Tipping at a restaurant is quite customary. When we leave some extra cash on the table, or add a few dollars to our credit card total, it’s easy to assume that tip will go to our servers.
But that’s not always the case. As CBS News Colorado reports, servers in Denver are taking legal action against a group of local restaurants, claiming that 30% of the automatic 20% service charge went to management instead of the employees.
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Culinary Creative Group manages some of the most popular restaurants in Denver, including Bar Dough, Tap and Burger, Kumoya, Forget Me Not and Mister Oso. In the lawsuit, the Culinary Creative Group is alleged to have violated Colorado hour and wage laws.
Faith Lindstrom, a former employee at Kumoya, shared the frustration she holds toward her former employer with CBS.
“Nobody could tell us where the money was going,” said Lindstrom. "I was furious because my manager could, you know, support himself, and I could not."
What employees seek in the lawsuit
The lawsuit, filed by several former CCG employees, claims the company not only took a portion of their tips, but wasn’t upfront with customers about how the service charges were distributed to staff.
According to the Colorado Department of Labor and Employment, employers are not permitted to keep any portion of employee tips, including supervisors and managers. This rule is applicable even if a company collects tips for a tip pool.
The lawsuit is seeking compensation for break periods that allegedly weren’t provided, as well as unpaid wages.
In January 2024, CCG allegedly reduced the pay for front-of-house employees to a tipped minimum wage, which ended up being $3 less per hour. Employers in Colorado are permitted to pay employees who earn tips less than minimum wage, so long as the employer meets certain state regulations.
“Direct wages can be less than full minimum wage by up to $3.02, an amount that’s called the employer’s ‘tip credit,’" states a document on tipping regulations from the Colorado Department of Labor and Employment.
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Culinary Creative Group’s response to the lawsuit
Juan Padro, the CEO of Culinary Creative Group, told CBS News in a statement that the company charges service fees, which are different from tips. This distinction, according to Padro, means the laws that the company is alleged to have broken do not apply.
Padro’s statement says, in part, "Under Colorado law, service fees may be distributed to any employees, including management, at the restaurant’s discretion. All guest checks at CCG establishments clearly disclose that the checks include a 20% charge which is labeled as a ‘service fee.’ Our guest checks also include an entirely separate line for guests to leave ‘tips.’"
Colorado law explicitly states that mandatory service charges don’t count as tips, since the charge is part of the goods or service costs. If an employer explicitly states that the service charges go to certain employees, that pay would count as "wages" or "compensation."
Padro says the allegations against CCG are false and that the company has never taken tips from employees, nor has it ever blocked its staff from taking breaks. Meanwhile, the lawsuit has reportedly been put on pause while both sides attempt to work out an agreement outside of the courts.
What employees can do if they’ve been mistreated
Federal and state laws in the United States have several regulations that serve to protect employees. If you feel your employer has violated federal or state regulations, here are a few steps you can take to address the matter:
- Review company policies: Your frist step should be to review the company’s policies to verify that your employer did in fact violate the law. You should also check to see if there’s a process for whistleblowing or reporting your concerns.
- Document everything: Collect all the evidence of wrongdoing that you can, including memos, emails or anything else that may support your claim.
- Keep a detailed record: Do your best to keep a record of the wrongdoing. Be sure to include a description of the incident, as well as times, dates and the names of potential witnesses. Any relevant documents could help you present a strong case to your employer.
Onve you’ve collected evidence and have the documentation to support your claim, your next step should be to meet with your employer to discuss the matter. Ideally, you can speak to the human resources department and see what can be done, but depending on the regulation that your employer has potentially violated, you may need to contact federal or state agencies for assistance.
The Department of Labor, for example, enforces the Fair Labor Standards Act, which states employees have the right to be paid at least the minimum wage. Minimum wages vary from state to state, and many states have their own regulations to protect workers. Check with your state department of labor to determine whether your employer is breaking the law.
If you require assistance, reaching out to your local bar association could help you find an attorney who can offer legal advice. Your state may also have legal aid programs for those who can’t afford the fees for an attorney.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
