Ex-On the Border Employee Claims Tipped Workers Owed Unpaid Wages

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A proposed collective and class action claims the operator of the On the Border restaurant chain applied an unlawful tip credit to workers’ wages and thus underpaid them in accordance with state and federal law.

According to the lawsuit, defendant OTB Acquisition, LLC failed to comply with statutory requirements before paying a sub-minimum wage to tipped employees at its On the Border Mexican Grill & Cantina restaurants. As a result, the defendant was not permitted to apply the tip credit to workers’ wages and thus owes them the full minimum wage rate for all hours worked, the case attests.

“In other words, Defendant must account for the difference between the wages paid to Plaintiff and all similarly situated workers and the minimum wage rate,” the complaint claims, alleging violations of the federal Fair Labor Standards Act and Colorado labor laws.

The lawsuit explains that before an employer applies what’s known as a tip credit to workers’ wages, i.e., uses a portion of the workers’ earned tips to offset the minimum wage requirement, the company must first notify the employees of the amount of wages that will be paid to them, the amount by which the wages will be increased as a result of the tip credit, that all tips received by the workers must be retained by them (with the exception of tips contributed to a valid tip pool), and that the tip credit does not apply to any employee who does not receive proper notice. According to the case, OTB failed to provide this statutory notice to employees before applying a tip credit to their wages.

The suit claims the defendant further violated the tip credit requirements by having tipped workers spend time performing non-tip-producing side work unrelated to their tipped duties. According to the suit, employees should have been paid at the full minimum wage rate for performing these unrelated tasks during which they could not earn tips, including cleaning bathrooms, preparing tortillas, cleaning the tortilla chip machine, sweeping the kitchen, gathering guacamole ingredients and stocking plates and sauces.

Moreover, tipped employees were unlawfully required to spend more than 20 percent of their time performing non-tipped duties related to their tipped work, the lawsuit alleges. More specifically, the case claims the workers should have been paid the full minimum wage when they spent over 20 percent of their shifts filling condiments, cleaning trays, cleaning the point-of-sale system, wiping down menus and cleaning the serving line. According to the suit, the workers were also required to perform various manual labor and setup duties before the restaurant opened and after closing, when there was no opportunity to earn tips, yet were unlawfully paid at a sub-minimum wage rate for this work.

The case goes on to claim that catering employees, who deliver food and have limited interactions with customers, and certain servers assigned to set up for, work and clean up after private events were similarly paid at an unlawful sub-minimum wage rate for their non-tip-generating tasks.

OTB, the lawsuit claims, had no policy in place to prohibit tipped employees from performing certain types or excessive amounts of non-tipped work or track the hours spent on such activities despite being fully capable of doing so.

The plaintiff, who worked at a Colorado Springs On the Border location from July 2017 to December 2019, alleges that the defendant further cut into workers’ wages by requiring them to pay for the costs of their uniforms without being reimbursed. Thus, OTB did not even pay its workers at the minimum “tipped” rate given their wages were reduced by the cost of these work-related expenses, the suit argues.

The lawsuit looks to represent current and former tipped employees who worked for the defendant for at least one week during the last three years, with a separate “class” proposed for those who did so in Colorado.

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