Recently, the United States Department of Labor settled claims against six Roanoke restaurants and the restaurant owners, in their personal capacities, Acosta v. El Rodeo-Electric, Inc., et. al., Case No. 7:16-cv-00265. After its investigation, the Department of Labor filed a complaint on behalf of the defendants’ servers and kitchen staffers alleging that the defendant restaurants and individual owners violated the Fair Labor Standards Act by failing to pay their servers and kitchen staffers minimum and overtime wages. Specifically, that the defendants were (1) not properly notifying the servers about the tip credit, (2) not paying the servers the tip credit minimum wage of $2.13; (3) not paying servers or kitchen staff overtime wages; (4) not recording tips; and (5) not keeping adequate timekeeping records.
Under the Fair Labor Standards Act, an employee that regularly receives more than $30 a month in tips can qualify as a tipped employee. While tips are the property of the employee who received them, an employer may claim a credit against the minimum wage requirement. This is known as the tip credit. Currently, the maximum tip credit an employer can claim is $5.12 per hour. This means at a minimum a tipped employee should be receiving $2.13 per hour worked. In order to take advantage of this credit, the employer must notify the employee that a tip credit will be used and provide them with a breakdown of the tips received and credits taken.
Additionally, “time and a half” must be paid for overtime work, which is anything over 40 hours in a given work week. In this Acosta v. El Rodeo-Electric, Inc., the United States District Court for the Western District of Virginia entered a Consent Judgment, ordering the defendants to pay back wages in the amount of $1,500,000.00 and $1,500,000.00 million in liquidated damages. The Department of Labor was successful in obtaining back minimum and overtime wages for the servers and kitchen staffers that were not properly paid.
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