US Department of Labor recovers $85K in back wages for 36 workers after investigation finds tip pool violations at coffee bar, lounge near Austin

News Release

US Department of Labor recovers $85K in back wages for 36 workers after investigation finds tip pool violations at coffee bar, lounge near Austin

AUSTIN, TX - The U.S. Department of Labor has recovered $85,197 in back wages for 36 employees after an investigation found a coffee bar and lounge in Buda operated an illegal tip pool.

An investigation by the department's Wage and Hour Divisiondetermined that Nate's At The Buda Mill & Grain Inc. - operating as Nate's Coffee & Cocktails - violated the Fair Labor Standards Actby allowing its general manager to participate in the employee tip pool. This invalidated the employer's use of the tip credit and required the employer to pay full minimum wage to affected workers, which the company failed to pay.

The FLSA permits an employer to take a tip credit toward its minimum wage obligations for tipped employees if employees receive enough tips from customers and direct wages per workweek to equal at least the minimum wage compensation required under federal law. However employers, including managers and supervisors, may not keep any portion of employees' tips for any purpose.

"By law, managers and supervisors are not allowed to retain employees' tips or participate in a tip pool. Service workers are entitled to all the tips they earn from customers and managers are not permitted to take away those rewards given for employees' hard work," said Wage and Hour Division District Director Charles Frasier, in Houston. "Employers are encouraged to contact us for any questions about their obligations under the law. We are here to provide assistance."

Workers and employers can call the Wage and Hour Division with questions and requests for compliance assistanceat its toll-free helpline, 866-4US-WAGE (487-9243). Employers are encouraged to use the agency's industry-specific compliance assistance toolkits to learn about their responsibilities under the laws enforced by the division. The agency's PAID program offers employers an opportunity to self-report and resolve potential minimum wage and overtime violations under the FLSA, as well as certain potential violations under the Family and Medical Leave Act.

Learn more about the Wage and Hour Division, including a search tool that workers can use if they think they may be owed back wages collected by the division. Download the agency's free timesheet app for iOS and Android devices to track hours and pay.