Servers and Other Restaurant Workers Are Getting Short Changed

Minimum wage and overtime violations are rampant throughout the restaurant industry. These violations affect servers, bartenders, bus persons, hosts and hostesses, and kitchen staff. FLSA minimum wage and overtime violations in the restaurant industry are particularly disturbing because of the low wages earned by most restaurant workers. The U.S. Department of Labor’s Bureau of Labor Statistics reports median hourly earnings (as of May 2004) for restaurant workers: fast-food cooks earn $7.07 per hour; waiters and waitresses (including tips) earn 6.75 per hour; bartenders (including tips) earn $7.42 per hour; and hosts and hostesses earn $7.52 per hour.

The scope of violations in the restaurant industry is evident by reviewing the U.S. Department of Labor Wage and Hour Division’s enforcement record over the past several years.  Many restaurants across the country, particularly smaller ethnic restaurant chains, have been subject to DOL enforcement actions. 

Las Palmas Mexican Restaurants, for example, agreed to pay $130,698 in back overtime wages to 85 employees who worked at three restaurants in Nashville, Tennessee.  The Wage and Hour Division’s investigation revealed that servers, busboys, hostesses and kitchen staff had not been properly paid under the Fair Labor Standards Act (FLSA). 

La Tapatia Mexican Café y Cantina in Houston has paid $109,708 in back pay after an investigation by the U.S. Department of Labor’s Wage and Hour Division found 217 current and former servers and cooks had not been properly paid.  According to the Wage and Hour Division the company violated the minimum wage and overtime provisions of the Fair Labor Standards Act (FLSA), by paying servers straight time for all hours worked and also by failing to pay overtime to non-exempt cooks.

A Federal Court in Minnesota ordered El Mariachi restaurants in Fairmont and Austin, Minnesota to pay 21 workers $39,931 in unpaid overtime compensation, minimum wages and liquidated damages.

In Indiana, 245 restaurant workers, including cooks, servers and bus persons recovered $350,041 because of the DOL’s efforts.  The workers were employed in 11 different restaurants throughout Indiana.  Another dozen Indian workers, kitchen workers at Mexico City Grill, in Indianapolis and Mi Casa Mexican Restaurant in Greenfield, Indiana were ordered to receive $10,000 in unpaid overtime wages.

In Austin, Texas eight kitchen staff employees recovered $51,347 in back wages from The New Mandarin Chinese Restaurant

Asian Super Buffet La. Inc. in Kenner, Louisiana violated the FLSA by including tips, meals and lodging as part of the wait staff’s compensation for hours worked, resulting in employee wages below the federal minimum wage. The company also failed to properly compensate employees for overtime hours and to maintain required records. As a result, Asian Super Buffet agreed to pay $77,218 in back wages to 26 current and former kitchen workers and wait staff. 

El Nopal Mexican Restaurant paid back wages totaling $95,800 due to 15 employees of the Valley Park, Missouri restaurant following an investigation by the U.S. Department of Labor’s (DOL) Wage and Hour Division. According to the investigation, the work force consisted of primarily low-wage Hispanic workers employed as servers and cooks.  Restaurant officials were found in violation of the minimum wage, overtime and record-keeping provisions of the Fair Labor Standards Act (FLSA). Approximately $68,000 of the total was due from the minimum-wage provision violations, and the remaining $27,000 involved unpaid overtime compensation.

San Pietro Restaurant, an Italian eatery located in Midtown Manhattan, paid 45 employees a total of $102,216 in overtime back wages. According to a U.S. Department of Labor investigation, the restaurant improperly paid cooks, waiters and bus boys among others. The investigation found that many employees worked more than 40 hours a week without receiving overtime pay. Investigators determined that employees worked an average of 52 hours per week. Management officials of San Pietro Restaurant agreed to pay employees the back wages they were due and to come into full compliance with the FLSA in the future.

While most of the DOL’s enforcement actions have targeted local restaurant chains. National chains and franchises face similar issues. In 2006, the DOL filed a lawsuit against Barbeque Ventures LLC, Barbeque Ventures of Nebraska LLC and Old Market Ventures LLC, known as Famous Dave’s, to collect $92,516 in back wages due 25 employees. The department alleged that the employees (kitchen workers and servers) at all five Famous Dave’s locations in Omaha and Bellevue, Nebraska, and Council Bluffs, Iowa were not paid overtime.

