An investigation by the U.S. Department of Labor’s Wage and Hour Division found that the owners of 13 Charleston, South Carolina area restaurants violated minimum wage, overtime, and recordkeeping provisions of the Fair Labor Standards Act (FLSA).
Under the FLSA, employers are allowed to take a “tip credit” and pay tipped employees below the full federal minimum wage per hour if the employees will make at least minimum wage after keeping their tips. To legally apply the tip credit, a restaurant must ensure that all tips received by tipped employees are retained by the employees (unless there is a valid tip pooling arrangement). In the present case, the employer required servers to give a percentage of their tips back to them and compelled three servers to work for only tips. The restaurant owners also required workers at some locations to purchase their uniforms, which reduced their earnings below the minimum wage.
The investigation also found that the employer failed to pay cooks, dishwashers and runners for all hours worked, resulting in these employees not earning minimum wage for all hours worked. Furthermore, these workers did not receive overtime pay of time-and-one-half for all hours worked beyond 40 in a workweek. Lastly, the owners failed to keep legally mandated time and attendance records.
Judge C. Weston Houck, of the U.S. District Court for the District of South Carolina, approved a consent judgment between the department and the owners, who will pay a total of $1,179,045 to 119 employees, which includes $589,523 in back wages and an additional equal amount in liquidated damages for all affected employees who worked at any of the 13 restaurants from Aug. 13, 2011 to Dec. 13, 2014.