One South Carolina restaurant found itself in a bit of legal trouble recently. The South Carolina seafood restaurant had to repay workers $624,000 for their illegal tip system after an investigation. The Department of Labor ruled their shared tip system illegal leading to the payout.
WHAT AND HOW?
Business Insider reports that 167 Raw in Charleston, South Carolina “shortchanged 92 workers by forcing them to participate in an illegal tip pool that included management.” Following the investigation, 167 Raw had to pay $624,017 in back wages to the 92 staff members. The repayment amount equaled nearly $6,700 per employee. The Fair Labor Standards Act says managers and supervisors are not to keep their workers’ tips “under any circumstances. That is including through tip pools. US employers can pay tipped staff as little as $2.13 an hour, with tips. This is bringing their take-home pay up to at least $7.25 an hour.
Since the restaurant forced staff to share tips illegally, workers ultimately were making less than the federal minimum wage. The restaurant states that before setting up the tip pool, they were told it was a legal practice. “Months later, however, the Department of Labor concluded that these procedures were in direct violation of certain federal guidelines,” the company said to Business Insider. “The department began a full investigation and determined that while we had not intentionally violated any regulation, we had instead relied upon incorrect legal advice.”
The company cooperated with the department to establish new procedures. They also stated that the owners did not participate in the pool split. As the restaurant industry continues to bounce back from the pandemic, workers’ pay have become a big part of discussions and recent investigations.
Source: Business Insider