A federal judge has ordered Houston-based Perry’s Steakhouse & Grille to pay more than $21 million after finding the upscale chain operated an unlawful tip pooling system that steered servers’ gratuities to workers who were not eligible to share in tips under federal law. The ruling caps years of complaints from hundreds of servers who said the setup left them earning only a few dollars an hour in base pay before tips, as per the Houston Chronicle.
According to the final judgment filed Tuesday and reported by the Houston Chronicle, Perry’s must pay about $3.4 million in back wages to more than 700 servers, roughly $7.1 million in misappropriated tips and about $10.5 million in damages and fees, for a total tab topping $21 million. The Chronicle notes that plaintiffs say the challenged practices ran from 2019 to 2022 and left some servers making as little as $2.13 an hour before tips. The judgment follows years of filings and a prior ruling that the tipping arrangement violated federal labor law.
Perry’s Restaurants has said it disagrees with the decision and plans to appeal. Chief Operations Officer Rick Henderson told the Houston Chronicle the company is “committed to treating employees fairly and maintaining transparent, lawful compensation practices that are commonplace in the industry.” Plaintiffs’ lead counsel has described the outcome as confirming servers’ claims that the tip pool helped subsidize the restaurant’s broader labor costs.
What the court found
Court records show that servers alleged Perry’s required them to kick in a fixed percentage of their sales, with plaintiffs pointing to a 4.5 percent contribution, into a mandatory tip pool. According to those filings, the pooled money was used to pay AM hosts, bussers and other staff who primarily worked before the restaurants opened to guests. The plaintiffs argued this violated the Fair Labor Standards Act because the pool was not limited to employees who are “customarily and regularly” tipped. Those allegations and earlier rulings are laid out across federal filings and orders, including in the Colorado case docket and a Western District of Texas order addressing related claims and partial summary judgment…