Federal Court Orders Perry’s Steakhouse to Pay $21.2 Million for Stealing Its Servers’ Tips

What Just Happened

On March 24, 2026, United States District Judge Robert Pitman of the Western District of Texas entered a final judgment exceeding $21.2 million against Perry’s Restaurants Ltd d/b/a Perry’s Steakhouse and Grille and its owner, Christopher V. Perry — personally and individually — on behalf of 707 current and former servers who worked at Perry’s Steakhouse locations across Texas.

The judgment is the culmination of a lawsuit that was filed in 2022 but traces its roots to violations that stretch back well over a decade. It is one of the largest federal wage judgments ever entered against a Texas restaurant group, and it sends an unambiguous message to the entire restaurant industry: the tips your servers earn belong to them — not to you.

Our firm, Herrmann Law, PLLC, served as lead counsel for the plaintiff class. It has been an honor to fight for every single one of the 707 servers.

What Perry’s Steakhouse Actually Did

Perry’s Steakhouse and Grille is one of the most recognizable upscale restaurant brands in Texas. Founded and headquartered in Houston, Perry’s operates locations across the state and beyond, marketing itself as a premier fine-dining destination. For years, it has been celebrated for its famous pork chop, its generous wine list, and its elegant dining rooms.

But behind the white tablecloths, Perry’s was running a system that stripped its servers of a meaningful portion of the tips they earned every single night — and then used that money to pay other employees’ wages.

Here is how it worked. Perry’s required every server at every Texas location to contribute 4.5% of their total nightly sales — not 4.5% of their tips, but 4.5% of every dollar of food and drinks they sold — into a company-wide mandatory tip pool. That pooled money was then paid out each week to other employees, including hosts, food runners, bussers, server assistants, and bartenders.

On its face, tip pools are not illegal. Federal law allows servers to share tips with other employees who regularly receive tips from customers — bartenders who pour your drinks, for example, or food runners who bring your plates to the table. But there is a critical limit: tip money can only go to employees who interact with and directly serve customers in manner that would customarily evoke a tip. Employees who work when no customers are present — who spend their entire shifts cleaning, prepping, and stocking an empty restaurant — simply do not qualify.

And that is exactly where Perry’s crossed the line.

Perry’s scheduled what it referred to as AM Bussers, AM Hosts, AM Server Assistants, AM Service Well bartenders, and AM Food Runners to work morning shifts that began hours before Perry’s even opened its doors to the public. Most Perry’s restaurants don’t open until 4:00 p.m. Sunday through Thursday. Yet these morning-shift workers would clock in as early as 10:00 or 11:00 a.m. and spend their entire shifts completing tasks like sweeping and scrubbing floors, mopping, polishing silverware, stocking server stations, checking the parking lot, cleaning the patio, prepping beverage stations, and setting up bread trays — all before a single customer arrived.

These employees had virtually no customer interaction. They were, in every practical sense, maintenance and prep workers. And Perry’s took its servers’ tips to lower its labor costs and pay  the wages of their de facto janitors and preparatory workers.

The Math: Nearly 25% of Every Server’s Tips

Let’s put the 4.5%-of-sales contribution in plain dollar terms, because the number is more striking than it sounds.

At an upscale restaurant like Perry’s, where the average check is high and customers routinely leave tips of 18 to 20 percent, a server who rings up $2,000 in sales on a busy Friday night might earn $360–$400 in tips. Perry’s required that same server to contribute $90 to the tip pool — 4.5% of $2,000 in sales.

That $90 represents nearly 25 cents of every dollar the server earned in tips. Do that math across every shift, every week, every year — and you begin to understand why the total misappropriated tips in this case alone exceeded $7 million.

For servers who rely on tips as their primary source of income — many of whom were also being paid as little as $2.13 per hour in base wages under the federal tip credit — that money was not a rounding error. It was a significant portion of their livelihood, taken from them without legal justification, shift after shift, for years.

To learn more about how tip pools work and when they are legal, visit our resource page: Tip Pools & Tip Outs: What’s Legal and What’s Not.

What the Court Found: The November 2025 Trial Ruling

The road to the final judgment began in earnest on November 10, 2025, when Judge Pitman issued his Findings of Fact and Conclusions of Law following a bench trial. That ruling was a comprehensive, detailed repudiation of Perry’s tip pool practices and every legal argument the company raised in its defense.

