Restaurants Nationwide Are Facing Costly Wage & Hour Lawsuits
Restaurants across the United States are increasingly facing costly wage and hour lawsuits due to failures to comply with federal and state employment laws. Whether caused by lack of understanding or willful noncompliance, these violations expose restaurant owners to serious financial penalties, reputational damage, and long-term operational impact.
The rise in lawsuits highlights the importance of proper wage and hour practices — especially for restaurants that rely heavily on tipped workers and complex scheduling.
Why Wage & Hour Lawsuits Are Increasing
Restaurants remain one of the highest-risk industries for wage and hour claims due to:
1. Complex Wage Regulations
Tip credit rules, dual job duties, and overtime calculations are complicated and frequently misunderstood.
2. High Turnover and Inconsistent Documentation
Frequent staff changes lead to onboarding gaps, missing timecards, and payroll errors.
3. Greater Employee Awareness
Workers are increasingly aware of their rights and more likely to report violations.
4. Aggressive Legal Action
Law firms specializing in wage theft and tip violations are actively targeting restaurants.
Ignorance is not a defense, and even unintentional mistakes trigger liability.
Common Violations Leading to Costly Lawsuits
Recent wage and hour lawsuits have included allegations of:
1. Paying Below Minimum Wage
Improper application of the tip credit or failure to ensure tipped employees earn at least the required minimum wage.
2. Invalid Tip Pools
Including non-tipped workers, managers, or supervisors in the tip pool — a direct violation of federal law.
3. Recording Only 40 Hours to Avoid Overtime
Altering timecards or failing to pay overtime wages for hours worked over 40 in a workweek.
4. Off-the-Clock Work
Requiring employees to perform prep, cleaning, or closing duties outside of recorded time.
5. Misclassification of Workers
Treating non-exempt kitchen or shift employees as salaried or independent contractors.
Each of these violations can lead to:
Back wage payments
Liquidated damages (often doubling the amount owed)
Attorney fees
Civil money penalties
Class-action exposure
Consequences for Restaurants
Lawsuits can result in:
Six-figure financial settlements
Court-ordered back wages
Liquidated damages
Long-term monitoring by the Department of Labor
Reputational harm
Employee distrust
Major operational disruption
Many restaurant owners don’t realize they have violated laws until the lawsuit occurs.
Ignorance of the Law Is Not a Defense
The Fair Labor Standards Act (FLSA) imposes strict liability.
That means:
❌ Employers cannot claim they “didn’t know”
❌ Mistakes still result in penalties
❌ Good intentions do not eliminate liability
Restaurant owners and managers are expected to understand and comply with the law — even if that law is complicated or confusing.
How Restaurants Can Reduce Legal Risk
To avoid costly lawsuits, restaurant owners should:
Conduct a wage & hour compliance audit
Review tip credit and tip pooling practices
Verify overtime calculations
Ensure accurate timekeeping
Maintain proper documentation for all employees
Provide compliance training for managers
Track tipped vs. non-tipped duties
Establish strong HR and payroll processes
Taking proactive steps now is far more cost-effective than facing litigation later.
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 a Wage & Hour Lawsuit Happens
Restaurants nationwide are facing record-breaking penalties — and most violations could have been prevented with proper compliance.
Get Your Free Labor Risk Assessment
Find out where your restaurant may be exposed — and what you can do about it.