Olive Garden / Red Lobster Owner Settles Wage-And-Hour Claim for 11 Million

Darden Restaurants Inc., the owner of Red Lobster and Olive Garden, disclosed Thursday that it has settled with a group of former employees who sought unpaid overtime wages and penalties and will pay up to 11 million dollars. Beginning in 2002, a total of five purported class action lawsuits were filed in Superior Courts of California (two each in Los Angeles County and Orange County, and one in Sacramento County) in which the plaintiffs allege that they and other current and former service managers, beverage and hospitality managers and culinary managers were improperly classified as exempt employees under California labor laws. According to its SEC filings, Darden has agreed to pay up to a maximum total of $11.0 million to settle all five cases. The settlement agreement has received final court approval and payment of the settlement proceeds is expected to occur before the end of fiscal 2007.

This is not Darden's first big wage/hour settlement in recent years. From a year ago:

More than 40,000 current and former hourly workers at California Red Lobster and Olive Garden restaurants will share $9.5 million as part of a settlement involving claims that they were prevented from taking breaks, and that they were required to purchase and maintain their own employee uniforms. Red Lobster workers from more than 40 locations in California who worked there from February 21, 1998 to the present will share $5.5 million, while Olive Garden employees who worked from March 24, 1999 to the present will share another $4 million.

Two food servers at the Brea Red Lobster restaurant filed the first class action complaint in Orange County Superior Court in February 2002, alleging that Red Lobster refused to allow breaks to its non-exempt workers throughout the State of California. The complaint was subsequently amended to include damages and restitution for Red Lobster's former policy of charging workers for uniforms, and for making the employees maintain their own uniforms. In March 2003, an Olive Garden employee filed a similar complaint, seeking certification of all GMRI workers, including both the Red Lobster and Olive Garden chains. In May 2004, while the first case was on appeal from an Orange County Superior Court ruling denying the defendant's motions for summary judgment and to compel arbitration, a third lawsuit was filed in Sacramento, California.

Under California Labor Code § 226.7 and Industrial Welfare Commission Wage Order 5, employees are entitled to a paid ten-minute break for every four hours of work, or major fraction thereof. Employees working at least 3½ hours are entitled to one paid break, and earn a second paid break after six hours. Furthermore, employees who work more than five hour shifts are entitled to a 30 minute break which need not be paid. Under California Labor Code § 450 and Industrial Welfare Commission Wage Order 5, employers are required to pay for the cost of purchasing and maintaining employee uniforms and may not require employees to purchase anything of value, including uniforms, from the company.

Source: California Wage/Hour Law