MANCHESTER, NH – A federal court has ordered a North Conway restaurant to pay a total of $148,128 – $74,064 in tips and back wages and a similar amount in liquidation – after a U.S. Department of Labor investigation found that employers kept workers’ tips illegally and failed to pay them overtime wages when required by law.
Investigators with the department’s Wage and Hour Division determined that between February 2020 and February 2022, Luchador Tacos LLC and owners Joshua Mitchell and Katherine Mitchell violated the Fair Labor Standards Act when they did the following:
In addition to recovering wages and damages, the consent judgment and order obtained by the department’s Office of the Solicitor in the U.S. The District Court for the District of New Hampshire permanently enjoined the restaurant and its owners from violating the FLSA’s minimum wage, overtime, and recordkeeping requirements.
The order also requires employers to cooperate with any future investigations, prohibiting them from firing or discriminating against employees engaged in FLSA-protected activity, such as filing a complaint with, providing information to, or cooperating with a Wage and Hour Department investigation. The restaurant and its owners must also provide current employees with basic FLSA information in English and Spanish and an overtime fact sheet in English and Spanish.
“Employers in the food industry must understand that they cannot keep tips earned by their employees. Illegal withholding of hard-earned tips makes it harder for workers and their families to make ends meet, said Wage and Hour District Director Steven McKinney in Manchester, New Hampshire. “Employers can avoid costly violations like the ones in this case by ensuring their pay practices comply with federal law. We encourage employers to contact us to discuss any questions they may have regarding the FLSA’s wage and tip-related requirements.”
The department published a final rule, the “Tips Regulations under the Fair Labor Standards Act,” parts of which became effective on April 30, 2021. Under this rule, an employer cannot under any circumstances keep employee tips, and managers and supervisors cannot keep tips received by employees, including through tip pools. This prohibition against employers keeping tips applies even if tipped employees are paid hourly wages at rates equal to or above the full federal minimum wage.
See the consent judgment and the order.
In fiscal year 2021, the division recovered more than $34.7 million in back wages for 29,209 workers in the food service industry. The Bureau of Labor Statistics projects that there were 1.2 million vacancies in the lodging and food service industry in August 2022, while 1,022,000 workers in the accommodation and food service industries left their jobs.
The FLSA requires that most employees in the United States be paid at least the federal minimum wage for all hours worked and overtime pay of no less than time and one-half the regular wage for all hours worked over 40 in a workweek.
Learn more about the Wage and Hour Department, including a search tool that you can use if you think you can recover wages collected by the department. Employers and employees may call the department confidentially with questions regardless of their immigration status. The department can speak with callers confidentially in more than 200 languages through the agency’s toll-free helpline at 866-4US-WAGE (487-9243).
Download the agency’s new Timesheet app, now available for Android and iOS devices, to ensure hours and wages are accurate.