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Texas: Restaurant Settles FLSA Charges of Illegal Tip Pooling Scheme

By Susan R. Heylman  7/29/2014
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Big Texan Steak Ranch in Amarillo, Texas, agreed to pay $650,000 in minimum wage back wages and $150,000 in liquidated damages to 279 current and former wait staff to settle charges that the restaurant’s tip pooling arrangement violated the minimum wage and record-keeping provisions of the Fair Labor Standard Act (FLSA).

The investigation by the U.S. Department of Labor’s Wage and Hour Division (WHD) determined that Big Texan Steak Ranch illegally retained a portion of the restaurant workers’ tips to pay for business costs, such as menus, glassware, trays, and contest prizes. WHD also found that the employer made illegal deductions from workers’ paychecks for uniforms and withheld additional percentages of workers’ tips as a disciplinary tactic, which brought the hourly wages of those workers below the required federal minimum wage.

“Through investigations such as this one, the Wage and Hour Division continues to combat widespread labor violations among restaurants to protect workers and to ensure a level playing field for law-abiding employers,” said Cynthia Watson, the regional administrator for the WHD in its Southwest Regional Office in Dallas, Texas. “The restaurant industry employs some of our country’s lowest-paid workers, who are vulnerable to exploitation. We will continue our effort in the restaurant industry to promote awareness and improve compliance.”

WHD, which announced the settlement on June 23, 2014, also charged the company with failing to maintain accurate time and payroll records.

In a press statement, the owners of Big Texan contended that the restaurant was not penalized for intentional wrongdoing but for technical issues related to tracking, reporting, and handling tip sharing to tipped employees. The restaurant said that it had implemented the compliance changes suggested by WHD.  

Susan R. Heylman, J.D., is a freelance legal writer and editor based in the Washington, D.C., area.

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