Investigators Find Restaurants Systematically Violating Wage and Hour Laws
In two of our recent blog posts(“Oregon Restaurant Industry Fights Limits on Tip Sharing” and”Tip Sharing Litigation Brings into Question the Limits of the Labor Department’s Authority”), we discussed how the restaurant industry in the Pacific Northwest had brought suit in Oregon’s district court against a Labor Department rule limiting tip-sharing arrangements among tipped and non-tipped employees. It seems, however, that tip pools are not the only area of conflict between the federal government and restaurants in the Pacific Northwest. According to a report recently published in the Oregonian, the Portland regional office of the Labor Department’s Wage and Hour Division has been investigating restaurants in the area in response to allegations that the restaurants have violated federal wage and hour laws.
Federal and State Wage Standards
Under the federal regulations outlined in the federal Fair Labor Standards Act (FLSA), restaurant employers must pay their workers at least $7.25, as well as overtime pay if they work more than 40 hours in a week. If the workers are tipped employees, restaurants are allowed to use what is called a ‘tip credit,’ which means that employers are only required to pay the tipped workers $2.13 per hour as long as their total earnings (including tips) amount to $7.25 per hour. Oregon’s state labor laws are more stringent than the federal standards are: servers must be paid $8.95 per hour, and employers are not allowed to use the tip credit system, so any tips that servers are paid on top of their hourly rate is a bonus.
Federal and State Investigators Find High Rates of Wage Noncompliance
The regional office of the federal Wage and Hour Division has been working with Oregon’s Bureau of Labor and Industries to ensure that restaurant workers are being treated fairly. A spokesman for the state Bureau, Charlie Burr, claims that the agency received 186 complaints from food service workers in the period between July 2011 and June 2012. Given the alarming rate of noncompliance that investigators eventually found, this number seems rather low. However, as Jeffrey Genkos, the district director of the Wage and Hour Division, noted, restaurant workers are normally a “low-wage, vulnerable workforce,” so workers often feel uneasy about filing complaints or standing up for their rights.
Federal labor officials have found that almost 80% of the 110 restaurants they investigated in Oregon, Washington state, and Idaho were not in compliance with the FLSA, which includes provisions regarding overtime and minimum wage. The wage violations that the state and federal investigators found most often related to issues such as: employers inappropriately classifying employees as ineligible for overtime pay, forcing employees to work off the clock (presumably so they would not be eligible for such overtime pay), and deducting missing register money or uniform costs from workers’ paychecks. The officials claim that, as a result of this noncompliance, about 500 restaurant workers across the three states are owed approximately $740,000 in back pay.
Not everyone, however, is convinced by the investigators’ findings. Bill Perry, the vice president of government affairs for the Oregon Restaurant and Lodging Association, notes that – given the fact that Oregon’s minimum wage laws are more stringent than the federal government’s laws – such a high rate of noncompliance with federal standards would equal “a pretty dramatic violation of state law.” Notwithstanding Perry’s reservations, both the Labor Department and the Bureau of Labor and Industries say they are working with restaurants to make sure that employers adhere to state and federal wage laws. They also say they want to make sure that restaurant workers are aware of their rights and where to go for help in enforcing them.
If you are a restaurant worker and you believe that your employer has unfairly violated state or federal wage and hour laws, please contact one of our experienced attorneys to help you vindicate your rights.