$1.6 Million in Unpaid Tips headed to Servers Pockets

It feels like a scene straight out of "Groundhog Day" – the same shit, different day.

Yet another restaurant caught in the act of exploiting its staff. The U.S. Department of Labor has been busy with over 100 South Carolina restaurants under scrutiny for mishandling earned tips.

Some have been diverting tips to non-tipped positions like dishwashers and cooks, creating invalid tip pools. Despite the already minimal wage of $2.13 an hour due to the tip credit system, these establishments further burden their servers by reallocating their hard-earned tips to cover other staff wages. I’m Not inferring the BOH doesn't deserve more money (they do!) Just not like this.   

The latest establishment caught in this web is Krafty Draft Brew Pub in Lexington, SC, where $125,819 was recovered in back wages for 23 workers.

 "Pay practices a business chooses to use must meet legal requirements. In this case, we found that—while allowing some employees to take home more than the federal minimum wage— Krafty Draft Brew Pub ignored its obligation to pay their share of its workers' income and passed that responsibility onto its customers," explained Jamie Benefiel, Wage and Hour Division District Director in Columbia, South Carolina.

"In South Carolina, this issue is all too familiar. Just in 2023 alone, we conducted about 108 investigations involving restaurants, resulting in roughly $1.6 million in back wages for 600 workers," said Jose Garcia of the SC office of The Dept of Labor. The investigation process, as Garcia outlines, can start from either a direct visit to an establishment based on a directed initiative or a complaint. Often, issues arise from improper recording of hours or misunderstanding over whom the tips rightfully belong to.

This abuse is far too common in our industry. For instance, last November,  

The East Coast restaurant chain "Plaza Azteca" was ordered to pay $11.4 million back to more than 1,300 employees following a slew of labor law violations uncovered by the Department of Labor. 

In 2022, another South Carolina restaurant, "167 Raw," faced a directive to pay $624k to 92 workers for forcing them into an illegal tip pool that included management and other typically non-tipped staff. These instances are just the tip of the iceberg, the for mentioned got caught.

The prevalence of such practices begs the question: Why is this manipulation of tip pools so common? It feels like these establishments use tip pools as a way to obscure and manipulate workers' earnings. So, what's the solution?

Vigilance and skepticism towards restaurants that lack transparency with earnings are crucial!

If a restaurant doesn't provide clear, shift-by-shift earnings reports, it's a red flag. I know of a few places here that excel in transparency, showing workers their earnings after every shift but they are to few and far between. These establishments are commendable examples of integrity in the industry, setting a standard we should all aspire to.

If you suspect you're being taken advantage of, not receiving your rightful wages, or being coerced into an invalid or illegal tip pool, it's clear evidence of the need for stronger worker protections in our industry. This situation underscores why starting or advocating for the formation of a culinary union is crucial. Such collective action can significantly enhance our ability to ensure fair treatment, proper wages, and legal compliance across the board. Reach out to the Department of Labor to report unfair practices. Remember, together, we can work towards an industry where everyone's rights are respected and protected.

US DEPT OF LABOR TIP REGULATIONS UNDER THE FAIR LABOR STANDARDS ACT (FLAS) THE LEGAL DISH   Like what you’re reading? Subscribe to  our newsletter for exclusive stories and insights—subscribers now will get special access as we expand!