Dive Brief:
- The owner of two Iowa restaurants must pay $833,992 in back wages to 64 employees to resolve Fair Labor Standards Act (FLSA) minimum wage, overtime and recordkeeping violations, the U.S. Department of Labor (DOL) has announced.
- Employees at El Rodeo Mexican Restaurants were required to cash their paychecks and return the amounts of the checks, in cash. The owner also required servers to surrender $20 from their daily tips to the employer. Finally, the employer failed keep time records of the employees’ work hours, instead paying workers for 40 hours a week, regardless of the number of hours actually worked.
- DOL sued to recover the wages and the U.S. District Court for the Southern District of Iowa ordered the payments.
Dive Insight:
There are several things to unpack in this situation. First, the FLSA requires that employees, unless exempt, be paid minimum wage, plus time-and-one-half for hours worked beyond 40 in a workweek. Employers also must keep records of non-exempt employees hours worked. Records on which wage computations are based, such as time cards and piece work tickets, should be kept for two years, DOL says.
Second, liquidated damages were notably absent from this case. DOL generally reserves those for willful violations, and while there has been a shift in the agency's enforcement activities since President Donald Trump's inauguration, it hasn't completely moved away from them. HR Dive asked the agency about this particular case, and a spokesperson said only that "there are various factors that the WHD use to decide if liquidated damages are given."
Finally, the announcement in this case comes just weeks after the department's leadership, in defending proposed tip pooling regulations, insisted that it need not prohibit employers from collecting workers' tips because of the improbability of that happening. Lawmakers, however, weren't persuaded and, in the most recent omnibus spending bill, amended the FLSA to make it clear that tips can't be taken by employers, managers or supervisors. DOL is expected to continue its rulemaking process to roll back Obama-era limits on tip-sharing arrangements.