In Nashville a restaurant worker at two Sbarro Restaurants, operated by franchisee F & S Foods, Inc., filed a federal lawsuit claiming that he and his co-workers were not properly paid for overtime hours and were required to work off the clock without compensation. The employer told the Court that it had compensated its employees for unpaid overtime and agreed to the entry of an $11,000 judgment in favor of the one employee who filed the lawsuit.

Arkansas Workers Sue Tyson for Overtime Violations

Employees from Tyson Foods, Inc. poultry processing plants in Arkansas filed a lawsuit against Tyson for overtime pay violations (Adams, et al. v. Tyson Foods, Inc., U.S. District Court, Western District of Arkansas). The lawsuit claims that Tyson violated the FLSA by failing to pay its employees for the time spent donning and doffing required gear and equipment, as well as time spent walking, waiting, and performing other job duties “off the clock.” Tyson is facing lawsuits throughout the U.S. for alleged FLSA overtime pay violations at its chicken processing and meat processing facilities

Tyson and others in the poultry and meat processing industries have longstanding differences with workers and the U.S. Department of Labor over industry pay practices.  These differences appeared to be finally resolved when the U.S. Supreme Court ruled in favor of workers in Alvarez v. IBP.  Still IBP (now Tyson) and other employers refuse to pay workers for time spent donning and doffing required gear and equipment.  According to the Department of Labor workers should be paid for this time. 

Timeshare Salespeople Are Entitled to Overtime Pay

The U.S. Department of Labor recently published a formal opinion letter stating that timeshare salespeople are not exempt from the FLSA’s wage and hour provisions under the “outside sales” exemption.  Timeshare salespeople’s primary duties are to sell timeshare condominiums at resorts typically found in exotic locals and tourist destinations throughout the United States, including Florida, Hawaii, Puerto Rico and even Gatlinburg and Nashville, Tennessee.  Consumers who purchase time shares buy a share of the condo (i.e. certain weeks of the year) rather than pay for the entire dwelling. 

Timeshare salespeople typically earn commissions on the timeshares they sell. The DOL’s opinion letter underscores the legal requirement that “outside salespeople” must be employed away from the employer’s place of business. The typical timeshare salesperson, however, works on location at the employer’s resort, which is the employer’s place of business. As such, timeshare salespeople are not exempt under the outside sales exemption and should receive overtime wages as provided by the FLSA (unless another exemption applies). 

Wal-Mart Violates Overtime Laws; Settles With DOL

Wal-Mart recently settled a case with the U.S. Department of Labor involving violations of the FLSA’s overtime provisions for $33 million.  The case involved 87,000 salaried and hourly employees who were not paid at the proper overtime rates.  The retail giant improperly calculated overtime payments by failing to include bonus payments into the employees pay rate when calculating overtime premium.  The agreement also addresses payment of overtime to certain non-exempt salaried interns, manager trainees, and programmer trainees.  While violations of this nature are common, Steven Mandel, an associate solicitor at the Department of Labor, said "these are serious violations."

Wal-Mart, facing approximately 70 lawsuits for wage and hour violations throughout the country, reported these violations to the Department of Labor and then settled with the DOL.  A spokesman for Wake-Up Wal-Mart, Chris Kofinis, criticized the agreement stating, "How do you negotiate a deal on behalf of workers when workers aren't included in the negotiations."  The employees had no independent legal representation in the settlement process.  As a result, Wal-Mart was likely able to settle the case for less than their actual liability.  Wal-Mart also avoided assessment of fines or penalties.

Prince Faisal and the Underpaid Security Guards

Five security guards hired to protect Prince Faisal bin Turki bin Nasser Al-Saud (a diplomat and a member of the Saudi royal family) at his McLean Virginia home are entitled to overtime pay according to a U.S. Appeals Court.  The security guards filed a lawsuit because they were paid only straight time without any overtime premium for hours over 40 in a workweek.  The court ruled that the security guards were joint employees of the Prince and Capital International Security, Inc. and that CIS was required to pay them overtime.  CIS had argued that the guards were independent contractors, who are outside the protection of the FLSA.