D.C. Restaurant Reaches $1.5 Million Settlement Amid Tipped Pay Debate

Farmers Restaurant Group, which manages some of the most popular restaurants in the D.C. metro area, agreed last month to pay out $1.49 million to settle a class-action lawsuit with nearly a thousand of its employees. Workers in D.C. and Maryland say they were systematically underpaid and denied sick leave.

The allegations also include violations of the tip credit, which allows employers to pay workers a substandard tipped wage — currently $3.89 in D.C. — while they’re doing work that will bring in tips. Farmers Restaurant Group workers said they were paid the tipped wage while doing untipped work, and that they were required to share the tips they earned with their managers. Both practices run against Department of Labor requirements.

The timing of the settlement couldn’t be more damning for the many D.C. restaurant owners who have tried to push back against a recent ballot initiative that would eliminate the subminimum tipped wage. Voters passed Initiative 77 to end the tip credit and mandate employers pay all workers a full minimum wage by healthy margins.

But the D.C. city council has already expressed interest in ignoring the will of the people and overturning the proposition. While the council is unwilling to end the subminimum tipped wage, lawsuits like this one underscore the need to end a two-tiered system. The tip credit leaves workers vulnerable to wage theft, even as their employers prosper.

After all, Farmers Restaurant Group isn’t suffering by any measure. Founding Farmers, the group’s star restaurant, has a city record for number of Yelp reviews. It’s been one of the most-booked restaurants in the country for years, enough to warrant inclusion on the list of America’s highest-grossing independent restaurants. Farmers Restaurant group was also certainly flush with enough cash to throw thousands of dollars in donations to the anti-77 campaign.

The restaurant group also sells itself on a purported community ethos they bring into their business. “Mindfulness, honesty, and accountability are ingrained in us because it is the farmer’s way,” they state on their website. Daniel Simons, one of the owners told The Washingtonian that their love for employees was key to the restaurant’s popularity. To that end, the restaurant has an in-house masseuse available to staff.

When the allegations were initially reported, Simons told The Washington Post that he was “super confident we take great care of our people.” Wage actions like the lawsuit were common among restaurants, he said, and “often unrelated to company culture, intent, or actual well-being of the staff.” The plaintiffs, some of whom will receive awards topping $25,000, would likely disagree. The restaurant group denies the allegations and says the payout isn’t an admission of wrongdoing.

It might be surprising to D.C. restaurant-goers that a city favorite that markets itself on its ethics has been accused of systematically abusing the rules. But it’s likely not a shock to tipped workers across the country who are especially prone to wage theft due to the tip credit.

I spoke with several tipped workers ahead of the district’s vote on Initiative 77, some of whom had dealt with wage theft. TJ — a pseudonym used to protect her from retaliation at work — told me about her experience recovering wages withheld by her employer. She says she went to the Department of Employment Services immediately after her manager refused to pay her the money she’d rightfully earned on the job.

Luckily, TJ was acutely aware of the dangers of wage theft and had been carefully documenting her pay stubs and hours. Her case worker said it was rare for workers to come in with such detailed notes about what they were owed, which made it easier for her to recoup her wages.

“I’m one of the lucky few that got her money back,” TJ said, “and it’s only because I kept meticulous records.”

While TJ’s an immigrant, she’s also a U.S. citizen — which she says was immensely helpful. After hearing about her ordeal, the back of the house workers at her restaurant were eager for advice. TJ says their manager already “played fast and loose” with their paychecks. Immigrant workers often faced many additional barriers to recovering wages, from language difficulties to intimidation.

At best, some were made to feel that employee services couldn’t provide them with assistance if they weren’t U.S. citizens. At worst they were told, TJ relays, that questioning their pay could affect their immigration status. Given the hostile national conversation around immigration and the preponderance of ICE raids at restaurants, it’s not surprising that immigrant workers might not feel comfortable approaching an enforcement agency to recoup lost funds.

TJ is resolved to help other people on the staff understand the law and their rights. But in the restaurant industry, exploitation can be the norm. On top of that, the most vulnerable workers will already have the least amount of recourse to protect themselves. For TJ, it’s a fundamental problem with how restaurants operate, and explains why tipped workers are so susceptible to wage theft. “The onus is always on the employee to make sure we’re getting paid.”