A server at Anna's House in Ann Arbor says her paycheck told a story that didn't add up: regular pay of $3.93 an hour, and overtime pay of about $5.895 an hour, for a single pay period in August 2024. Lauren Burke has now sued the breakfast chain, its owner and 14 related companies, arguing that math reflects a systemic shortchanging of tipped workers rather than a one-time error.
Lawsuit Targets Payroll Formula Across Michigan Chain
Burke filed a class and collective action lawsuit on October 27 in U.S. District Court for the Eastern District of Michigan, according to MLive.com. The suit names 14 Anna's House companies and owner and CEO Joshua Beckett as defendants, and Burke works at the chain's location at 445 E. Eisenhower Parkway in Ann Arbor, per her complaint. Anna's House is based in Grand Rapids and operates 13 restaurants across Michigan, including locations in Ann Arbor, Westland and Milford.
At the center of the complaint is how Anna's House's payroll system calculated overtime. According to the lawsuit, the system paid overtime at 1.5 times the reduced tipped wage rather than 1.5 times the full Michigan minimum wage, even though the company's own handbook states that tipped workers should receive overtime at 1.5 times the minimum wage, not 1.5 times their tipped rate of pay. Burke's attorneys say that gap left her underpaid by at least $3.20 per overtime hour — or as much as $9.60 per overtime hour if no valid tip credit applied at all.
Burke Says She Never Got Required Notice
Burke, who is from Toledo, alleges she signed onboarding paperwork in 2022 stating she would be paid $7.00 per hour plus tips — a rate the complaint says Anna's House never actually paid her. She also alleges she received no required notice and gave no written consent before the company applied a reduced tipped wage, and that the employee handbook contained no tip credit notice at all, according to the lawsuit.
Federal law requires employers to give tipped workers advance notice before taking a tip credit, and the U.S. Department of Labor's guidance on the matter states that an employer electing to use the tip-credit provision must inform the employee in advance and be able to show that direct wages plus the tip credit allowance provide at least the applicable minimum wage, according to the agency's Handy Reference Guide to the FLSA. Separate Department of Labor guidance states that the FLSA permits employers to take a tip credit toward minimum-wage and overtime obligations for tipped employees, though that guidance does not address whether any particular employer has complied with the requirement, per the agency's tip regulations page.
Mandatory Tip-Outs and Unpaid Training Also Alleged
The complaint also says Anna's House requires servers to share tips with hosts and expeditors — the kitchen employee who handles final checks between the kitchen and wait staff — through a mandatory tip-out arrangement. The cited federal regulation, 29 CFR § 531.59, addresses the tip wage credit.
Burke's complaint further alleges that Anna's House required workers to complete an unpaid alcohol service course lasting over five hours, even though the company's handbook states that mandatory training will be paid. Taken together, Burke accuses Anna's House of shorting hundreds of tipped workers on wages, overtime and training pay, alleging violations of the federal Fair Labor Standards Act and Michigan's Improved Workforce Opportunity Wage Act.
Anna's House Disputes the Claims
Anna's House disputes the allegations and said the company takes seriously accurate pay and fair treatment of employees, per the same MLive report. The company said it would reserve further comment while the case is pending. Attorneys Andrew R. Frisch and Jordan Richards, who represent Burke, declined to comment on the lawsuit, while Elizabeth Wells-Skaggs will represent Anna's House in the case.
Burke's lawsuit seeks unpaid minimum wages, unpaid overtime, an equal amount in liquidated damages, attorney fees and court approval to notify other workers who may be affected. She has requested a jury trial, and the complaint specifies no dollar amount of damages.
Michigan's Tipped-Wage Rules Have Shifted Repeatedly
The dispute arrives amid a run of changes to Michigan's tipped-wage law. A Michigan Supreme Court ruling in July 2024 would have eliminated the state's reduced tipped wage entirely, but bipartisan legislation passed that February instead preserved the reduced wage while raising the standard minimum wage to $12.48 an hour, leaving tipped workers at 38% of the minimum wage rate at that time. Those same bills required Michigan employers to explain tipped-wage rules in writing at or before hiring and obtain workers' written consent.
Michigan's tipped-wage share has continued to climb since then, rising to 40% as of January 1, 2026, with a further increase to 42% scheduled for January 1, 2027, according to Michigan's Department of Labor and Economic Opportunity. The state's standard minimum wage is currently $13.73 an hour and is set to reach $15 an hour by January 2027, after which it will rise annually based on inflation. Under current rules, Michigan restaurants may pay tipped workers a reduced hourly wage of $5.49 if specified conditions are met, and employers may only apply that reduced wage if workers keep all tips except those shared voluntarily.
Not the First Wage Dispute at an Ann Arbor Restaurant
Burke's lawsuit is not the only wage complaint to touch Ann Arbor's restaurant scene in recent years. The U.S. Department of Labor sued Cascabel Ventures LLC, which operates Ann Arbor restaurants Isalita and Mani Osteria & Bar, in September 2023, alleging the company failed to pay time-and-one-half overtime to employees working overtime hours between July 2020 and July 2022, according to ClickOnDetroit. That case sought $242,534 total, representing $121,767 in back wages and an equal amount in liquidated damages for 20 affected workers.
Anna's House itself has faced workplace litigation before. The chain settled a separate lawsuit filed in January 2020 by two former workers at its Westland location who alleged they were fired without justification, a case that was later resolved, according to mlive.com.
