The operators of the Outback Steakhouse and Fleming’s Prime Steakhouse & Wine Bar chains have been hit with two lawsuits that claim certain workers were not paid proper wages due to the companies’ misapplication of a tip credit.
The cases allege OS Restaurant Services, LLC, a defendant in both complaints, has unlawfully paid tipped employees, including servers and bartenders, a sub-minimum wage despite failing to satisfy the federal Fair Labor Standards Act’s strict tip credit requirements.
A tip credit is a method by which an employer can offset its minimum wage obligations for tipped employees, i.e., those who regularly receive more than $30 per month in tips, equal to the difference between the required cash wage, which must be at least $2.13, and the federal minimum wage. The suits relay that the FLSA prohibits an employer from applying a tip credit to a worker’s wages—and thus paying them less than the federal hourly minimum—unless the employer properly informs the worker of the tip credit and does not (a) exceed the maximum tip credit limit, (b) require the individual to perform non-tipped duties unrelated to their tipped work, or (c) require the person to spend more than 20 percent of their time performing non-tipped duties related to their tipped work.
According to the lawsuits, the operators of Outback Steakhouse and Fleming’s Prime Steakhouse & Wine Bar have failed to meet these requirements, and thus paid servers and bartenders at an unlawful sub-minimum wage rate.
“As a result of these violations, Defendants have lost the ability to use the tip credit and therefore must compensate Plaintiff and all similarly situated workers at the full minimum wage rate, unencumbered by the tip credit, and for all hours worked,” each complaint reads. “In other words, Defendants must account for the difference between the wages paid to Plaintiff and all similarly situated workers and the minimum wage rate.”
The substantially similar lawsuits, filed respectively by former servers at an Outback Steakhouse in Atlanta and a Fleming’s Prime Steakhouse & Wine Bar in Scottsdale, Arizona, claim the defendants failed to inform workers that they intended to rely on a tip credit to meet their minimum wage obligations. Moreover, tipped employees, according to the cases, were not properly informed of the amount of their cash wages, the amount their wages would be increased through the tip credit, that all tips received by an employee were to be retained by them (except for those contributed to a valid tip pool) and that the tip credit would not apply to any worker who does not receive proper notice.
The lawsuits go on to allege that the defendants failed to pay tipped workers even the required tipped hourly rate by requiring that they pay for their uniforms. The restaurant operators’ failure to reimburse workers for the costs of the shirts, pants and shoes required for their jobs amounts to an illegal deduction from their wages, the cases allege.
Tipped Outback and Fleming’s employees were also required to perform “excessive amounts” of untipped duties unrelated to their tipped occupations, including cleaning the restaurant, washing and polishing dishes and, in some cases, making food, the lawsuits claim. According to the suits, Outback and Fleming’s had the capacity to allow workers to clock in for such duties at the full minimum wage rate yet failed to track the time workers spent on non-tipped duties.
Similarly, the cases claim workers were also required to spend more than 20 percent of their time performing non-tipped duties related to their tipped work, such as setting up and cleaning tables, wiping down booths, refilling condiments, rolling silverware, stocking ice and bringing dishes to the kitchen.
Per the suits, servers and bartenders did not usually interact with customers while performing these non-tipped duties and thus had no opportunity to earn tips during that time. The lawsuits claim the defendants had no policy in place prohibiting tipped workers from performing certain types or excessive amounts of untipped work.
The cases claim the defendants—OS Restaurant Services; Outback Steakhouse International, L.P.; Outback Steakhouse of Florida, LLC; and Bloomin’ Brands, Inc.—have “knowingly, willfully, and/or with reckless disregard of the law” failed to adhere to the FLSA’s tip credit requirements and have thus underpaid employees.
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