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The Department of Labor filed a complaint in federal court against two Illinois-based IHOP franchises in O’Fallon and Alton, alleging that the restaurants violated tip pool regulations and shortchanged their employees’ wages. The Wage and Hour Division (WHD), which handled the investigation, determined that the owners of the franchises owe 179 employees $183,945 in back wages, plus an equal amount in damages. In addition, the two companies that operate the franchise locations have been assessed a civil money penalty of $199,577.
According to the complaint, management of the two franchises had servers surrender their tips to a “shared” tip pool, but the managers were keeping the tips for themselves or sharing with back of house, which is against federal law. Tips belong to the servers. Management and back of house are usually prohibited from participating in tip pools. In addition, workers would have their entire shift deleted from the time records if their time got too close to 40 hours, which meant the worker wouldn’t get overtime.
When or if an overtime premium was paid, it was calculated at the federal minimum tipped wage of $2.13 per hour instead of the higher Illinois minimum wage. These violations of the FLSA took money out of the employees’ pockets and deprived many low-wage workers of their already limited earnings.
Regardless of how anyone feels about tipping culture, there’s no excuse for taking hard-earned tips from employees. Employers should be held accountable for not paying out tips and wages under the law. Wage and Hour Division District Director Noah Lee in St. Louis called these violations an “extensive nature of wage theft,” which was the reason for the significant amount of civil money penalties assessed.
According to the Department of Labor, almost $30 million in back wages was recovered for food service workers in just fiscal year 2023. Employers, please do better.
