Two Japanese restaurants in Philadelphia, doing business as Osaka, were ordered to pay $1 million in back wages and damages to over 200 employees, following an investigation by the U.S. Department of Labor that uncovered minimum wage and overtime violations of the Fair Labor Standards Act (FLSA).
The Department of Labor investigation revealed that the Osaka restaurants failed to pay employees the proper overtime rates. Hourly tipped employees received straight time for all hours worked, even when their time records clearly showed them working more than 40 hours, according to the Department of Labor. The restaurants also paid sushi chefs, hibachi chefs, kitchen cooks and dishwashers flat daily rates ranging from $80-$150 for all hours worked, even when their time records clearly showed them working upwards of 50-60 hours per week. Under both federal and state laws, employers are required to pay employees who work more than 40 hours in a workweek at a rate of time-and-a-half, or 1.5x their regular hourly rate, for those overtime hours. Instead, the restaurants paid them at a “straight-time” rate or daily-rates, which failed to account for their overtime.
The investigation also uncovered that from at least Sept. 1, 2013, the "employers deducted and pocketed 15 percent of customer tips charged on credit cards." Because the restaurants were retaining an unlawful portion of their employees hard-earned tips, they were in violation of the tip-credit provisions of the FLSA, meaning the employees should have been paid at the full minimum wage rate. Under the FLSA, a restaurant can take a “tip credit” towards its minimum wage obligation for tipped employees, meaning they can pay tipped employees at a “tipped-minimum wage.” Tipped employees include waiters/waitresses, bartenders, food runners and other employees that regularly and customarily receive tips.