Perry’s Steakhouse and Grille was ordered to pay more than $21 million in back wages and damages for requiring servers to share tips with ineligible employees.
The restaurant chain, which has six Houston-area locations, must pay about $3.4 million in back wages to a group of more than 700 servers, plus $7.1 million for misappropriated tips, $10.5 million in damages and other fees, according to the final judgement filed Tuesday in federal court.
The restaurant disagrees with the ruling and plans to appeal, Perry’s Restaurants chief operations officer Rick Henderson said in a statement to the Houston Chronicle.
“Perry’s Restaurants is a respected brand committed to treating employees fairly and maintaining transparent, lawful compensation practices that are commonplace in the industry,” Henderson said. He declined to comment further, citing ongoing litigation.
The judgment comes after U.S. District Court Judge Robert Pitman ruled in November that Perry’s violated labor law by including non-tipped workers in a tip pool between 2019 and 2022, according to court documents. Servers, who were paid $2.13 an hour before tips, were required to contribute about a quarter of their tips to the pool.The money was used to pay hosts and bussers who worked primarily when the restaurant was closed to the public.
Under labor law, employers are only allowed to pay tipped workers below the federally mandated floor of $7.25 if they allow those workers to keep all of their tips, or if pooled tips are only distributed among regularly tipped workers.
“When employees are forced to participate in an unlawful ‘tip pool,’ they effectively subsidize the restaurant’s labor costs,” Pitman wrote in the November decision.
Perry’s also fired an employee after she filed a National Labor Relations Board complaint about the tip pooling system, according to court documents.
At trial, Perry’s management said the tip pooling was intended to even out wages between roles and shifts with varying degrees of busyness, according to the documents.
“It is incredible that Perry’s would try to characterize any of this as common industry practice,” Drew Hermann, lead attorney for the servers, said in a statement to the Chronicle. “It’s simple. Know the law, follow the law, and refrain from making up your own version of the law to profit from your employees’ wages and tips.”
The case marks the fourth time a court has found that Perry’s used unlawful tipping practices, according to court documents. In 2003, a Department of Labor investigation found that the restaurant required servers to share tips with private event coordinators and to contribute to buying their own uniforms.
Perry’s Steakhouse, known for its pork chop lunches, began as a butcher shop in Houston in 1979 and now operates 21 restaurants across the country, according to the restaurant’s website.