Unpaid Overtime, Illegal Tip Pools, Child Labor Violations: Employer Pays $718K

A restaurant chain has paid $618,666 in back wages to 779 employees and an additional $100,000 in penalties after the Department of Labor (DOL) found wage and child labor violations across 13 South Carolina locations.

The DOL found several violations of the federal Fair Labor Standards Act (FLSA) at multiple Tropical Grille restaurants.

Unpaid Overtime

According to the DOL’s investigation, the employer failed to combine all hours worked for employees across those restaurants, which led to some workers not receiving the time-and-one-half overtime premium when they worked more than 40 hours in a single workweek.

Illegal Tip Pools

Investigators also determined that managers and supervisors participated in the restaurant’s tip pool, which is prohibited by the FLSA. For more info on tip pools, see the DOL’s Fact Sheet #15: Tipped Employees Under the Fair Labor Standards Act (FLSA).

Child Labor Violations

The DOL also found the employer allowed 14- and 15-year-olds to work longer and later than legally permitted by federal child labor laws. For more info about child labor topics, go to YouthRules.

Settlement and Additional Requirements

The employer paid $618,666 in back wages and was assessed $100,000 in penalties for the child labor and tip retention violations.  

As part of the settlement, the employer must also:

• Update or create materials that address compliance with child labor laws, and 
• Provide annual training on child labor regulations for managers and supervisors. 

Next Steps

Review your company’s operations and take the following steps where applicable:

• Audit timekeeping to ensure hours worked at multiple locations are combined when calculating overtime
• Confirm that only eligible employees participate in tip pools and that managers and supervisors are excluded 
• Verify schedules against federal and state child labor limits on hours and times of day if the company employs 14- and 15-year-olds
• Review written policies on overtime, tip pools and child labor, and update them as needed, and
• Maintain records of hours worked, tip distributions and schedules for employees under 16.

More info: DOL press release