Tipping Point : A $21 Million Verdict Shows Why Employers Must Get Tip Pools Right | Sheppard , Mullin , Richter & Hampton LLP
Case Summary
In a landmark decision on March 24, 2026, the Western District of Texas awarded a $21 million verdict against Perry’s Restaurants for violations related to tip pooling under the Fair Labor Standards Act (FLSA). The ruling highlights the importance of compliance with FLSA tipping rules, including proper management of tip credits and the risks of double damages and individual liability for employers.
Stage
Verdict entered
Timeline
1 event
Coverage
1 article
Sources
1
Key Issues
- • FLSA tip pooling compliance
- • Tip credit rules
- • Employer liability
- • Damages and penalties
update What Changed This Week
Analysis & Coverage
Case Timeline
1 eventTipping Point : A $21 Million Verdict Shows Why Employers Must Get Tip Pools Right | Sheppard , Mullin , Richter & Hampton LLP
On March 24, 2026, a federal court in Texas ordered Perry’s Restaurants to pay $21 million for violating rules about tip pooling. This case highlights that employers must strictly follow tip credit laws under the Fair Labor Standards Act or risk losing the ability to pay reduced wages and facing hefty penalties. The ruling also shows that individual owners can be held personally liable for these violations.