Lawsuits From Employees and Former Employees Are Becoming Increasingly Common in the Restaurant
A new trend is reshaping the legal landscape for restaurants across the United States: lawsuits filed by current and former employees are becoming more frequent than ever before.
According to industry experts, lawsuits against restaurants have doubled over the past decade, driven by the complex nature of wage and hour laws and widespread employer misunderstanding of the rules.
For restaurant owners, this means that day-to-day operations now carry far greater legal risk than in previous years.
Why Employee Lawsuits Are Increasing
Several factors are contributing to the nationwide surge in lawsuits filed by current and former restaurant employees:
1. Complexity of Wage & Hour Laws
Federal tip credit rules, overtime calculations, dual job duties, and tip pooling regulations are difficult to apply correctly — even for well-intentioned employers.
2. Higher Employee Awareness
Employees today are more informed about their rights, especially in relation to tipped work, overtime, and misclassification.
3. Aggressive Legal Marketing
Law firms specializing in wage theft and tip violations frequently advertise to restaurant workers, encouraging them to file claims.
4. High Turnover Rates
Restaurants experience constant turnover, creating documentation gaps and inconsistent pay practices — a perfect recipe for complaints.
5. Increased Wage and Hour Enforcement
Federal investigations often uncover violations that then become civil lawsuits.
Employee lawsuits are no longer rare — they are becoming a routine part of the industry.
Types of Lawsuits Restaurants Are Facing
The most common employee and ex-employee lawsuits include:
1. Wage Theft & Back Wage Claims
Alleging unpaid overtime, off-the-clock work, or minimum wage violations.
2. Tip Pooling & Tip Theft Lawsuits
Claims involving diverted tips, invalid pools, or managers receiving tips.
3. Misclassification Cases
Alleging that workers were improperly classified as exempt or independent contractors.
4. 80/20 Rule Violations
Tipped employees performing too much non-tipped work without proper pay.
5. Retaliation & Wrongful Termination
Claims filed after an employee raises concerns about pay practices.
Each of these lawsuits can lead to significant financial liability, especially when filed as collective or class actions.
The Financial Impact on Restaurants
Employee-driven lawsuits often result in:
Back wages
Liquidated damages (doubling the amount owed)
Attorney fees for the plaintiffs
Civil money penalties
Long-term compliance monitoring
Reputational damage
Operational disruption
Even small claims can snowball into six-figure settlements when multiple employees join a lawsuit.
Why Restaurants Are Especially Vulnerable
The restaurant industry is one of the highest-risk sectors for employee litigation because:
It depends heavily on tipped workers
Wage calculations are complex
Staffing is inconsistent
Training is often informal
Documentation practices vary
Tip pools and tip credits are common and frequently mishandled
Even minor administrative errors can be used as evidence in a lawsuit.
How Restaurants Can Reduce the Risk of Employee Lawsuits
To minimize legal exposure, restaurants should:
Conduct a wage & hour compliance audit
Review tip pooling and tip credit policies
Track tipped vs. non-tipped work accurately
Ensure overtime is calculated correctly
Implement clear onboarding and recordkeeping processes
Train managers on wage and hour laws
Document all pay practices thoroughly
Address employee concerns proactively
Proactive compliance significantly reduces the likelihood of lawsuits.
To understand how these violations happen and how to prevent them, read our Ultimate Guide to Wage & Hour Compliance for Restaurants.”
Protect Your Restaurant Before an Employee Lawsuit Happens
Employee and ex-employee lawsuits are rising nationwide — and restaurants are one of the main targets.
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Find out where your restaurant may be exposed — and what you can do about it.