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Outback Steakhouse ordered to pay $1.25 million in tip-sharing lawsuit

Outback servers won a class action lawsuit over tip pooling.
Outback servers won a class action lawsuit over tip pooling.

Tip-pooling--when a restaurant's waitstaff shares a percentage of their gratuities with untipped staffers, such as bussers and dishwashers--has become a popular practice at some local restaurants, including Piccolo and Travail.

But while the practice is kosher under federal law, Minnesota state law states that employers cannot require employees to pool tips--they must do so voluntarily.

In fact, a U.S. District Court in Minnesota recently approved a $1.25 million settlement for a lawsuit between OSI Restaurant Partners LLC (the parent company of Outback Steakhouse) and about 1,200 Outback Steakhouse servers in Minnesota, who alleged in that their employer required them to share their tips with bussers and hosts.

The class-action lawsuit was filed last year and the court ruled that the tip-sharing violated the Minnesota Fair Labor Standards Act prohibition on employer-run and mandated tip pools. Outback issued a statement saying that they believed their practices fell into accordance with state law, but that they settled to avoid the hassle and expense of prolonged litigation.


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