Restaurants

Published on: May 12, 2022

Illegal Tip Pool Costs Restaurant to Pay Back Wages to Employees

“Restaurant industry employers must know and comply with federal requirements to claim the tip credit,” says the Department of Labor (DOL). The DOL recently found a restaurant in violation of the federal tip pool regulations that protect tipped employees’ earnings. In the case, the restaurant required the tipped employees to share their tips illegally which invalidated the restaurant’s claim to a tip credit.

Untitled-design-5-232x300 Restaurants are permitted to claim a tip credit for its tipped employees. This means that a restaurant may pay a tipped employee $2.13 per hour plus tips. However, there is a federal regulation on how the tips are distributed to other restaurant employees. If a restaurant requires a tipped employee to share their tips with non-tipped employees like back of house employees or management employees, it invalidates the tip pool and tip credit. This means the restaurant owes the employee minimum wage (minus the $2.13 already paid) and overtime pay.

Unfortunately, illegal tip sharing, invalid tip pools, etc. are very common in the restaurant industry. Restaurants illegally use the money to pay other workers’ wages. The DOL noted that the restaurant industry struggles to find workers to fill jobs. However, it needs to recognize that it must follow the law with respect to tipped employees and protect their wages from illegal wage theft through forcing them to share their tips with non-tipped workers.

Published on: March 3, 2016

Department of Labor Finds College Town Restaurants In Violation Of Overtime And Minimum Wage Laws

by Martin & Martin, LLP

On March 3, 2016, the Department of Labor (DOL) issued a press release regarding its enforcement initiative in the hospitality/restaurant industry in “college towns” stating that many companies are in violation of the Fair Labor Standards Act (FLSA) wage and hour laws. The DOL has collected almost $100,000 for workers who were not paid properly.

During the investigation, the DOL found that because hospitality jobs are likely filled by students, temporary, or foreign workers who are often unfamiliar with wage laws. Additionally, it found that language barriers, fear of retaliation, and fears of immigration status can cause these individuals to not exercise their rights allowing companies to take advantage of them.

Some of the violations found by the DOL include:

Published on: December 3, 2015

Department Of Labor Finds Restaurant Failed To Properly Pay Servers & Kitchen Workers

by Martin & Martin, LLP

The Tampa District Office of the Department of Labor Wage & Hour Division found that the restaurant, Hibachi Buffet, failed to properly pay its servers and kitchen workers under the Fair Labor Standards Act (“FLSA”). The investigators found that the restaurant violated the overtime, minimum wage, and record keeping requirements of the FLSA. The restaurant did not pay its kitchen employees overtime pay for the hours worked beyond 40 in a workweek and did not compensate its servers beyond tips, room and board.

The restaurant agreed to pay 12 employees over $48,000 in back wages plus an equal amount in liquidated damages for a total of over $97,000. Under the FLSA, employers can be required to not only pay back wages but also “liquidated damages” which are also call “double damages” because they double the damages entitled to employees.

The DOL stated that “[u]nderpaying and improperly paying workers cheats them out of their hard-earned income and puts those responsible employers, who play by the rules, at a competitive disadvantage. We strongly encourage workers who may be in similar situations, where their employer is not paying overtime after 40 hours of work in a workweek or paying the correct minimum wage pay, to contact us with the knowledge that the information they share is kept confidential under the maximum extent of the law.”

Published on: January 26, 2013

Judgments Require Restaurants To Pay Over $1 Million In Back Wages

by Martin & Martin, LLP

As part of the Department of Labor’s (“DOL”) continued focus on restaurant employees, a chain of three restaurants in New York have been ordered to pay over $1,000,000 in back wages including minimum wage and overtime. The DOL’s investigators found that the restaurant employees employed as servers and kitchen staff were not paid wages of at least hourly minimum wage and not paid proper compensation for overtime. The investigation also revealed that the restaurants kept inaccurate and incomplete records pay and hours of the employees.

Under the federal Fair Labor Standards Act (“FLSA”), restaurant employees must be compensated at least minimum wage of $7.25 per hour and one and one-half times this rate for overtime hours – all hours over 40 in a workweek. Under the FLSA, restaurants are also allowed to pay tipped workers $2.13 per hour plus tips. However, their tips must be high enough to allow the workers to make at least $7.25 per hour.

Restaurant employees are regularly underpaid for their work and their recovery under the FLSA can be substantial. Restaurant employees (servers, waiters/waitresses, hosts/hostesses, bartenders, bussers, barbacks, kitchen staff, etc.) can learn about their rights to pay under the FLSA by contacting Atlanta overtime attorneys.

Published on: December 20, 2012

Department Of Labor Targets Illegal Pay By Restaurants

by Martin & Martin, LLP

This year, the Department of Labor (“DOL”) focused on restaurants to determine whether restaurant employees were properly paid. The response was a resounding statement that the restaurant industry is vulnerable for minimum wage and overtime violations under the Fair Labor Standards Act (“FLSA”).

One problem is that restaurant employees do not know that their rights are being violated. Restaurant employees are some of the lowest paid employees in the nation and are paid even less when restaurants violate the FLSA when paying them. It’s important that restaurant employees learn how they should be paid under the FLSA. Hourly restaurant employees must be paid at least $7.25 per hour and one and one-half times this hourly rate for all hours over 40 in a workweek. The FLSA allows restaurants to compensate tipped employees just $2.13 per hour plus tips as long as their regular rate is at least minimum wage. Also, the federal regulations allow restaurants to require their tipped employees to participate in tip pools. These tip pool regulations are very specific and only allow certain employees to participate in the tip pools.

As part of the DOL’s restaurant investigation, Pancho’s Mexican Restaurant I, II and III – and Papa’s and Beer Mexican Restaurant agreed in October to pay 85 employees $485,913 in back wages due to minimum wage and overtime FLSA violations. The federal violations included paying kitchen staff a set salary without regard to the number of hours the employees worked and not providing additional compensation to tipped employees whose $2.13 per hour plus tips did not always equal at least minimum wage for each hour worked.