Lawsuit Claims P.F. Chang’s Failed to Pay Tipped Workers Proper Wages

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A proposed collective action claims P.F. Chang’s China Bistro, Inc. and P.F. Chang’s III, LLC have unlawfully paid tipped employees less than the minimum hourly wage while failing to comply with the strict tip credit requirements of the Fair Labor Standards Act (FLSA).

More specifically, the 18-page lawsuit alleges the restaurant chain has purported to apply a “tip credit” to servers’ and bartenders’ wages without providing statutory disclosures. Overall, P.F. Chang’s, the suit claims, has taken unlawful deductions from the workers’ wages and required the employees to perform non-tipped duties either unrelated to their jobs or in excess of the amounts of time allowable by law. The sum of these alleged wage-and-hour abuses is that P.F. Chang’s is precluded from placing a “tip credit” on tipped workers’ wages, according to the case.

“As a result of these violations, Defendants have lost the ability to use the tip credit and therefore must compensate Plaintiff and all similarly situated workers at the full minimum wage rate, unencumbered by the tip credit, and for all hours worked,” the complaint contends. “In other words, Defendants must account for the difference between the wages paid to Plaintiff and all similarly situated workers and the minimum wage rate.”

The defendants operate a nationwide chain of restaurants under the P.F. Chang’s trade name and employ tipped waiters and bartenders, the lawsuit relays. Per the case, the defendants pay tipped employees a sub-minimum wage and have attempted to apply a tip credit to the workers’ wages to meet the companies’ minimum wage obligations. Nevertheless, P.F. Chang’s has failed to meet the FLSA’s strict requirements for an employer looking to utilize a tip credit, the case alleges.

According to the suit, the defendants have failed to provide tipped workers with a statutorily required notice that informs them of the amount of their cash wages, the amount their wages will increase on account of the tip credit, that all tips received by the employee are to be retained by the employee unless they are contributed to a valid tip pool, and that the tip credit does not apply to any employee who does not receive the notice.

The lawsuit goes on to claim that the defendants have unlawfully required tipped workers to perform non-tipped duties unrelated to their tipped occupation, including cutting fruit, making juices and drinks, labeling bottles, setting up sauces, cleaning, pumping wine, and taking out the trash. Per the case, servers and bartenders do not interact with customers while performing these duties and therefore cannot generate tips. As a result, the workers should have been paid the full minimum wage for their unrelated non-tipped work, the suit claims.

The defendants have also employed an unlawful practice of requiring tipped employees to spend more than 20 percent of their time performing non-tipped work related to their tipped occupation, such as setting up tables, brewing coffee, rolling silverware, cleaning bottles and refilling condiments, the case says. Further, the workers were required to perform additional non-tip-producing work before the restaurant opened and after it closed, according to the lawsuit. The case estimates that workers spent 30 minutes to two hours before opening and after closing time performing duties that could not generate tips yet were paid less than the full minimum wage rate for these hours.

The lawsuit claims the non-tipped work performed by servers and bartenders is, in other establishments, typically assigned to back-of-the-house employees who were paid at least the minimum wage rate.

According to the suit, P.F. Chang’s was well equipped to track the amount of time tipped employees spent on non-tipped work yet refused to do so. The case goes on to claim that servers and bartenders were not even paid at the minimum “tipped” hourly rate since they were required to purchase uniforms and not reimbursed for the costs of the apparel.

“Because Defendants paid their tipped employees at the minimum of $2.13 per hour (or the state’s respective tipped wage), any week in which a tipped employee was required to pay for work related expenses for Defendants’ business, their compensation fell below the minimum wage rate, thereby negating Defendants’ entitlement to claim the tip credit,” the complaint alleges.

The lawsuit claims the defendants’ failure to adhere to the FLSA’s tip credit provisions precluded them from applying a tip credit to servers’ and bartenders’ wages.

The case looks to cover anyone who is or was employed by the defendants as waitstaff, including waiters, servers and those in “substantially similar positions,” for at least one week during the past three years.

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