A federal judge in Pennsylvania has ruled that Empire Diner, the owner himself and a manager are liable for $1.35 million in back wages and liquidated damages to 107 servers and kitchen workers following a five day trial which confirmed the business used an illegal tip pool and engaged in other wage and hour violations.
The litigation followed an investigation by the U.S. Department of Labor’s Wage & Hour Division, which confirmed the violations, specifically that the employer failed to comply with the federal requirements for tip credit and using servers’ tips to pay bussers’ wages. In doing so, the company violated federal minimum wage, overtime and record-keeping requirements of the Fair Labor Standards Act.
According to the lawsuit, for a period of three years the employer “paid servers $2.83 per hour and claimed a tip credit for the difference between the minimum wage of $7.25 per hour and the cash wage of $2.83 per hour. At the end of each shift, the defendants required the servers to pay approximately 10% to 15% of their tip money to the defendants.
This money seized from servers’ tips was retained, at least in part, by the defendants and was not used in furtherance of a valid tip pool. The defendants therefore willfully violated Section 6 of the act by intentionally seizing the servers’ tip money and failing to pay servers the $7.25 per hour minimum wage required by the act. The defendants also misled the servers — and the Department of Labor — about how those...
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