RESTAURANT CHAIN IN GEORGIA, MISSOURI AND WEST VIRGINIA SETTLES OVERTIME PAY CLAIM

Another settlement has been reached that puts unpaid overtime wages back in the pockets of restaurant workers.

Enforcement activity on behalf of food service workers has been significantly increased in recent years due to the widespread noncompliance with the federal minimum wage, overtime and record-keeping laws. A new focus has been on chains that operate using a franchise model. In this case, the Department of Labor went after the franchisor for wage and hour violations at 28 Huddle House restaurants in Georgia, Missouri and West Virginia. The result – the franchisor agreed to facilitate compliance among all its franchisees and pay overtime and minimum back wages in excess of $60,000 to 128 employees.

The case revealed practices that are all too common in the restaurant business – some employees didn’t receive at least the minimum wage because the cash wage paid by the employer plus tips received did not equal minimum wage for all hours worked, and others received only tips and no cash wage at all. In other instances workers’ pay dropped below the minimum wage because they were required to share tips with non-tipped employees, or because deductions were made for breakage, damages and check-cashing fees. Violations of overtime wage laws included tipped employees not receiving overtime at the correct rate and salaried nonexempt employees, such as cooks, not receiving overtime pay, as well as overtime paid to some employees after 80 hours in a two-week period vs after 40 hours each week as required by wage and hour law. The franchisor has committed to assist its restaurants in complying with federal labor regulations going forward.

The FLSA (Federal Fair Labor Standards Act) requires workers to be paid at least the federal minimum wage of $7.25 to covered, nonexempt employees for all hours worked and mandates that employees receive time and one-half their regular rate, including commissions, bonuses and incentive pay, for hours worked beyond 40 per week. While restaurants that employ tipped workers are only required to pay $2.13 an hour in direct wages, this is only if that amount plus the tips received equals at least the federal minimum wage of $7.25 an hour. If a worker’s tips combined with their direct wages do not equal the minimum wage, the employer must make up the difference.

About tip pools – restaurants are permitted to create a tip-pooling or sharing arrangement among employees who customarily and regularly receive tips, but a valid tip pool may not include employees who do not customarily and regularly receive tips, such as dishwashers, cooks, chefs and janitors.

About deductions from paychecks – when customers walk their tabs, when plates are broken or cash is short in the register, docking workers’ pay is not legal if it reduces their wages below the minimum wage.

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