New England Biz Law Update
The Department of Labor has filed a lawsuit alleging that Texas-based restaurants used a portion of employees’ tips to pay for business expenses, including condiments and takeout packaging.
The suit asks the U.S. District Court for the Southern District of Texas to require the restaurants to pay back wages and damages to the affected workers.
The allegations stem from investigations by the DOL’s Wage and Hour Division finding that Tejas Chocolate LLC and Tejas Dragon Companies LLC collected the employees’ tips to distribute among them, but diverted some of the money for business purposes in violation of the Fair Labor Standards Act (FLSA).
The FLSA generally allows employers to pay tipped employees the full minimum wage or take a tip credit toward their minimum wage and overtime pay obligations, if certain criteria are met. Employees are barred from keeping employees’ tips for any reason.
The suit, filed by the DOL’s Office of the Solicitor, seeks back wages and an equal amount in liquidated damages for current and former employees of two locations of Tejas Chocolate & Barbecue, operated by Tejas Chocolate LLC, and Tejas Burger Joint, operated by Tejas Dragon Companies LLC, from May 2021 to May 2023 and beyond if the division finds the employer continued to use employees’ tips improperly.
“When it comes to workers’ tips, the law is crystal clear: tips are the property of the workers who earn them,” said Regional Wage and Hour Administrator Betty Campbell in Dallas in a statement. “The owner and operator of Tejas Chocolate & Barbecue and Tejas Burger Joint willfully deprived employees of all their hard-earned tips and used their money to illegally benefit their businesses.”
“The Department of Labor is determined to protect the rights of all workers when their employers shortchange them for any reason and will use all legal means necessary,” said Regional Solicitor of Labor John Rainwater in Dallas. “The operator of these businesses directly violated the law, denying employees all the tips left by their customers to recognize their good service.”
