Product News and Recalls

MGM Settles Class-action Over Tip Credits

mgm resorts settles tipping lawsuitTwo table game dealers who previously worked for MGM Resorts International casinos in New Jersey and Maryland brought a class-action lawsuit against their former employer over allegations that the corporation improperly claimed a tip credit and did not notify its employees that it was doing so. The credit came from employees who are paid less than minimum wage on an hourly basis but also make supplemental tips. The result of the credit, while a positive for MGM’s bottom line, was also a minimum wage violation.

The class grew to over 2,500 dealers who will receive somewhere between $1,000 and $4,500. The two employees who filed the suit will each receive $7,500. The total result of the settlement is $12.5 million.

Corporations that work to find ways around labor laws to take from their employees in the interest of their own bottom line are finding that those employees are fighting back. Delaware Valley staple Chickie’s & Pete’s settled a tipping lawsuit in 2014 that, at the time, was hailed by the Department of Labor as the largest tip-credit case in its history. Employees sued the restaurant chain over its policy that wait staff had to pay into a tip pool at the end of each night, of which the restaurant kept 60%. Servers were required to pay into the pool in cash even if their tips from that shift had come from credit transactions, effectively forcing them to pay out of pocket. Chickie’s & Pete’s was also found to be in violation of the tipped-worker minimum wage of $2.13 an hour while simultaneously failing to pay overtime and charging workers for their mandated uniforms. In addition to paying to settle the employees’ claims, the company also paid a $50,000 civil penalty.

Two former employees of Urban Outfitters sued the company in 2018 over how it was classifying exempt versus non-exempt employees in an effort to avoid paying overtime. The company was hiding behind the Fair Labor Standards Act and tried classifying department managers as exempt even though the vast majority of their work actually had nothing to do with management and instead included folding clothes, unboxing shipments, and cleaning.

Fast-casual dining restaurant Panera tried the same tactic and was met with a similar response.