Tropical Grille, a South Carolina-based restaurant chain, recently paid nearly $700,000 in back wages and penalties based on violations of the Fair Labor Standards Act. The violations that the U.S. Department of Labor (“DOL”) investigated included allegations of tip pool misuse, unpaid overtime for hours worked over 40 in a workweek, and child labor issues. [Read the WYFF 4 Story here]
What is the Fair Labor Standards Act for South Carolina Employees?
As a refresher, the Fair Labor Standards Act (“FLSA”) is the federal law that governs the payment of minimum wage (currently $7.25/hour) and the time-and-a-half overtime premium for all hours worked over 40. The DOL is the federal agency that investigates and enforces the FLSA. The DOL has the option to file a lawsuit if the company being investigated does not pay the amounts owed, as determined by the DOL’s investigation. An employee also has a right to bring his or her own private lawsuit for violations of the FLSA. The FLSA allows an employee to recover the amount owed, plus “liquidated damages,” which means double the amount owed in damages, if the company’s actions were “willful.”
Based on WYFF4 article, it appears that the case against Tropical Grille has resolved without the filing of a federal lawsuit. Oftentimes the DOL will hold the threat of liquidated (double) damages over the employer’s head as a means to encourage the company to settle and pay the employees the amounts owed. Perhaps that played a role here, although we don’t know for sure.
Tropical Grille takes the rather unusual step here of providing a very long and detailed statement about the settlement with the DOL, presumably for damage control reasons. Tropical Grille’s statement highlights the fact that the DOL did not make a “willfulness” finding. Now, that could just be because they settled the case before that finding was made (or alleged in a lawsuit), but regardless it appears that Tropical Grille is owning the issues and making full payments to the employees affected, which is a good first step. The DOL will also require full compliance moving forward, likely new policies, as well as training.
What are Tip Pools under the FLSA?
One violation by Tropical Grille involves tip pools. As I’ve written about before, tip pools require tipped employees to contribute all of their tips to a shared “pool,” then the tips are doled out equally to all employees who participate in the pool. [Read more: Tip Pooling Changes Under the Fair Labor Standards Act] But only non-management employees are allowed to participate and receive tips back out. This is where employers get in trouble. If you allow your managers to take some of the tips from the pool, then that violates the tip pool rules and can subject the employer to fines and requirements to pay back the amounts owed. Only tipped employees, like servers in a restaurant, can receive tips from the pool. Tropical Grille had managers taking out tips, which violates the FLSA and associated regulations.
Violations of the Overtime Provisions
Tropical Grille also way afoul of the FLSA by failing to pay all proper overtime. From what I can glean from the company’s written statement, some employees would work forty hours at one location of the chain and then go work more hours at another location. Tropical Grille improperly counted those as separate jobs, basically, instead of combining the hours as is required. So employees would only get the extra hours paid as straight time instead of the 1.5x premium. Since it’s all the same employer, the hours should get added together and the overtime paid out from there.
Takeaways for South Carolina Employees
If you work in South Carolina, then the FLSA is the only law that governs overtime and minimum wage. South Carolina does not have a separate minimum wage or overtime law.
For tipped employees, it’s important to keep track of your tips to make sure you are being paid properly. If the company pays you the tip credit amount of $2.13/hour, then make sure you are making enough in tips to cover the full $7.25/hour amount, otherwise the company has to make up the difference. If you are forced to participate in a tip pool, make sure that members of management are not taking a cut of the proceeds.
If you work more than 40 hours in a week, you are entitled to overtime pay. Keep your own records where possible of the hours you work, and match those up each pay period to ensure that you are getting compensated as the law requires.
If you have concerns with your pay and need to bring that to your employer’s attention, try to do so in writing (via text or email) so that there is a written record of your complaints. The FLSA also prohibits retaliation for making complaints about unpaid overtime or minimum wage, if the company fires you, you want to make sure your complaints is clear and in writing. [Read more: Retaliation for Unpaid Overtime and Minimum Wage Complaints]
The DOL accepts complaints for violations of the FLSA. [See the DOL’s Complaint Page here] You can also contact a South Carolina unpaid overtime lawyer—like me!—to discuss your legal options. Wage theft is a very real issue in South Carolina, and there’s a statute of limitations on claims, so don’t delay or sit on your rights. You can contact our office at 864-278-5389 or via our “Contact Jeremy Summerlin” page.
