Bartenders @ Logan Inn sue after their manager steals their tips.

TL;DR: Bartenders at the Logan Inn (located in New Hope, PA) say a salaried bar manager took a share of their tip pool. Federal law treats managers keeping workers’ tips as a violation that can wipe out an employer’s right to use the “tip credit.” A proposed $100,000 settlement would pay workers and require broad releases of federal wage claims unless workers opt out.

An appellate (appeals) court cleared the way for such releases in opt-out class settlements and sent the case back for a full fairness review.

Keep reading for the receipts, the money flows, and why this model leaves workers exposed.

Introduction: When the House Skims the Tips

Logan Inn bartenders and servers describe a tip system that diverted bartender gratuities to a salaried bar manager. The whole lawsuit strikes at the core of wage law because managers may not keep any part of employees’ tips. It shows how companies can still package global releases of wage claims inside class settlements that bind workers who do not affirmatively opt out.

Inside the Allegations: Corporate Misconduct

The core claim: A salaried supervisory employee received distributions from a bartender tip pool. Under federal and Pennsylvania law, that practice triggers the loss of the tip credit and exposes the employer to back wages and liquidated damages.

Case posture and scope: The plaintiff (person who initiated the lawsuit) worked as a bartender and server and filed a hybrid FLSA/PMWA action on behalf of similarly situated workers. The court conditionally certified an FLSA collective for hourly bartenders and servers who contributed to a pool that funneled tips to the bar manager during the defined period. Ten workers opted in by written consent.

Proposed settlement terms: The parties reached a settlement framework with a $100,000 cap. The plan allocated $60,000 pro rata to class members who did not opt out and an additional $5,000 shared by the ten workers who opted in. The notice warned that staying in the class would waive the right to recover FLSA wages and liquidated damages for the period at issue.

Timeline of Key Events

Regulatory Capture & Loopholes

Wage law bans managers from keeping tips and sets out remedies when that happens. Yet enforcement power often shifts to private settlements. Courts can approve opt-out class settlements that include releases of federal wage claims. That structure places heavy weight on notice quality and opt-out mechanics, which become the only real gatekeepers when public enforcement capacity is thin. The appellate court underscored that the statute governs how claims are litigated, not how unasserted claims are waived, and directed the trial court to examine fairness in detail.

Profit-Maximization at All Costs

Tipping pools exist to share gratuities among tipped staff. Workers allege that a salaried manager took a slice. That transfer converts customer gifts into corporate savings through the tip-credit system by shifting compensation risk to employees. The law treats this as a forfeiture of the tip credit, which raises the employer’s minimum wage obligation. The business incentive to reduce labor cost sits in direct tension with worker income.

The Economic Fallout

The settlement structure shows the real money at stake for workers. Most of the cash pool flows to class members automatically unless they opt out, with a separate amount for those who bore the risk of publicly joining the federal claim. This is compensation for lost tip credit value and related damages placed into a fixed fund capped at $100,000.

Where the Money Goes (Proposed)

Exploitation of Workers

The legal rule is simple: managers cannot keep workers’ tips. Yet the manager received monies from the bartender pool. That practice strips earnings from frontline staff and undermines customer intent. Under federal and state law, this removes the employer’s ability to use the tip credit, increasing the wages owed.

Corporate Accountability Fails the Public

The trial court initially blocked the settlement because it required workers who did not opt in to the FLSA collective to release their federal wage claims. The appellate court vacated that ruling and clarified that federal law allows releases of unasserted FLSA claims in an opt-out settlement. The case returns to the trial court for a full fairness review, where the judge acts as a fiduciary for absent workers and must scrutinize whether the release and relief match the harm.

Pathways for Reform & Consumer Advocacy

• Strengthen and fund proactive wage enforcement so workers do not rely on private releases to resolve core rights.
• Require plain-language notices that highlight any waiver of federal wage claims and provide easy opt-out channels.
• Increase penalties tied to illegal tip practices to realign incentives toward corporate compliance.
• Protect workers who raise wage issues through strong anti-retaliation enforcement.

This Is the System Working as Intended

The modern day legal framework permits global releases within opt-out settlements and leaves fairness to case-by-case judicial review. Companies can treat wage violations as a calculable cost within settlement caps. Communities see labor income siphoned off while formal compliance remains the talking point.

Conclusion

Workers describe losing tip income to management. The law calls that practice unlawful and removes the tip-credit benefit when it occurs. The settlement path illustrates how corporations can resolve wage exposure through opt-out mechanisms that trade broad waivers for controlled payouts. The burden shifts onto workers to read the fine print and act quickly. The incentive structure remains tilted toward cost control over fair pay.

Logan Inn can be found at 10 West Ferry Street in New Hope, Pennsylvania.