More than 3,000 Logan’s Roadhouse employees nationwide have joined a class action lawsuit against the restaurant chain alleging wage violations. Servers make $2.13 per hour and when waiting tables also earn tips. This structure is supposed to equate to at least the federal minimum wage of $7.25 per hour. If a server spends more than 20% of the time doing work other than serving for tips, federal law requires they be paid the federal minimum wage of $7.25 per hour.
Problems arose when Logan’s had wait staff spending more than 20% of their time on the clock doing work for which they would not receive tips, all the while only earning $2.13 hourly. The lawsuit alleges Logan’s made profits at the expense of its employees. By paying employees $2.13 per hour for doing non-tipped work, Logan’s saved on payroll costs and payroll taxes. Logan’s also allegedly made employees report “phantom tips” during the times they were doing non-tipped work to make it look like they were being paid the required minimum wage of $7.25.
Logan’s corporate structure or business model perhaps incentivizes restaurant managers to engage in these type of wage violations. The Logan’s “centralized plan” rewards managers that stay under budgeted labor, and punishes those who don’t. The lawsuit also alleges the entire amount of budgeted labor is inadequate under Logan’s business model and forces managers and bartenders to work off the clock.
The United States Supreme Court upheld a lower court ruling in 2012 against Applebee’s on this very issue. Workers spending more than 20% of their time doing non-tipped work must be paid the $7.25 federal minimum wage. Applebee’s ended up paying $9.1 million to 5,680 people.