Tuesday, December 6, 2022

Pay attention to the industries the Department of Labor is targeting

Take a look at the following headlines, each taken from a Department of Labor news release from just the past month.

  • US Department of Labor obtains court judgment ordering Pennsylvania restaurant, owner to pay 68 employees $193K in back wages, damages
  • US Department of Labor finds overtime, tip violations; recovers $80K in back wages for 52 workers at 5 Carolina restaurants
  • Dollars to doughnuts: Krispy Kreme to pay more than $1.1M to 516 workers after US Department of Labor finds systemic overtime violations
  • US Department of Labor recovers $375K for 11 Oregon restaurant workers whose employer kept tips, denied overtime wages illegally
  • Jury decides Westmoreland County restaurant, owner willfully denied 15 servers, kitchen workers full wages over 5-year period
  • US Department of Labor recovers $102K in tips, back wages, liquidated damages for Maine restaurant workers denied overtime, tips

What do they all have in common? They are all substantial settlements reached or judgments taken against food-service and hospitality employers.

The Department of Labor often targets employers in specific industries, and will pick industries that are most at risk for wage and hour violations. Food service and hospitality employers definitely fall into this category. 

For these reasons, I'll be speaking at the Craft Brewers Conference in Nashville from May 7 - 10 on the topic, Tips on Tips: How to Legally Account for and Pay Tipped Wages to Your Taproom & Brewpub Employees. Here's the description:

No employment law is more misunderstood and misapplied by employers than the Fair Labor Standards Act (FLSA), our federal wage and hour law. There are more than 8,000 federal FLSA lawsuits filed per year, with nearly one-quarter filed against employers in the hospitality industry...including taprooms and brewpubs.

These employers get themselves in legal trouble because of the special manner in which hospitality industry employees are compensated. If you employ workers who customarily and regularly receive more than $30 a month in tips (and every taproom and brewpub does), there are two key FLSA phrases you must understand to avoid legal landmines in how you pay your employees—tip credit and tip pool.

If you're a craft brewery and you're not paying attention to how you're paying your employees, you're doing your business a disservice. You may not be paying attention, but it sure looks like the Department of Labor is.

Tomorrow, I'll back with some practical pointers on what to do (and not do) if a Department of Labor investigator shows up at your door.