Topgolf Entertainment Corp. will settle a class-action lawsuit that accused the employer of giving managers incentives to pay employees below minimum wage, according to court filings this week.
The case was initially filed in Texas federal court in February 2020 by a former Topgolf server and bartender at its venue in Spring, and the terms of the settlement are unclear. Thousands of workers had opted to join the nationwide class-action lawsuit since the 2020 complaint, according to filings.
Topgolf categorically denied all allegations in its response and alleged that an LLC called Topgolf USA Spring Holdings, which is also named in the suit, was the employer of the worker filing suit and not Topgolf. A spokesperson for the Dallas-based company declined to comment on the suit.
The worker in the original complaint alleged that the golf entertainment company violated the Fair Labor Standards Act in multiple ways. The FLSA is the law that defines the 40-hour workweek, overtime and minimum wage rules at the federal level.
Like many bars and restaurants, Topgolf took advantage of a provision of the FLSA that allows employers to pay a worker below minimum wage — $2.13 per hour — if they’re receiving tips, the suit said.
The suit alleges that Topgolf didn’t tell employees they were working for tips, required them to give a portion of their tips to other workers ineligible for tips, required them to purchase specific clothes and deducted the cost from the worker’s pay and required employees to regularly perform a substantial amount of time performing non-tipped work, including cleaning.
It also alleged that the software used by Topgolf at its venues was capable of recording pay for employees’ non-tipped work at $7.25 an hour rather than $2.13, but that the company didn’t allow its tipped employees to do so.
“[Topgolf] managers at the restaurants were eligible to receive bonuses, in part, based on meeting or exceeding certain labor cost targets, which created an incentive to keep the amount paid to tipped employees low,” according to the complaint.
The lawsuit sought back pay from Topgolf for all employees affected by its practices as if they had been working for $7.25 an hour.
It’s not the only charge Topgolf has had to settle for underpaying employees. The same Spring venue was the subject of a 2018 lawsuit that was joined by several dozen employees. That case was settled in mid-2019 for an undisclosed sum.
And in September 2021, the U.S. Department of Labor forced Topgolf to payout $750,000 to more than 250 workers whom its investigation found were wrongly denied overtime. That investigation was triggered by FLSA violations found at a Topgolf venue in London.
Callaway Golf acquired Topgolf in early 2021 in a deal valuing the entertainment company at $2 billion and taking it public. When it merged with Callaway, Topgolf employed more than 20,000 workers, according to a filing with the Securities and Exchange Commission.
Last year, Topgolf’s income from its venues around the world made up roughly 35% of Callaway’s overall revenue. Topgolf saw $445 million in profit in 2021. It opened nine new venues last year and expects to open more than 10 additional venues in 2022.
