Court Orders $1.3 Million Settlement in Chip's Restaurants Tip Case

CONNECTICUT — A Connecticut Superior Court ordered a $1.3 million judgement last week against Chip's Family Restaurant chain.

The ruling followed a class action suit brought by servers who alleged the restaurants failed to pay them minimum wage when they were doing non-service work.

The damages cover around $1 million in back wages and almost $323,000 in interest. The suit was first filed in 2017.

Chip's Family currently operates restaurants, in Fairfield and Orange. Dining rooms in Southington and Wethersfield shuttered in 2022, following the death of the restaurants’ original owner, George Chatzopoulos.

The suit filed by the employees contended the chain violated Connecticut Regulation Section 31-62-E4, which states that "if an employee performs both service and non-service duties, and the time spent on each is definitely segregated and so recorded, the allowance for gratuities as permitted as part of the minimum fair wage may be applied to the hours worked in the service category."

Until 2020, when the state adopted a new policy, restaurants were required to pay the full wage for time spent on side work.

The defendants, Kaiaffa LLC, doing business as Chip’s Family Restaurants, and Konstantia Bajko, executrix of the Chatzopoulos estate, challenged the claims of their wait staff. They argued the servers did not spend more than 15-20 minutes completing non-service work, and believed they were in compliance with the state's tip credit laws.

Connecticut's tip credit law allows workers who collect gratuities to be paid a wage below the state minimum of $15 an hour, as long as the employee's tips make up the difference. If the tipped minimum wage plus the employee's tips do not meet the minimum wage requirement, the employer must make up the difference.