Restaurant Fined $867K For Overtime Violations, Stealing Tips

Recently, the U.S. Department of Labor’s (DOL’s) Wage and Hour Division (WHD) recovered $867K in owed wages after investigators uncovered a Texas restaurant’s history of overtime violations and stealing tips. The employer’s actions violated both overtime rates and tip regulations established by the Fair Labor Standards Act (FLSA). Recent DOL investigations continue to reveal numerous wage violations under the FLSA across multiple companies. Earlier this month, the DOL recovered $500K in overtime and other wage and hour violations across three separate companies.

Wage and Hour Standards Under the FLSA

The FLSA provides for several federal wage and hour standards. These include a federal minimum wage, mandatory overtime pay, recordkeeping requirements, and protections for tipped workers. In general, the FLSA covers employers in the private sector, as well as in federal, state, and local governments. As of the publishing of this post, the FLSA entitles covered workers to a minimum wage and overtime pay according to the following:

• Federal minimum wage of not less than $7.25 an hour, effective July 24th, 2009.
• Overtime pay rate of not less than one and one-half times the regular rate of pay during hours worked more than 40 a week.

Tip Regulations Under the FLSA

In 2020 and 2021, the DOL introduced a series of rules updating existing regulations to protect tipped workers. Specifically, these rules expressly prohibit employers from stealing tips. Effective nearly a year ago (April 30th, 2021,) the DOL’s tipped worker final rule includes the following regulations:

• An employer cannot keep employees’ tips under any circumstances; managers and supervisors also may not keep tips received by employees, including through tip pools.
• Additionally, any employer that collects tips to facilitate a mandatory tip pool generally must fully redistribute the tips within the pay period.

Accordingly, the WHD enforces such federal minimum wage, overtime pay, recordkeeping, and protections for tipped workers under the FLSA. In order to ensure employers succeed in their compliance efforts, the WHD keeps a team of investigators to support the enforcement of the several labor laws applicable to businesses.

Employer’s Overtime Violations and History of Stealing Tips

WHD investigators found that the Texas employer, Roanoke Hard Eight LLC, engaged in multiple employment law violations. Specifically, the employer failed to pay hourly managers the required time and a half rate for all hours worked over 40 in a work week. What’s more, the employer was effectively stealing tips from its tipped workers. In brief, the employer illegally included managers in the restaurant’s tip pool. Indeed, the FLSA forbids employers from keeping tips its workers earn, regardless of whether or not the employer claims a tip credit.

Penalties for Overtime Violations and Stealing Tips

Based on the WHD’s investigations, Roanoke Hard Eight LLC was ordered to pay a total of $867K. The total amount represented owed wages, including overtime and recovered tips for 910 workers. In the end, this case represents the DOL’s ongoing efforts to investigate and rectify employment law violations. Undoubtedly, the DOL will continue to hold wage and hour violators accountable. As Wage and Hour District Director Jesus A. Valdez explained, “As businesses struggle to find people to do the work needed to keep operating, employers would be wise to avoid violations or risk finding it even more difficult to retain and recruit workers who can choose to seek jobs where they will receive all of their rightful wages.”