Red Lobster Short-Changes Servers to Avoid Obamacare

Posted October 25, 2012 in Labor and Employment by

Photo: Ollie Crafoord

Sticking it to waiters and waitresses who are already underpaid and overworked is turning out to be business as usual for Darden Restaurants Inc., which owns Olive Garden and Red Lobster.

After being sued in September by workers alleging they are being shorted on overtime and even minimum wage, the company reportedly announced earlier in October that it plans to move more of its beleaguered staff from full- to part-time status in order to avoid having to pay for their health care insurance on January 1, 2014.


Dodging Obamacare

That’s when the Patient Protection and Affordable Care Act kicks in. The new law will require companies with 50 or more full-time employees to offer health insurance to their workers or face fines of $2,000 per employee.

In “a test aimed at limiting costs from President Barack Obama’s health care law,” Darden reportedly said it is increasing its part-time numbers in four of its markets across the United States, according to an ABC News report. Seventy-five percent of its employees are already part-time workers.

With almost 170,000 employees, Darden raked in over $ 7.1 million in 2010. The company was number 99 in Fortune’s Top 100 Companies to Work For in 2012, which cited its restaurants for their diversity – in management.


Not Even Paying Minimum Wage

Non-management employees aren’t faring as well, according to the class action, filed by Higer Lichter & Givner in Aventura, Fla., and Trief & Olk in New York. Servers from Olive Garden, Red Lobster, Longhorn Steakhouse, and the Capital Grille are seeking back wages they say Darden owes them under the Fair Labor Standards Act, according to a site set up for the case.

The plaintiffs allege they were not paid for time spent doing general maintenance or prep duties, which should be paid at the minimum wage. “Specifically, plaintiffs Amanda Mathis and James Hamilton allege that Darden required them and other servers to perform work while off-the-clock,” according to the site.

The plaintiffs say they weren’t allowed to clock into the company’s time card system until their first customers came into the restaurant. They were also required to punch out of the system but to keep working until their tasks were done.

“Three of the most basic protections afforded by the FLSA are the entitlement of employees to be paid for all hours worked, to be paid a minimum wage, and to be paid premium overtime compensation for all hours worked in excess of forty hours per week” unless they’re exempt, according to the complaint. “In violation of these basic protections, Plaintiffs and the members of the Class were not lawfully paid for all hours worked.


Squeezing a Wrung-Out Sponge

The company has a history of squeezing its workers. With its sales down in recent years, Darden offers lower pay to its new hires and has cut general managers’ bonuses. Under a new strategy, Red Lobster servers wait on four instead of three tables at a time, according to one report.

Darden put servers on a tip-sharing program in 2011 that required them to share tips with busboys and bartenders, which allowed the company to pay more workers the “tip credit wage” of $2.13, rather than the federal minimum wage of $7.25 an hour.

Darden’s tactic of increasing its part-time force “is another example of employers prioritizing profits over employees’ satisfaction and well-being,” according to ThinkProgress, a blog that advocates passage of worker and consumer protection laws that it says “could supplement Obamacare.”

“Without such protections, large corporations in particular might use the landmark reform law as a convenient excuse for providing less worker benefits and protecting their bottom lines,” says the blog.


If you’re concerned about your rights to overtime or minimum wage, consult a labor and employment lawyer on

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