U.S. Department of Labor issued the following announcement on March 12.
After investigations by the U.S. Department of Labor’s Wage and Hour Division (WHD), Ryuko International LLC and Izakaya WA-River Oaks – both doing business as Izakaya WA in Houston, Texas – have paid $150,371 in back wages to 18 employees to resolve minimum wage and overtime violations of the Fair Labor Standards Act (FLSA).
Investigators found that the restaurants operated an invalid tip pooling arrangement that included non-tipped workers such as cooks and dishwashers in the distribution of tips earned by wait staff. That violation negated the employer’s ability to pay servers a tipped-worker minimum wage and claim what is known as a “tip credit,” a credit for tips earned by a tipped employee toward the employer’s obligation to pay that worker the full federal minimum wage. Absent this tip credit, Izakaya WA-River Oaks owed tipped employees the full federal minimum wage of $7.25 per hour and the corresponding overtime. The employer had paid wait staff the federal tipped employee minimum wage of $2.13 per hour. WHD also cited the employer for recordkeeping violations.
“Restaurant staff often work long, hard hours and must be paid every dollar they legally earn,” said Wage and Hour Division District Director Robin Mallett in Houston, Texas. “We encourage employers to contact us for assistance in understanding their responsibilities so that they can avoid violations like those found in this case. We offer a wide variety of tools to explain their responsibilities.”
The law’s requirement that an employee must retain all tips does not preclude a valid tip pooling or sharing arrangement among employees who customarily and regularly receive tips, such as waiters, waitresses, bellhops, counter personnel (who serve customers), bussers and service bartenders. A valid tip pool may not include employees who do not customarily and regularly receive tips, such as dishwashers, cooks, chefs and janitors.
The department offers numerous resources to ensure employers have the tools they need to understand their responsibilities and to comply with federal law, such as online videos, confidential calls, or in-person visits to local WHD offices.