Dive Brief:
- The Department of Labor said Thursday that it obtained a consent judgment to recover $1.3 million in back wages, withheld tips and damages on behalf of 51 workers from La Tolteca Authentic Mexican Restaurant in Wilkes-Barre, Pennsylvania.
- The judgment, which was entered into the U.S. District Court for Middle District of Pennsylvania, followed an investigation by the DOL’s Wage and Hour Division that found several violations by the company and owner Carlos De Leon.
- The Wage and Hour division said the employers violated the Fair Labor Standards Act’s provisions related to tipping and record keeping and also failed to pay salaried, but non-exempt, cooks overtime wages.
Dive Insight:
The employer made servers and bartenders surrender a percentage of tips based on total sales to the restaurant at the end of each shift, instead of contributing to a legal tip pool, the DOL said. There were no records of how the tips were used making it impossible to prove if the tip pool was valid.
“Customer tips for good service are the property of the people who earned them, not their employers,” Wage and Hour Administrator Jessica Looman said in a statement. “Misuse of all or any portion of tips by management violates workers’ rights. This is a common concern in the restaurant industry and the U.S. Department of Labor remains committed to ensuring all workers are paid all of their rightful wages and that businesses do not gain an unfair advantage over competitors that abide by the law.”
The restaurant and De Leon are required to pay affected workers $651,778 in back wages and restored tips as well an equal amount in liquidated damages. The employer also must pay over $26,000 in civil money penalties “due to the willful nature of the violations.” The consent judgment also permanently bars the employers from committing future FLSA violations.
“The outcome of this investigation and litigation shows restaurant industry employers that illegally tampering with their workers’ wages and tips violates their rights and can have costly consequences,” Solicitor of Labor Seema Nanda said in a statement. “The U.S. Department of Labor will use every tool available, including litigation, to prevent employers from depriving workers of their wages.”
The DOL has pursued several restaurant wage and hour violations this year. In August, the DOL secured a judgment ordering an Indiana diner to pay $390,000 in back wages and damages to 44 employees, and recovered $45,000 in back wages for 11 servers at a Southern Michigan restaurant. In July, a Subway franchisee paid $218,000 following a DOL investigation that alleged owners and managers illegally participated in employee tip pools.
The Washington, D.C., attorney general also reached a roughly $525,000 settlement with Swahili Village in a wage theft suit in July. The Wage and Hour division also recovered $124,000 in back wages for 84 workers of a New Jersey-based Swahili Village unit.
