Tag Archives: 80/20 Rule

TGI Friday’s Settles Wage Theft Case for $19.1 Million

TGI Friday's Wage theft lawsuit

A nationwide wage theft lawsuit against TGI Friday’s has been settled for $19.1 million according to a court filing by the workers’ attorneys in New York federal court. The settlement, which covers 28,000 restaurant workers, is a record amount for resolution of a wage theft lawsuit in the restaurant industry. This settlement is the latest example of fast casual restaurants across the United States paying out millions of dollars on wage theft cases.

The lawsuit alleged that TGI Friday’s failed to pay its tipped hourly food service workers the proper minimum wage, overtime pay, and misappropriated tips. Attorneys for the servers, bussers, runners, bartenders, barbacks and hosts, claimed that TGI Friday’s failed to satisfy the strict requirements under the Fair Labor Standards Act (“FLSA”) and the New York Labor Law (“NYLL”) that would allow them to pay a reduced minimum wage rate to tipped employees. In particular, TGI Friday’s had a policy and practice that required tipped employees to spend over two hours and/or in excess of 20% of their work shift performing non-tip producing “side work.” Side work included, general cleaning of the restaurant, preparing food in bulk for customers, cutting produce, refilling condiments, and stocking and replenishing the bar and service areas. According to attorneys for the workers, this practice violated the “80/20 rule” and TGI Friday’s should have paid the tipped employees the full minimum wage rate, rather than reduced tipped minimum wage rate.

The front of the house workers also alleged that TGI Friday’s required them to perform “off the clock” work for which they were never compensated. “Off the clock” work consisted of requiring them to arrive at the restaurant one hour before customer service to perform side work, requiring them to punch in after they got their first table, and punch out before they performed closing side work. As a result of these practices, workers were not compensated for all the hours they worked and when they worked over forty hours per workweek, they were not paid overtime pay. Furthermore, the lawsuit claimed that TGI Friday’s required tips to be distributed to employees who are not entitled to tips under the FLSA and/or NYLL such as, silverware rollers and expeditors. Additionally, workers were given only one uniform, which TGI Friday’s failed to launder or pay workers the statutory uniform allowance. Finally, TGI Friday’s was accused of making unlawful deductions from employee wages for customer walkouts.

If approved, the settlement would resolve a nationwide class action brought by more than a dozen workers, alleging violations of the FLSA and claims brought under the labor or unfair competition laws of nine states: California, Colorado, Connecticut, Florida, Illinois, Maryland, Michigan, New Jersey and New York.

 

Seventh Circuit Weighs In On 80/20 Rule and Tip Credit Disputes

Pancake House Restaurant Front

The Seventh Circuit addressed tip credit and 80/20  issues in a decision involving pay practices at Original Pancake House restaurants in Chicago.

On the 80/20 issue, the Court found that although some waiters and waitresses tasks may be performed by untipped staff at other restaurants, it does not make them unrelated to their server duties. The Court noted that “the possibility that a few minutes a day were devoted to keeping the restaurant tidy does not require the restaurants to pay the normal minimum wage rather than the tip credit rate for those minutes.”

On the tip credit issue, the Court analyzed the requirements of §203(m) and explained “workers are entitled to knowledge about the tip credit program but not to a comprehensive explanation.” The Seventh Circuit’s take on the requirements for notification of the tip credit was threefold: “Three things are apt to matter most to employees at establishments such as these defendants: (a) in anticipation of tips the employer will pay less than the minimum wage; (b) how much the cash wage will fall short of the current minimum wage; and (c) if tips plus the cash wage do not at least match the current minimum wage, the employer must make up the difference. We think that person told these things has been adequately “informed” for the purpose of the statute, during the time before the Department of Labor elaborated by regulation.”

Le Pain Quotidien Sued For Minimum Wage and Overtime Violations

le pain quotidien

Servers at Le Pain Quotidien restaurants in New York City, claim they have been unlawfully denied minimum wage and overtime pay, according to a class action lawsuit filed in Manhattan federal court.

The lawsuit alleges that the restaurants paid its waiters and waitresses a reduced tipped minimum wage rate, but did not satisfy the requirements under the Fair Labor Standards Act or the New York Labor Law by which they could take the “tip credit.”  Attorneys for the workers claim that the restaurant should not have paid the workers the federal tipped minimum wage because the restaurant failed to inform the waiters and waitresses of the tip credit provisions of the law.

Attorneys for the workers also claim that the restaurant was not able to take the tip credit because the waiters and waitresses were required to perform substantial non-tipped “side work,” that equaled more than twenty percent of their time at work.  That “side work” included polishing silverware, washing the tables, slicing and preparing the bread, and sweeping and mopping floors.

Under the Fair Labor Standards Act (“FLSA”), employers are allowed to take a “tip credit” and pay waiters, bussers, and bartenders below the federal minimum wage of $7.25 per hour. (Note: minimum wage in New York is now $8.00 per hour).  For example, the “tip credit” for waitstaff in New York is currently $3.00 per hour, meaning that waiters, busboys, and bartenders can be paid an hourly minimum wage of $5.00 per hour.  The United States Department of Labor regulations provide, however, that a restaurant will not qualify for the “tip credit” for employees that spend more than 20% of their time performing non-tipped work.

Restaurant workers and employers in New York State should note that the twenty percent rule is already in effect for waiters, bussers, and bartenders in New York.  The New York State Department of Labor’s Hospitality Wage Order specifically provides a twenty percent rule for restaurants that take a tip credit.  Subpart 146-2.9 of the Hospitality Wage Order states:

On any day that a service employee or food service worker works at a non-tipped occupation (a) for two hours or more, or (b) for more than twenty percent (20%) of his or her shift, whichever is less, the wages of the employee shall be subject to no tip credit for that day.

The case against Le Pain Quotidien seeks back wages, penalties, and attorneys’ fees and an injunction to protect workers rights.