Failing To Meet Tip-Pooling Requirements Creates Huge Financial Pitfall

The proliferation of wage and hour class actions throughout the United States over the past twenty years is well-documented. A recent federal court decision involving a class action brought under the Fair Labor Standards Act (FLSA) by approximately 750 servers against a chain of famous steakhouses in Texas offers another cautionary — and expensive — tale about the dangers of home-grown tip-pooling arrangements. Operating as Perry's Steakhouse and Grille, the defendant employer implemented a tip-pooling program which required servers to share their tips with a number of different job categories of employees who worked before and after the respective locations were open to the public. In most cases, these "off-hour" employees were assigned cleaning and prep-related duties during the morning hours. So, unlike many other employers who have run afoul of wage and hour laws by retaining some portion of the tip pool for upper management or the "house," in this particular