Facts

Gibraltar Hospitality Services, LLC (“Gibraltar”), the operator of the popular Las Vegas restaurant 7^th & Carson, is facing a class-action lawsuit filed by former employee Douglas Vasquez (“Vasquez”).^[1]  On March 23, 2023, Gibraltar removed the complaint against it to federal court.[2]

According to the Complaint, Gibraltar required tipped employees to share their tips with “supervising employees” who were not regularly and customarily tipped and not direct service providers to customers.  As a result, the plaintiff and other similarly situated tipped employees were allegedly deprived of tips that were rightfully theirs.  The Complaint asserts causes of action for conversion, unjust enrichment, and violation of the Fair Labor Standards Act (“FLSA”).  The FLSA is a federal law that sets minimum wage and overtime pay requirements for employees.  Under the FLSA, tipped employees must receive at least the federal minimum wage, and employers may take a tip credit to cover some of the employee’s wages.  However, employers cannot require tipped employees to share tips with managers and supervisors or keep any portion of the tips for themselves.  The FLSA also provides for liquidated damages, which are an additional amount equal to the unpaid wages owed to the employee, as well as attorney’s fees and costs.  Punitive damages may also be awarded in cases of willful or intentional violation of the law.

In this case, Vasquez, a former server/bartender at the restaurant, alleges the restaurant’s tip-pooling arrangement violated FLSA by requiring tipped employees to share their tips with “supervising employees” who were not entitled to receive tips.[3]  Vasquez alleges Gibraltar unlawfully withheld, deprived or confiscated tips belonging to him and other tipped employees. [4]  The class action lawsuit seeks to recover the full amount of tips unlawfully withheld, an equal amount as liquidated damages, and attorney’s fees.[5]  Plaintiff also seeks an award of punitive damages.[6]

The alleged class includes tipped employees who worked for the restaurant for the three years prior to the filing of the complaint, and it is estimated to number over 500.[7]  The lawsuit seeks to hold Gibraltar accountable for its alleged actions and to compensate the affected employees for the tips of which they were allegedly deprived.

In addition to the claims related to the tip-pooling arrangement, Vasquez separately claims he was terminated in violation of Nevada public policy and federal law after he opposed the unlawful tip-confiscation policy.[8]  Vasquez seeks both general and punitive damages arising from his termination.[9]  The case will proceed before United States District Court Judge Cristina D. Silva.  Gibraltar must file an Answer or other appearance in this matter by April 28, 2023.

Takeaways

This case highlights the importance of fair wage and compensation practices in the hospitality industry.  Employers must adhere to the FLSA’s guidelines regarding minimum wage, overtime pay, and tip distribution to ensure employees are fairly compensated for their work.  This case also serves as an important reminder to employers to exercise caution regarding employees who report violations of the FSLA.  Retaliation is prohibited under the FLSA and can result in additional damages.

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Sources

[1] Complaint, Vasquez v. Gibraltar Hospitality Services, LLC, Clark County Dist. Ct. No. A-23-864620-C, Nevada (January 26, 2023) (“Complaint”).

[2] Notice of Removal of Action, Vasquez v. Gibraltar Hospitality Services, LLC, United States District Ct. No. 2:23-cv-00441 (March 23, 2023).

[3] Complaint at ¶ 74.

[4] Id. at ¶ 75.

[5] Id. at Prayer.

[6] Id.

[7] Id. at ¶¶ 43, 45.

[8] Id., at ¶¶ 99, 105.

[9] Id. at ¶¶ 102, 111.