Former Northstar Café employees file class action complaint over wage and tip theft

COLUMBUS, Ohio (WCMH) – Former employees of a Columbus-area restaurant chain have claimed that the company willfully violated state and federal labor laws through routine underpayment and tip theft.

A dozen employees of Northstar Café’s Easton and Westerville locations have joined a federal lawsuit filed against the company in late May, claiming in part that the restaurant group underpays for overtime, disburses tips to managers and pays employees subminimum wages. Arguing the labor violations are company-wide policy, the employees have asked the court to grant them class action status, allowing potentially dozens of former and current employees to join the complaint.

"This is wage theft, in our book," said Bob DeRose, managing partner at Barkan Meizlish DeRose Cox and an attorney representing the employees.

Northstar Café’s policies violate labor laws in a myriad of ways, the complaint argues. Taken together, improper tip distribution and incorrect overtime calculations amount to the company not paying employees even the federal minimum wage – nearly $3 less than Ohio’s required minimum. 

A Northstar Café representative said the company cannot comment on pending litigation, but it "will always prioritize managing a fair, legally-compliant workplace."

"We take these allegations seriously because we value our team members," the representative said in an email.

By the time of publication, Northstar Café's owner, Darren Malhame, had not been served with the complaint, according to court records.

Tip credits

Like many companies in the food service industry, Northstar Café takes a tip credit, which allows employers to pay tipped employees a "tipped minimum wage," or $5.05 per hour in Ohio. To take the credit, employers must follow a series of guidelines – guidelines the former employees claimed were routinely ignored.

Employers can require staff to pool their tips for disbursement, but the complaint stated that Northstar distributed tips to employees considered not customarily or regularly tipped, such as kitchen staff, a violation of the Fair Labor Standards Act. Employees’ attorneys also claimed that supervisors and managers regularly received tip money as part of the pooling, amounting to tip theft under federal law.

"Defendants jointly receive the benefit of these tips at the expense of Plaintiffs who earn tips," the complaint read.

Tipped employees were also routinely paid at tip-credit wages for what’s called "tip-producing work," which can include non-service tasks such as rolling silverware, emptying trash cans and polishing wine glasses. Under federal law, tipped employees who spend a certain amount of their shift performing tip-producing duties are entitled to minimum wage during those hours – which the complaint said Northstar did not provide.

Subminimum wages, underpaid overtime

Even when the company differentiated between tipped work and tip-producing work, it flouted state wage laws, the lawsuit claims. 

At $10.10, Ohio’s minimum hourly wage is nearly 40% higher than the federal minimum wage of $7.25. Despite state minimum wages superseding the federal minimum, Northstar Café’s former employees claimed company-wide policies have been based on the lower federal rate since at least 2020.

Not only was tip-producing work compensated at the lower rate, the complaint argues, but employees were deprived of Ohio minimum wages for all hours worked. Northstar Café applied the lower, tipped minimum wage to employees whose hourly pay averaged above $7.25, when the threshold should have been $10.10.

The restaurant group also incorrectly calculated overtime pay, resulting in companywide shortchanging of employees, the lawsuit contends.

Under the Fair Labor Standards Act, employers must compensate at 1.5 times the minimum wage for all hours over 40 worked in a week minus a tip credit, if applicable. But former employees claimed Northstar Café calculates overtime at 1.5 times the tipped minimum wage. When they should have been compensated at $10.10 for overtime, tipped employees were instead paid $7.58, a 25% underpayment.

If the court decides to grant class action status, any person who worked at Northstar Café in the past three years and was deprived of proper overtime compensation, tips and wages will be notified of their eligibility to join the lawsuit. If the court rejects the request for a class action, the employees currently named in the suit will still be able to proceed with litigation.

In addition to asking for damages and penalties against the company, the employees' attorneys have asked for back pay of all retained tips in the past three years and either 6% of total unpaid wages or $200 for each failure to pay wages, whichever is greater.

DeRose said the case is a "typical" one for the Columbus-based law firm, which specializes in employment and labor laws. So, too, he said, are the federal and state laws that govern the food service industry.

"These rules are well-known by companies, and it’s one of those things that we believe this is a willful violation, because the tip credit rule is pretty standard in the industry," DeRose said. "For Northstar to have violated it in so many ways just shows it was a willful business calculation to steal wages from its employees, our clients."