Nashville Restaurant Workers Awarded $1.03 Million in Wage Theft Lawsuit Settlements
A hospitality and entertainment group in Nashville has agreed to pay $1.03 million to settle multiple class-action lawsuits alleging tip theft, wage theft, and violations of federal labor laws.
The lawsuits claimed the restaurant group withheld portions of employees’ tips, diverted tip money to cover business expenses, and required tipped workers to perform excessive non-tipped duties — all actions that violate the Fair Labor Standards Act (FLSA).
The settlement represents one of the largest recent wage theft payouts in Tennessee’s food service industry.
Overview of the Lawsuits
According to the lawsuits, the employer engaged in several illegal practices, including:
Withholding portions of employee tips
Distributing tip money to non-tipped employees
Using tips to cover business expenses, such as uniforms
Requiring tipped employees to spend more than 20% of their shift on non-tipped work
Failing to ensure tipped workers earned full wages for non-tip-producing tasks
These violations formed the basis of the class-action lawsuits and ultimately led to the $1.03 million settlement.
Major Violations Identified in the Settlement
1. Withholding Tip Money for Business Expenses
The employer deducted tip money to pay for:
Uniforms
Operational costs
Non-tipped employee wages
Under FLSA:
Employers cannot use employee tips for any business-related expense.
Any such deduction is considered tip theft.
2. Distributing Tips to Non-Tipped Employees
The lawsuits alleged that the employer diverted tip money to:
Kitchen staff
Support staff
Other non-tipped workers
This automatically invalidates the tip pool and can void the employer’s tip credit, requiring full back wages.
3. Excessive Non-Tipped Work (“80/20 Rule”)
The restaurant allegedly required tipped workers to spend more than 20% of their time performing tasks that do not generate tips, including:
Cleaning
Rolling silverware
Preparing place settings
Attending meetings
Prep work
Under federal law, when tipped employees perform too many non-tipped duties:
The employer must pay full minimum wage, not the tipped wage
Failure to do so is a wage violation
This rule is one of the most misunderstood and frequently violated by restaurants nationwide.
Financial Consequences for the Employer
The employer agreed to pay:
$1.03 million across multiple settlements
Compensation to thousands of hours of underpaid labor
Legal fees for the plaintiffs’ attorneys
Additional obligations to reform labor practices
Cases involving large hospitality groups often lead to:
Long-term federal oversight
Class-action exposure
Reputational damage
Ongoing compliance audits
Why This Case Matters for Restaurant Owners
This Nashville settlement highlights a growing trend:
📌 Law firms are aggressively targeting restaurants for wage theft and tip violations.
📌 Class-action lawsuits are becoming more common.
📌 Tip pooling and tip credit rules are heavily scrutinized.
Restaurants are especially vulnerable if they:
Misuse the tip credit
Require tipped workers to perform excessive non-tipped duties
Deduct tips for business expenses
Allow non-tipped workers to receive tips
Lack proper payroll documentation
Many restaurant owners violate these laws without knowing it — until a lawsuit appears.
How Restaurants Can Protect Themselves
To avoid costly settlements like this one, restaurants should:
Conduct a comprehensive wage & hour compliance audit
Review all tip credit and tip pooling practices
Ensure tipped workers do no more than 20% non-tipped work
Stop using tips for uniforms, breakage, or business expenses
Maintain accurate timekeeping for tipped vs. non-tipped duties
Train managers on FLSA requirements
Document all labor practices properly
Being proactive is the best defense against lawsuits and investigations.
To understand how these violations happen and how to prevent them, read our Ultimate Guide to Wage & Hour Compliance for Restaurants.”
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