The lawsuit alleges that Olive Garden’s parents’ tipping policy leads to racial discrimination and sexual harassment

Signage outside an Olive Garden restaurant in Thornton, Colorado on Friday, March 19, 2021.

Chet Strange | Bloomberg | Getty Images

Advocacy group One Fair Wage is suing Olive Garden’s parent company, Darden Restaurants, alleging the company’s tipping policy encourages sexual harassment and racial discrimination against its waiters.

The complaint, filed in California federal court on Thursday, is the latest volley in the fight against the minimum wage. In 43 states, employers can only pay their employees $ 2.13 an hour as long as that hourly wage and tips add up to the local wage floor. Otherwise the employer has to make up the difference.

The minimum wage was last raised in 1991, but the Democrats tried to get rid of it earlier this year as part of their plan to raise the federal minimum wage. The amendment to raise the federal wage floor to the recent Covid-19 relief bill was not passed by the Senate, but Democrats are likely to reconsider the issue during President Joe Biden’s four-year tenure. Darden was one of the restaurant companies that were loudly opposed to getting rid of the lost wages.

In the lawsuit, One Fair Wage says that Darden’s tipping policy results in its employees, who are colored people, earning less than white employees. A survey by 200 advocacy-run Darden employees found that servers who are colored people tip 18% less per hour than white servers. The lawsuit also alleges that Darden’s policies give managers the ability to influence server wages because they can assign servers to shifts or seating areas that tend to result in lower tips.

The complaint alleges that servers receiving less than the minimum wage experience more sexual harassment than waiters working in places where Darden has to pay the minimum wage, based on a survey conducted by One Fair Wage.

“The cash wage policy is the direct or at least the motivating cause of these different effects,” said the complaint.

Managers can tell their servers to dress more suggestively to get higher tips and ignore sexual harassment to keep the customer happy as per the lawsuit. In addition, servers that complain of managerial sexual harassment could retaliate and receive inferior shifts and tables.

The advocacy group suggests several alternatives that could be helpful, including pooling tips, adding a standard service charge to all invoices, or providing standards to customers that would minimize the role of the race in tipping decisions. Dardens current corporate policy allegedly does not allow managers to use different tipping systems.

One Fair Wage is the only plaintiff named in the complaint. The group argues it has the right to sue Darden for spending more time and money helping company employees, including paying out $ 175,000 in financial aid to employees due to the coronavirus pandemic.

One Fair Wage filed a complaint with the Equal Employment Opportunity Commission in September but asked the agency to dismiss the case in March. The EEOC gave the group a termination right that gives them 90 days to file a lawsuit in federal court. Two employees at The Capital Grille, owned by Darden, also filed complaints with the EEOC last year.

One Fair Wage is calling on the court to explain that tipping policies like Darden’s are illegal and violate the Civil Rights Act of 1964. The plaintiff is also seeking an injunction against Darden to maintain these policies and employment practices.

Darden did not immediately respond to a request for comment from CNBC.

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