DETROIT — In 2016, a class action lawsuit on behalf of Red Robin hourly servers was filed alleging that tipped workers were required to take part in a tipping pool with non-tipped employees. These allegations include a complaint that servers were forced to share 1% of their gross sales with non-tipped employees at the end of shifts. Tipped employees are not paid minimum wage due to an employer’s tip credit. However, if non-tipped employees are taking tips away from tipped employees, it could possibly invalidate a companies tip credit. In the event that this credit was indeed invalid, employees who were not paid minimum wage would be entitled to compensation for income lost.
The first Red Robin was opened in 1940 under the name “Sam’s Tavern” but was later renamed “Sam’s Red Robin.” The company adopted its current name in 1969 when the Red Robin chain was founded and expanded.
The company is now based in Greenwood Village, Colorado and encompasses an estimated 538 locations that draw in a reported $1.26 billion in revenue per year.
Invalid Tip Pools
Under the Fair Labor Standards Act, an employer may pay their employees less than the state minimum wage if they typically receive tips that subsidize their income. This is defined as an employers tip credit and allows them to pay an employee as little as $2.13 per hour as long as tips per shift averages out to the states minimum wage.
If an employer chooses to create a tip pool for their employees, they must first notify all employees of the requirements and can only take credit for what each employee receives. In the event that even one non-tip employee is involved in a employer mandated tip pool, the entire system can be deemed invalid which will result in employers needing to pay their employees as standard minimum wage employees.
Many employees are being unlawfully denied overtime pay due to willful or intentional conduct by employers. If you feel that you fit this description, you should call (855) 754-2795 or complete the Free Unpaid Overtime Case Review form on the top right of this page.