AM Employees Were Not Eligible for Tip Pool Payments

The Court’s central finding was straightforward but devastating for Perry’s: the AM employees were not “customarily and regularly tipped” employees within the meaning of the Fair Labor Standards Act, and therefore could not legally receive distributions from the tip pool.

Federal law is clear that for an employer to maintain a valid tip pool — and to continue claiming the tip credit that allows paying servers below minimum wage — every employee who receives tip pool money must be the kind of worker who customarily and regularly receives tips from customers. The key inquiry is customer interaction: does the employee engage with the customers who are actually leaving the tips?

For Perry’s AM employees, the answer was plainly no. These workers substantially completed — and in many cases entirely completed — their shifts before the restaurant’s doors opened to the public. The Court found that they simply could not have had meaningful customer interaction because there were no customers to interact with. The legal conclusion followed inescapably: including these employees in the tip pool violated the FLSA.

And because the tip pool was unlawful, Perry’s forfeited its right to apply the tip credit — meaning every server was entitled to be paid the full minimum wage for every hour worked during every week the tip pool violations occurred. That is what drove the minimum wage damages in this case into the millions.

Perry’s Defenses Were Rejected Across the Board

Perry’s raised a series of defenses at trial. The Court rejected each one.

Perry’s argued that its AM workers were “front of house” employees and that some of them — like bussers — held job titles that the Department of Labor traditionally recognizes as tipped positions. The Court was unpersuaded. Titles do not determine tip eligibility; duties and customer interaction do. Calling someone a “busser” does not make them a tipped employee if they are sweeping floors in an empty restaurant before the lunch rush.

Perry’s also argued that AM employees sometimes had brief interactions with customers — people who came in early to pick up a gift card, make a reservation, or retrieve something they left behind the night before. The Court found this amounted to nothing more than occasional, de minimis contact that fell far short of the sustained customer-service interaction the law requires. As the Court noted, a server does not leave a tip for the person who confirmed their reservation over the phone.

You can read the full background on the Perry’s Steakhouse lawsuit case page for a complete timeline of proceedings.

The Bombshell Finding: Perry’s Knew It Was Breaking the Law

This is the part of the story that is truly remarkable — and that should be deeply troubling to anyone who believes that corporations operating in America are held accountable for knowingly breaking the law.

The Court’s willfulness finding was built on a foundation of facts that, taken together, make it virtually impossible to characterize Perry’s conduct as an innocent mistake:

A history of DOL investigations. Perry’s was not encountering the Department of Labor’s tip pooling rules for the first time when this lawsuit was filed. The company had been the subject of prior Department of Labor investigations involving its tip pooling practices. Those investigations put Perry’s on notice — in official, documented form — that the government had concerns about how it was handling its servers’ tips.

Fifteen-plus years of FLSA litigation. Perry’s has been involved in Fair Labor Standards Act litigation involving its tip pool and tip credit practices continuously since at least 2009. Multiple lawsuits. Multiple courts. Multiple rulings. At some point, a company that keeps losing the same legal argument in court cannot credibly claim it did not know the law.

Direct complaints from its own employees. Perry’s employees raised concerns — including through an NLRB charge — about the very tip pooling practices at issue in this case. Perry’s was hearing from its own workers that something was wrong. It did nothing.

No legal counsel. On purpose. In what the Court found to be a remarkable admission, Perry’s conceded at trial that it designed and implemented the tip pool program entirely without legal counsel. In a normal case, a company in Perry’s position might point to advice-of-counsel as evidence of good faith — that it asked a lawyer whether its practices were lawful and was told yes. Perry’s could not make that argument because it never asked. It simply built the program the way it wanted to build it, without ever seeking to confirm whether the law permitted it.

Taken together, these facts led the Court to conclude not only that Perry’s willfully violated the FLSA, but that it could not establish the good-faith defense that would have eliminated liquidated damages. The result: every dollar of unpaid wages and misappropriated tips was doubled through mandatory liquidated damages under federal law.

For a deeper look at how restaurants exploit the tip credit and what the law requires, see our resource guide: Tip Credit Abuse: How Restaurants Exploit Servers.

