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Restaurant chain defeats lawsuit over paying workers less than minimum wage

Darden — the parent group of restaurant chains like Olive Garden, Capitol Grille and Longhorn Steakhouse — was accused of paying waitstaff as little as $2.13 per hour in some states that allow tipped workers to make less than minimum wage.

SAN FRANCISCO (CN) — An advocacy group lacks standing to sue one of the largest restaurant chain companies in the United States for paying tipped workers less than minimum wage, a federal judge ruled Tuesday.

One Fair Wage, a nonprofit focused on eliminating sub-minimum wages, sued Darden Restaurants, which operates national chains like the Olive Garden and Longhorn Steakhouse, this past April. The group claims the company’s pay policies force workers to rely on tips for the bulk of their wages. This puts servers at the mercy of potentially biased, racist or sexist customers, according to the complaint.

The nonprofit claimed Darden's pay policies violate civil rights laws that prohibit sexual harassment, gender bias and racial discrimination in the workplace. It sought an injunction to stop Darden from paying sub-minimum wages to tipped workers in 43 states that allow the practice.

But U.S. District Judge Edward Chen found One Fair Wage is not entitled to sue someone else’s employer for workplace discrimination under Title VII of the Civil Rights Act of 1964.

“Simply put, OFW cites no case law establishing that a non-employee — here, an advocacy organization — has standing to challenge an employment practice, particularly where the alleged injury it contends renders it 'aggrieved' is either purely ideological or entirely derivative of the injury directly suffered by actual employees,” Chen wrote in a 29-page ruling.

One Fair Wage had argued Darden’s pay practices frustrated its mission of fighting to make all employers pay at least minimum wage to tipped workers and to enact policies, such as pooled tips and service charges on bills, that can mitigate the impact of unfair tipping by customers.

The advocacy group claimed these policies forced Darden employees to spend more time working and recovering from sexual harassment, giving them less time to support the group’s mission by testifying against their employer’s policies.

It further asserted that Darden’s policies required One Fair Wage to spend more time and money addressing complaints from Darden employees, providing pandemic-related cash assistance to those employees and diverting resources that could otherwise go to political advocacy, grassroots organizing and other efforts.

Chen wrote that prior rulings, including a 2020 decision in a District of Maryland case, Know Your IX v. DeVos, challenging U.S. Department of Education sexual harassment and assault policies, suggest “there has not been a sufficient showing of direct impairment of OFW’s ability to operate and function to confer standing.”

But the judge did not dismiss the case on that basis. Rather, he found One Fair Wage’s lack of standing to sue under Title VII of the Civil Rights Act means the court didn't need to address the group’s other theory of liability.

Chen wrote that One Fair Wage’s position on standing would mean any outside group affected by an employer’s labor practices could file suit and seek relief that would affect the rights and compensation of a class of potentially thousands of employees.  

“OFW’s broad standing approach would ignore the protection afforded to the class via Rule 23’s requirements of notice, objection rights, and judicial scrutiny of any class settlement,” Chen wrote. “This is particularly pertinent here, as there may well be employees who object to the changes sought by OFW to eliminate unmediated tipping.”

Chen dismissed the case with prejudice, finding any attempt to amend the lawsuit would be futile.

Reached by email, One Fair Wage attorney Jason Harrow of the firm Gerstein Harrow in Los Angeles said he disagrees with the court's finding that his client lacks standing to sue for employment discrimination.

“We are still considering our options, but our client will surely continue its fight to end the harms that Darden’s low wages and tipping policies cause,” Harrow said.

According to the lawsuit, Darden pays waiters the lowest possible wage in the 43 states that allow tipped workers to make less than minimum wage. About 20% of Darden’s tipped workers make $2.13 an hour, and a majority of its tipped staff make less than the federal minimum wage of $7.25 an hour, according to the complaint. The federal minimum wage was last raised in 2009 from the prior rate of $6.55.

Seven states — including California, Oregon, Washington state, Nevada, Minnesota, Montana and Alaska — require tipped workers be paid full minimum wage. In California, employers with 26 or more employees must pay workers at least $14 an hour. That rate will increase on Jan. 1, 2022, to $15 per hour.

Darden Restaurants’ attorneys and media representatives did not immediately respond to emails requesting comment Tuesday.

Darden is represented by Christopher Braham of McDermott Will & Emery in Los Angeles.

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