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Here’s a Tip – Restaurant Workers Allege Wage and Hour Violations Amid COVID-19 Pandemic

As the Barnes & Thornburg Wage and Hour Practice Group continues to track and catalogue COVID-19 related workplace complaints, this week we want to spotlight an example of the pandemic as an accelerant for wage and hour class and collective actions. The setting for this particular case is an industry hit particularly hard by COVID-19: the restaurant industry. The allegations in this featured complaint highlight many of the wage and hour issues that can present themselves when dealing with tipped workers. 

In Smith, et al. v. Local Cantina, LLC, et al., the plaintiff brings a class action lawsuit on behalf of all servers and bartenders at nine restaurants operated by the defendants. The plaintiff alleges that prior to May 2020, the defendants paid their tipped workers the minimum wage minus the maximum allowable tip credit. The plaintiff goes on to allege that since May 2020, however, the defendants have retained all of the credit card tips received by tipped workers, and have forced the tipped workers to share cash tips with non-tipped employees who are ineligible to participate in the tip pool. Further, the plaintiff alleges that since May 2020, the defendants have paid the tipped workers a fixed amount every week. 

In addition to these tip credit and tip pool violations, the plaintiff alleges that the defendants have required the tipped workers to work more than forty hours per week, but have not paid the tipped workers overtime for these additional hours. The plaintiff alleges that the defendants’ new pay policy is designed to maximize the amount of money that may be treated as forgivable under a Paycheck Protection Program loan the defendants received due to the COVID-19 pandemic. 

Although the tipped workers receive more money in the form of wages, the plaintiff alleges that they were deprived of their tips, which are retained by the defendants, and that the defendants seek to compensate the employees using one hundred percent forgivable PPP loan money. The plaintiff brings claims for failure to pay minimum wages under the Fair Labor Standards Act (FLSA) and the Ohio Constitution, failure to pay overtime wages under the FLSA and the Ohio Constitution, untimely payment of wages under Ohio law, and unjust enrichment.  

While the Department of Labor issued proposed rules last fall concerning certain tip pools when no tip credit is taken and rules that would effectively abolish the 80/20 side work “rule,” many wage and hour pitfalls remain for employers of tipped workers. The Smith case presents an interesting illustration of how COVID-19 can bring those issues to the forefront. As another reminder, several of the contributors to the COVID-19 Related Workplace Litigation Tracker will be presenting on this and other workplace litigation trends on July 1, 2020. We will continue to track these trends as they unfold, and will continue to update the tracker twice each week. As always, stay tuned.

© 2021 BARNES & THORNBURG LLPNational Law Review, Volume X, Number 179



About this Author

Peter J. Wozniak Barnes Thornburg Chicago  Labor Employment

Pete Wozniak is a vigorous advocate who strives to help his clients navigate issues that can be fraught with challenges as painlessly and efficiently as possible. He is a candid and personable counselor, offering his clients direct advice by leveraging his deep experience performing a broad range of outcome critical functions for complex labor and employment matters.

Pete represents clients across a number of industries, including transportation and logistics, restaurants, retail, manufacturing, and temporary staffing. Handling a number of high profile matters, he identifies the...

Mark Wallin, Attorney, BT, Chicago, Labor Employment
Of Counsel

In order to provide the best counsel, Mark Wallin believes it is his role to understand his clients’ business needs so he can help them determine what resolution will provide the most benefit. His keen ability to understand his clients’ practical concerns allows him to advise on the best path to successfully resolve issues – whether through traditional litigation or negotiated resolution.

In the course of his practice, Mark has focused on providing the highest-level of service to his clients and building long-term relationships. Specifically, he defends employers in a wide range of...


Caroline represents employers in a range of actions involving harassment, retaliation, discrimination, wrongful termination, and wage and hour claims, including class actions.

Beyond litigation and agency representation, Caroline counsels senior management on day-to-day human resources and employee relations issues, including wage and hour compliance, disciplinary and performance counseling, reasonable accommodation, termination decisions, internal complaints and investigations, and employee classifications. She also assists with reviews and updates to company handbooks, policies...