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Diving certificate:
- The Ministry of Labour announced on Thursday that it had Unanimous judgment to refund $1.3 million in unpaid wageswithheld tips and damages for 51 employees at La Tolteca Authentic Mexican Restaurant in Wilkes-Barre, Pennsylvania.
- The ruling, handed down in the U.S. District Court for the Middle District of Pennsylvania, followed an investigation by the Labor Department’s Wage and Hour Division, which found several violations by the company and its owner, Carlos De Leon.
- The Wage and Hour Division said the employers violated the Fair Labor Standards Act’s tipping and record-keeping provisions and also failed to pay overtime wages to permanent cooks who were not exempt from the hour-of-service rule.
Diving insight:
The employer required waiters and bartenders to give a percentage of tips based on total sales to the restaurant at the end of each shift, rather than paying into a statutory tip pool, the DOL said. There were no records of what the tips were used for, making it impossible to prove whether the tip pool was valid.
“Tips for good service belong to the people who earned them, not employers,” Jessica Looman, director of the Wage and Hour Administration, said in a statement. “Management misuse of all or part of the tip money violates workers’ rights. This is a widespread problem in the food service industry, and the U.S. Department of Labor remains committed to ensuring that all workers receive the full wages they are entitled to and that companies do not gain an unfair advantage over law-abiding competitors.”
The restaurant and De Leon must pay the affected workers $651,778 in back wages and tips, as well as a liquidated damages of the same amount. The employer must also pay more than $26,000 in civil penalties “due to the willful nature of the violations.” The ruling also permanently prohibits the employers from violating the FLSA in the future.
“The outcome of this investigation and litigation shows employers in the food service industry that illegal manipulation of their employees’ wages and tips violates their rights and can have costly consequences,” said labor attorney Seema Nanda in a statement. “The U.S. Department of Labor will use every tool available, including litigation, to prevent employers from withholding wages from their employees.”
The DOL has prosecuted several violations of wage and hour laws in restaurants this year. In August, the DOL obtained a judgment ordering an Indiana restaurant to pay $390,000 in back wages and damages to 44 employees, and obtained $45,000 in back wages for 11 servers at a Southern Michigan restaurant. In July, a Subway franchisee paid $218,000 after the DOL’s investigation alleged that owners and managers illegally participated in employee tip pools.
The Washington, D.C., attorney general reached a roughly $525,000 settlement with Swahili Village in July in a wage theft case. The Wage and Hour Division also recovered $124,000 in back wages for 84 workers at a New Jersey-based Swahili Village unit.
