Red Lobster class action says ‘tip credit’ shortchanges workers

Red Lobster wage and hour class action overview: 

• Who: A former Red Lobster employee is suing the seafood restaurant company.
• Why: The plaintiff says she and other tipped workers were effectively paid less than minimum wage.
• Where: The Red Lobster wage and hour class action was filed in a Maryland federal court. 

Red Lobster asks its tipped workers to perform excessive amounts of non-tip-generating tasks, driving their take-home pay to below minimum wage, a new class action lawsuit claims. 

Maggie Hill, a former employee, filed the class action complaint against Red Lobster on July 23 in a Maryland federal court, alleging the seafood restaurant chain has been underpaying its tipped employees for years.

Hill, who worked at a Red Lobster in Frederick, Maryland, from May 2019 to Dec. 2021, alleges that Red Lobster violated the Fair Labor Standards Act (FLSA) and the Maryland Wage and Hour Law by misusing “tip credit provisions” to underpay tipped employees. 

Federal tip credit provisions allow employers to pay less than the minimum wage, with the expectation that tips will make up the difference.

However, Hill says Red Lobster did not comply with the tip credit rules under the law.

Managers Incentivized to Keep Wages Low

Hill claims that managers at Red Lobster restaurants received bonuses based on meeting or exceeding certain labor cost targets, which incentivized them to keep the tipped employees’ wages low.

“Defendant knew or should have known that its policies and practices violate the law, and Defendant has not made a good faith effort to comply with the FLSA,” the lawsuit says.

According to Hill, Red Lobster failed to inform its employees in advance about its intent to take a tip credit from their wages, as it is required to do, and also required employees to purchase specific clothing for work without reimbursement, further reducing their wages.

One of her chief accusations, though, is that Red Lobster made servers and bartenders perform excessive amounts of non-tipped work, such as making salads, cleaning the kitchen, sweeping and mopping floors, taking out trash, deep cleaning the restaurant, and doing dishes. 

According to Hill, these non-tipped tasks often took longer than allowed by law, which mandates that non-tipped work should constitute less than 20% of a shift and not exceed 30 consecutive minutes. Despite this, Red Lobster did not pay employees full minimum wages for that time, she states.

Hill seeks to represent all current and former tipped employees who worked at Red Lobster and had a tip credit claimed for at least one week in the past three years. 

She’s seeking certification of the class action, damages, fees, costs and recovery of unpaid wages.

There have been a number of class action lawsuits filed and settlements reached over alleged wage theft by restaurant owners. In 2022, Famous Dave’s agreed to pay almost $1 million as part of a settlement to resolve claims it failed to properly pay servers and other employees who received tips. 

Last year, Rare Hospitality International was hit with a class action lawsuit alleging it failed to pay all the minimum wages owed to workers at its LongHorn Steakhouse restaurants who were compensated on a hybrid sub-minimum wage and tips basis.

What do you think of the allegations in this Red Lobster class action lawsuit? Let us know in the comments.

Plaintiff Maggie Hill is represented by Don J. Foty of Hodges & Foty LLP. 

The Red Lobster wage theft class action lawsuit is Maggie Hill v. Red Lobster Restaurants LLC, Case No. 1:24-cv-02132, in the U.S. District

Read About More Class Action Lawsuits & Class Action Settlements:

• Walmart employees win ‘substantial’ settlement over pre-shift COVID-19 screenings
• JPMorgan Chase employees forced to skip lunch, work off the clock, class action claims
• Subway class action alleges restaurant fails to pay Ill. employees min. wage, OT
• Judge grants initial approval to $16M Delta wage settlement