This isn’t the first time I’ve blogged about the importance of making sure your employees are properly compensated under the Fair Labor Standards Act (FLSA), you can find those stories here, here, and here.  Now, it seems that restaurants are on the Department of Labor’s hot seat. 

The Minneapolis District Office for the Wage and Hour Division of the Department of Labor has resolved an investigation involving the Wisconsin Meyer’s Family Restaurant. The Meyer’s Family Restaurant has agreed to pay over $116,000 in back wages to 38 employees. The company was cited for failing to record all hours worked by employees, failing to pay overtime compensation, paying cash for some hours of work and keeping no record of the hours worked or the cash payments made, and keeping no record of tips received.

The FLSA has established a federal minimum wage of $7.25/hour for all hours worked, plus time and one-half for hours worked beyond 40 hours per week. However, an employer of a tipped employee is only required to pay $2.13/hour in direct wages, provided the amount the employee receives in tips equals the federal minimum wage. If the employee’s tips combined with the employer’s direct wages do not equal the minimum wage of $7.25/hour, the employer is require to make up the difference.

On the east coast, 15 Boston-area restaurants and their owners have agreed to pay a total of $424,000 in back wages and liquidated damages to 409 employees, to resolve alleged violations of the FLSA. Most of the employees affected were paid by a separate company, Superbrite Professional Cleaning (later known as Excel Management). George Rioux, the district director for the Boston – Wage & Hour Division stated, “Utilizing contract labor providers does not absolve employers from their responsibility of complying with the FLSA and paying workers the wages they are legally due.” Generally, the use of contract labor through an employment agency does not generate a FLSA problem as long as the agency is properly compensating the contract labor.

If you are in the restaurant industry, make sure you keep complete and accurate records. Appropriate record keeping is crucial in order to establish employees are properly compensated. Additionally, any Employers out there who use contract labor should confirm the workers are being properly compensated, so you don’t get punished with liquidated damages.