Tip Pool Violations and Off-the-Clock Work
Houston Hookah Bar Servers: Tip Pool Violations and Off-the-Clock Work
Parkerz LLC | Servers | Houston, Texas
Servers at Texas restaurants and bars are often paid $2.13 an hour in direct wages, with customer tips expected to make up the rest of the minimum wage. Federal law allows that arrangement, but only if the employer follows a specific set of rules. Two of those rules matter most. The server has to keep all the tips customers leave, except for contributions to a valid tip pool shared with other tipped employees, and the employer has to pay for every hour the server is required to be at work. When either rule breaks down, the low direct wage is no longer lawful, and the employer owes the full minimum wage for all hours worked, as well as any tips that are stolen.
On November 4, 2025, The Buenker Law Firm filed a collective action in the United States District Court for the Southern District of Texas, Houston Division, on behalf of servers at Parkerz LLC, a hookah bar on Westheimer Road in west Houston. The suit also names Moeed P. Nagra and Bassam P. Nagra, who the complaint alleges own and operate the business and set its pay practices. According to the complaint, servers were paid $2.13 an hour, and the owners took portions of the servers’ tips and gave them to back-of-the-house and managerial workers who are not eligible to share in a tip pool. The complaint further alleges that servers were regularly required to clock out of the timekeeping system and keep working or remain at the bar without pay. The defendants have answered and deny the allegations. They contend the tip pool included only employees who customarily and regularly receive tips, that the required tip credit notices were given, and that the servers were paid for all hours they worked.
The federal minimum wage is $7.25 an hour. The Fair Labor Standards Act lets an employer count up to $5.12 of an employee’s tips toward that obligation, which is what produces the $2.13 cash wage. That $5.12 credit is a conditional benefit, not an entitlement. The employer must tell the worker in advance that it is taking the credit, must let the worker keep all tips, and may require tip pool contributions only among employees who customarily and regularly receive tips. Cooks, dishwashers, and managers do not qualify. If an employer puts ineligible workers into the pool, it loses the tip credit, and the workers are owed the difference between $7.25 and what they were actually paid for every hour worked in the covered period, not just the hours touched by the pool. Unpaid off-the-clock time is a separate problem, because the employer has not paid even the $2.13 cash wage for those hours.
The lawsuit was filed as a collective action on behalf of all individuals who worked for Parkerz LLC as servers and were paid as tipped workers during the three-year period before the complaint was filed. Workers who fit that description are not automatically part of the case. Under the FLSA, a worker joins a collective action only by filing a written consent with the court. The case is currently pending in federal court in Houston before Judge Keith P. Ellison, and no ruling has been made on the merits of any claim.
The complaint alleges the violations were willful. It points to an earlier FLSA lawsuit, Washington v. PBM Enterprises, Inc., No. 4:23-cv-03368 (S.D. Tex., filed September 8, 2023), in which the same two individuals were named as defendants over tip credit practices at a different establishment they control. The complaint alleges that the earlier case put them on notice of what the FLSA requires. The defendants acknowledge that the earlier lawsuit exists but deny that it establishes willfulness here. The distinction matters, because willfulness extends the recovery period from two years to three.
Workers in similar situations may have legal rights under the FLSA. Because prior legal action or agency findings can establish willful conduct, affected workers may be entitled to recover three years of back wages. Time limits apply.
