A Japanese restaurant located in Peachtree City, Georgia, must pay more than $373,000 to its employees for wage theft violations. The employees filed a collective action in July 2021 for wage theft, minimum wage violations, and retaliation against the restaurant.
In his ruling, Judge Batten found owners of the restaurant failed to inform new hires that any tips they received would count towards their minimum wage. Failing to notify employees that tips contribute towards minimum wage payment is a violation of the Wage Theft Prevention Act (WTPA), and thus, is unlawful.
Furthermore, Judge Batten found that owners of the restaurant incorrectly calculated the workers’ overtime pay rate by using the sub-minimum wage as a baseline. They also instituted a mandatory tip pool that did not comply with the Fair Labor Standards Act (FLSA) due to the participation of management and the retention of a percentage of tips by the store itself. Under law, tip pools “must be limited to employees who customarily and regularly receive tips, and cannot include managers or supervisors,” Judge Batton stated.
The restaurant’s liability included failing to attempt to investigate potential liability arising from an FLSA violation, failing to consult an attorney or related Department of Labor (DOL) guidelines prior to determining overtime pay rates or claiming tip credits towards their employee’s minimum wage, and choosing to remain uninformed.
If you are a business in a tipped industry and are looking to set tip credit guidelines for your employees, or if you are an employee of a business that you believe does not follow WTPA/FLSA guidelines, reach out to Pechman Law Group PLLC at 212-583-9500.
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