Georgia Restaurant Industry Paid $2,277,480 in Back Wages and Damages for FLSA Violations

Monday, January 11, 2016
U.S. Department of Labor Wage and Hour Division investigations have identified widespread violations of the minimum wage, overtime and record-keeping requirements of the Fair Labor Standards Act in Georgia's restaurant industry. As a result, restaurants are paying a total of $2,277,480 in back wages and damages to more than 3,000 employees.

Since the initiative began two years ago, the division's Atlanta District Office has conducted nearly 400 investigations of full-service restaurants.  Common violations have included the following:

  • Requiring tipped employees to turn over a portion of their tips to management.
  • Reducing workers' pay below minimum wage by charging employees for mandatory uniforms.
  • Failing to maintain required time and payroll records.

Jesus Velasquez, a 23-year veteran of the restaurant industry who was employed as a server at Atlanta's El Potro Mexican Restaurant, was denied more than $1,000 in income due to his employer's failure to pay him at least the minimum wage and overtime pay. In particular, his employer failed to pay him the mandatory federal tipped minimum wage rate of $2.13 per hour before tips.

Under the FLSA, when customers tip employees, restaurant operators can benefit by claiming a credit toward their obligation to pay those employees the full minimum wage. An employer that claims this tip credit is required to pay a tipped employee only $2.13 per hour in direct wages. If an employee's tips, when added to the wages paid directly by the employer, do not equal the federal minimum wage of $7.25 per hour the employer must make up the difference.

The federal minimum wage of $7.25 per hour was last increased in 2009, and the minimum cash wage for tipped workers was last increased in 1991. Tips are the property of the employee who receives them.

The FLSA requires the payment of at least the federal minimum wage to covered, nonexempt employees for all hours worked. Paycheck deductions for patrons who do not pay for their orders, broken dishes or cash register shortages are illegal if they reduce an employee's wages below the minimum wage. Applicable state labor laws may also limit allowable deductions. The FLSA also requires that employees receive time and one-half their regular rate of pay, including commissions, bonuses and incentive pay, for hours worked beyond 40 per week. Additionally, employers must maintain accurate time and payroll records.
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