clock menu more-arrow no yes mobile

Filed under:

Restaurant Group Sued By Department of Labor for Skimming $40,000 in Tips

The restaurant group allegedly failed to pay employees for overtime as well.


The U.S. Department of Labor is suing a New Jersey-based restaurant group for allegedly pocketing thousands of dollars of tips from employees. According to The Record, A.C.E Restaurant Group — which operates 17 Houlihan's locations — required servers and bartenders to "contribute a percentage of their tips to a tip pool." The pool was then "unlawfully" distributed to help pay the wages of non-tipped employees such as kitchen workers. Additionally, the restaurant group allegedly would keep a "portion of the tips collected," which violates the Fair Labor Standards Act, notes NBC.

The lawsuit names various incidents where the amount of money contributed to the tip pool didn't match the money distributed in tips. Last year at a location in New Jersey, the lawsuit claims that employees added $2,212 to the pool but management only handed out $1,877 back to the staff. At another Houlihan's outpost nearby, employees once contributed $2,594 to the pool but were only given $2,387 back.

The lawsuit further claims that A.C.E. Restaurant Group failed to pay employees overtime. Employees who performed custodial work were also paid less than the hourly minimum wage, even though it is not a tipped position. The Department of Labor says that it is seeking reimbursement "on behalf of 1,430 employees for unpaid minimum ages, tips, and overtime compensation," as well as damages. Eater has reached out to the restaurant group and various Houlihan's locations for comment.

A.C.E Restaurant Group is the latest company accused of skimming tips. Last year, Philadelphia-based sports bar chain Chickie & Pete's agreed to pay $6.8 million in back wages and damages for keeping nearly 60 percent of the tip pool. Additionally, the chain failed to pay overtime and meet minimum wage requirements.