classify employees as exempt and others intentionally do so in order to circumvent the law. In either case, workers do not receive the wages they should, and a lawsuit may be the only way to recover their earned wages.

The Chicago Overtime Law Center is based in Chicago, and represents clients throughout the country who have unpaid overtime and other employment right claims.