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Lawsuit Questions Olive Garden's Tipping Policy

Darden Restaurants, the parent company of the Olive Garden, is facing a lawsuit alleging sexual harassment and racial discrimination. The target of the lawsuit is Darden, but it has implications for all restaurants that use tipping as part of compensation. This case is complex because tipping has been established as part of our culture and is associated with good service.

The advocacy group, One Fair Wage, filed a lawsuit in a California federal court taking aim at rules that allow employers to pay workers as little as $2.13 an hour plus tips. If the local minimum wage is not achieved with tips, then the employer has to make up the difference. The lawsuit alleges that this tipping policy results in people of color earning less than white employees. Also, managers can contribute to discrimination by assigning servers to shifts where there is more opportunity for higher tips. According to their survey, the advocacy group found that people of color made 18% less in tips per hour than white servers.

Another issue associated with the tipping policy is increased reports of sexual harassment among servers working in areas that allow tipping to be included as part of meeting the minimum wage. This may be because, according to One Fair Wage’s research, some servers are encouraged by management to tolerate sexual harassment or even to dress suggestively to increase their tips. If they complain about harassment, they could be given slow shifts or smaller tables of customers. One Fair Wage suggests that problems could be avoided by pooling tips or adding a standard service charge to avoid tipping decisions.

Darden has a zero-tolerance policy for sexual harassment and discrimination. The firm has policies in place to protect employees and support a safe work environment. In fact, Darden's average tipped employees make more than $20 per hour. The lawsuit focuses on Darden employees who earn the company’s pay floor of at least $10 per hour, including tipped income. In response to the lawsuit, Darden is also offering $17 million in one-time bonuses for hourly workers earning $10 per hour to bring their compensation to $11 per hour.

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