Restaurant had illegal tip pool arrangement
AMARILLO, Texas — Big Texan Steak Ranch has agreed to pay $650,000 in minimum wage back wages and $150,000 in liquidated damages to 279 current and former wait staff following an investigation by the U.S. Department of Labor’s Wage and Hour Division, which found violations of the Fair Labor Standards Act’s minimum wage and record-keeping provisions. Violations stemmed from an illegal tip pooling arrangement by the restaurant.
“Through investigations such as this one, the Wage and Hour Division continues to combat widespread labor violations among restaurants to protect workers and to ensure a level playing field for law-abiding employers,” said Cynthia Watson, regional administrator for the Wage and Hour Division in the Southwest. “The restaurant industry employs some of our country’s lowest-paid workers, who are vulnerable to exploitation. We will continue our effort in the restaurant industry to promote awareness and improve compliance, so workers and businesses can prosper together.”
The investigation by the Wage and Hour Division’s Albuquerque District Office determined that Big Texan illegally retained a portion of the restaurant workers’ tips to pay for business costs, such as menus, glassware, trays and contest prizes. The employer also made illegal deductions from workers’ paychecks for uniforms and withheld additional percentages of tips as a disciplinary tactic, bringing those workers’ hourly wages below the required federal minimum wage. Additionally, the company failed to maintain accurate time and payroll records.
The FLSA requires that covered, nonexempt employees be paid at least the federal minimum wage of $7.25 per hour for all hours worked, plus time and one-half their regular rates of pay for hours worked beyond 40 per week. In accordance with the FLSA, an employer of a tipped employee is required to pay no less than $2.13 an hour in direct wages, provided that amount plus the tips received equals at least the federal minimum wage of $7.25 an hour. If an employee’s tips combined with the employer’s direct wages do not equal the minimum wage, the employer must make up the difference. Employers are required to provide employees notice of the FLSA tip credit provisions, to maintain accurate time and payroll records and to comply with the hours, hazardous orders and other restrictions applying to workers under age 18.