Fighting for restaurant workers

Most people think the minimum wage in America is $7.25 per hour. But it turns out even that low wage has a loophole: tipped workers, like servers and bartenders at most restaurants, can be paid something called the “subminimum wage,” which can be as low as $2.13 per hour, depending on the state. Tips are supposed to make up the difference between the two, but our friends at One Fair Wage have long argued that relying on tips for such a huge part of workers’ take-home pay leads to sexual harassment and racial discrimination. One Fair Wage has been making this case compelling to the public, so Gerstein Harrow LLP filed a legal complaint on behalf of One Fair Wage against the largest restaurant company in America to take the fight against discriminatory wage and tipping practices to court. 

Our legal case takes on two aspects of Darden’s illegal business practices. First, we directly attack Darden’s stated policy of paying all servers and bartenders at all of its restaurants—like the Olive Garden and The Capital Grille—the lowest possible cash wage in any state. According to data from current and former Darden employees, and supported by studies measuring the impact of wage policies like Darden’s, paying this subminimum wage, and forcing tipped workers to get to the regular minimum wage through tipping, is the cause of a documented increase in sexual harassment. A key reason for this is that the subminimum wage puts great pressure on tipped employees to have the customers, rather than Darden, pay employees their legally-required wages. This, in turn, means that managers have the incentive to ignore, indulge, or even encourage sexual harassment, including requiring or encouraging employees to flirt or dress suggestively. If Darden got rid of this wage policy tomorrow—and we hope they will in response to this lawsuit!— these illegal effects would be substantially lessened. 

Second, Darden’s tipping policy itself has led directly to tipped employees of colour being paid less in tips than tipped white employees. The reason is clear: it is Darden’s corporate policy or practice to encourage and facilitate tipping for positions like servers and bartenders while doing nothing to guide customers or ensure their workers receive fair payment for their work. In essence, this means that Darden, as a corporation, requires its customers to directly set the wage levels for tens of thousands of its employees without any oversight. But customers are often capricious, not rational; and they can bring conscious and unconscious racial and other biases with them when they dine out. This results in an illegal wage disparity. 

This effect is actually well-known. We found it in One Fair Wage’s poll of Darden employees, and it’s been documented elsewhere, including in a prominent study by leading researchers at Cornell and in another Yale study of the tipping of taxi drivers. The disparity is replicable across industries; it’s so well-known, in fact, that Uber publicly resisted tipping because it knew that “tipping is influenced by personal bias.” (It later caved, though there’s no evidence that Uber has eliminated that bias.)

This is not to say that all tipping is illegal. If Darden wants to maintain tipping, there are easy ways to mitigate these effects. Darden could require the pooling of tips. It could add a mandatory or recommended service charge. It could provide better guidance for customers about how to tip so that diners don’t fall into this trap. What it can’t do is require servers to rely on tips by paying the minimum possible wage, facilitate tipping, and then look the other way when it turns out employees of colour aren’t making as much in those tips as white servers. That’d be illegal in any other industry. It’s illegal in industries where tipping is common too—at least the way Darden operates its restaurants. 

Stay tuned for more as the case develops.

Key documents

• Complaint in federal court.

• Decision granting motion to dismiss.

• Opening brief on appeal.

• Reply brief on appeal.