Eagle Diner Corp., Owners Hit with FLSA Complaint Over Alleged Invalid Tip Credit

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Two plaintiffs have filed a proposed class and collective action against Eagle Diner Corp. and three individuals who own the restaurant to recover allegedly unpaid minimum wages. The plaintiffs, who worked as servers for the defendants until May and August 2017, respectively, claim they put in between 40 and 60 hours per week and were paid at a tip-credited minimum wage rate while being required to contribute to a tip pool. The complaint notes the defendants’ servers were not allowed to use the restaurant’s time clock themselves, but had to rely on one of the individual defendants or managers to punch in and out of work for them.

According to the lawsuit, the plaintiffs were required to perform “a significant amount of untipped side work”—sometimes off the clock—unrelated to their tipped serving duties. The plaintiffs claim they were routinely required to spend more than two hours per eight-hour shift on untipped work, with even more time spent on such tasks in the event a server had to work a double shift. This should have precluded the defendants from applying a tip credit to offset the plaintiffs’ hourly wages, the case claims.

“[The defendants] pay servers at the tipped minimum wage rate of $2.83 per hour for all untipped work they perform ‘on-the-clock’ instead of the regular minimum wage rate of $7.25 per hour,” the lawsuit attests. “[The defendants] do not pay servers any wages for the untipped work they perform ‘off-the-clock.’ At least half of servers’ untipped work each shift is performed ‘off-the-clock.’”

The plaintiffs further allege they were required to contribute $2 from each of their tips earned every hour to the defendants’ tip pool. Though these wages were purportedly collected to provide additional wages to bussers, the defendants instead pocketed servers’ tips, the lawsuit alleges, thereby invalidating the tip pool.