The Owner Is Personally on the Hook

One of the most significant findings in this case is one that many people outside the legal world do not expect: Christopher V. Perry, the founder and owner of Perry’s Steakhouse, was found to be personally and individually liable under the FLSA.

In most business contexts, corporate structures are designed to shield owners and executives from personal liability for the debts and judgments entered against their companies. If a corporation loses a lawsuit, the individual who owns that corporation typically does not have to write a personal check to satisfy the judgment.

The FLSA is different. Federal wage law extends the definition of “employer” broadly — broadly enough to cover individual owners and executives who have operational control over a business, even if they are not the ones personally handing out paychecks. The test focuses on whether the individual had the authority to set pay practices, hire and fire employees, and control the working conditions that gave rise to the violations.

The Court found that Christopher V. Perry met that standard. As the founder and owner of Perry’s Restaurants Ltd., he had the authority and the control that the law requires. The result is that he is jointly and severally liable for the entire $21.2 million judgment — meaning that if Perry’s Restaurants, Ltd. cannot satisfy the judgment, Mr. Perry is personally responsible for every dollar of it.

This is not an unusual outcome in FLSA cases. Our firm has pursued and obtained individual liability against restaurant owners in multiple matters. To learn more about how individual employer liability works under federal wage law, visit our Legal Center for Restaurant Employees.

Breaking Down the $21.2 Million Final Judgment

On March 24, 2026, Judge Pitman entered the final judgment in Paschal v. Perry’s Restaurants, Ltd., Case No. 1:22-CV-27-RP (W.D. Tex.). The judgment covers 707 opt-in plaintiffs and consists of the following components:

The judgment is entered jointly and severally against Perry’s Restaurants Ltd. d/b/a Perry’s Steakhouse and Grille and Christopher V. Perry, individually. The Court has further ordered Perry’s to pay Plaintiffs’ attorneys’ fees and costs, the amount of which will be determined by the Court on motion — meaning the total recovery will be even higher.

Why This Matters

Perry’s Steakhouse is a Houston institution. It was founded in Houston, Texas. It is headquartered in Houston, Texas. Its most iconic locations are in Houston — in Galleria, in the Houston suburbs, in the upscale dining corridors that define the city’s food culture. And for decades, the servers who worked for those Houston-area locations were among those contributing their tips to a pool that a federal court has now found to be unlawful.

But this case matters beyond Perry’s Steakhouse, and beyond Houston.

The restaurant industry is one of the largest employers in the United States, and it is one of the industries most prone to wage theft. Tipped workers — servers, bartenders, food runners — are among the most economically vulnerable workers in the American labor force. They earn sub-minimum wages, they depend on tips for the majority of their income, and they often lack the resources or knowledge to challenge illegal practices when they encounter them.

Tip pool violations like the ones Perry’s committed are not rare. They happen every day, in restaurants large and small, in every city in the country. Most workers never find out. Most violations are never challenged. The employers who commit them often face no consequences whatsoever.

That is why cases like this one matter. A $21.2 million judgment — entered publicly, reported nationally, and tied personally to the owner of the company — sends a signal that reaches far beyond the parties in this courtroom. It tells every restaurant operator in America: the FLSA is not optional, the Department of Labor has investigated you before, and the next time a group of servers walks into a federal courthouse, the result could be the same.

For tipped workers specifically, this judgment affirms a fundamental principle: your tips belong to you. An employer can ask you to share them — but only with the right people, under the right conditions, following the right rules. When an employer crosses that line, the law provides a remedy. And we will pursue it.

Perry’s Is Still Doing It. Are You Owed Money?

The $21.2 million judgment covers servers who worked at Perry’s Steakhouse Texas locations from approximately January 2019 through January 2022. If you worked as a server at Perry’s after that period, your claims are not covered by this judgment.

On January 8, 2026, Herrmann Law filed a new federal lawsuit against Perry’s Steakhouse for the same unlawful tip pool practices — practices that Perry’s has continued to this day, even as litigation has piled up against it. If you worked as a server at Perry’s Steakhouse at any time since December 31, 2023, you may be eligible to join that lawsuit and recover your unpaid wages, misappropriated tips, and additional damages.

There is no cost to join. Our firm handles these cases on a contingency basis, which means you pay nothing unless we win. To learn more about your rights as a tipped employee — or to find out whether you may be owed money from any restaurant employer — visit our Legal Center for Restaurant Employees.