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Texas Roadhouse Pays Out Texas-Sized Settlement For Unlawful Wage Practices

COLUMBIA, S.C. — Two waitresses at a Texas Roadhouse restaurant in Columbia, South Carolina have just received a Texas-sized settlement for themselves and other similarly situated employees employed by the chain in the amount of $700,000.

The waitresses alleged their employer required them to participate in an illegal tip-sharing pool.

Although the law does permit employers to require tip pooling, the employers may not require tipped employees to share tips with other restaurant workers who do not “customarily and regularly receive tips.” Under the Fair Labor Standards Act, the federally mandated minimum wage is $7.25 per hour.

However, employers may claim a tip credit to reduce the hourly wage that they are required to pay to employees who customarily and regularly receive more than $30 per month in tips from customers.

This tip credit to the employer is meant to reflect the cash wages the employee receives while working and permits the employer to pay an hourly rate less than $7.25 per hour.  The tip credit may not exceed the amount of tips the employee actually receives.

Furthermore, the employer is prohibited from using an employee’s tips for any reason other than as a credit against its minimum wage obligation or in furtherance of a valid tip pool.

A valid tip pool may not include employees who do not customarily and regularly receive tips, such as: dishwashers, cooks, chefs, and janitors.  In their lawsuit against Texas Road House, the Plaintiffs alleged that “expediters” were not employees that customarily and regularly receive tips of more than $30 per month from customers.

The Plaintiffs’ Complaint explained that expediters were “the gate-keepers of the kitchen” who are not permitted to participate in the tip-pool under the Fair Labor Standards Act because they rarely, if ever, leave the setup area in the kitchen.  Accordingly, the Texas Road House tip pool that required servers to share their tips with expediters was illegal.

Without the benefit of the tip credit provision, the employer must pay each employee the statutory minimum wage of $7.25 per hour.  The class of plaintiffs was not limited to servers, but also included other employees that the employer paid less than $7.25 and claimed a tip credit for such as bartenders and food runners.

The Fair Labor Standards Act also permits employees to recover liquidated damages or double the amount that is owed to them when the employer’s violation of the Act is willful, knowing, intentional, or reckless.  The Act also allows the Plaintiff to recovery all reasonable costs and attorney fees incurred in the course of the litigation.

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