The popular local sports bar chain Chickie’s and Pete’s was sued by over 1200 different employees for having illegally docked their pay, not provided them overtime pay, failed to pay them minimum wage, and/or failed to distribute their tips to them. These employees collectively lost as much as $4,500,000 in compensation.
The parties reached a settlement of $8,520,000.
Chickie’s and Pete’s unlawful acts were especially egregious as not only was it unlawfully not paying its employees minimum wage but also was unlawfully taking a percentage of the tips paid to its employees as a sort of double-dip reduction in compensation. For example: the bar would regularly dock between 2% and 4% of an employee’s pay in a practice which became known as “Pete’s tax” and, in addition, require its employees to place a portion of their tips into a “tip pool” from which the Bar would keep about 60%.
What is interesting about the investigation into this matter is that the numbers at issue here could all be precisely calculated because the Bar kept meticulous records of everything described above and more. The Bar’s system of underpaying its employees was more than just an unlawful scheme to line its own pockets but was their explicit business model.
Cases like this, and others, reinforce the fact that the power of business owners need to be checked through law, regulation, and unions. Without these protections, the abuses perpetrated by the Bar would go unabated, which, in my view, would damage the marketplace far more than the law/regulations/unions allegedly do.
You can learn more about this case here: