$170,666 in Back Wages for Employees at Restaurant that Violated Overtime, Minimum Wage and Record-Keeping Provisions of the FLSA

Friday, June 15, 2012

San Jose Restaurante Mexicano, located on Sparkleberry Lane in Columbia, has agreed to pay 11 employees $170,666 in back wages following an investigation by the U.S. Department of Labor’s Wage and Hour Division, which found violations of the Fair Labor Standards Act’s overtime, minimum wage and record-keeping provisions.

The FLSA violations resulted from the employer’s failure to properly compensate employees for all work hours. By reviewing payroll records and conducting employee interviews, investigators determined that tip-earning employees, such as servers, were made to rely primarily on tips for pay, and consequently earned wages that fell below $2.13 per hour, in violation of the FLSA’s minimum wage provision. Additionally, other employees, such as kitchen staff, were paid flat salaries each month – without regard to hours worked – that did not satisfy minimum wage or overtime pay requirements. The employer also failed to maintain accurate records of employees’ work hours and wages, as required.

The investigation was conducted under a multiyear enforcement initiative focused on South Carolina’s restaurant industry, in which widespread noncompliance with the FLSA’s minimum wage, overtime and record-keeping provisions has been found. Since fiscal year 2010, the division’s Columbia District Office has conducted more than 200 investigations of restaurants in its jurisdiction, resulting in $1.72 million in back wages recovered for more than 1,300 employees.

In addition to paying the back wages, the restaurant has agreed to future compliance by keeping accurate records of all hours worked by employees, paying all employees at least the federal minimum wage, providing overtime compensation and informing employees in advance that the tip credit will be used.

The FLSA requires that covered, nonexempt employees be paid at least the federal minimum wage of $7.25 for all hours worked, plus time and one-half their regular rates for hours worked beyond 40 per week. In accordance with the FLSA, an employer of a tipped employee is required to pay at least $2.13 an hour in direct wages provided that amount plus tips received equal at least the federal minimum wage of $7.25 an hour. If an employee’s tips combined with the employer’s direct wages do not equal the minimum wage, the employer must make up the difference. Employers also are required to provide employees notice of the FLSA tip credit provisions, maintain accurate time and payroll records, and comply with restrictions that apply to workers under age 18.

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