There are several ways a restaurant may choose to pay its serving staff. Some Texas venues run on the traditional practice of allowing servers to keep what they earn in tips, and others pool tips and divide the amount equally among the staff. A slight mistake in either method can lead to wage and hour disputes. As one incident involving a famous steakhouse illustrates, the consequences of failing to compensate staff according to federal regulations can be expensive.
The Big Texan Steak Ranch is known for offering a 72-ounce steak dinner as an eating challenge: The meal is on the house for anyone who can consume it in an hour. The restaurant is now making headlines after a 2011 audit revealed that some of the pooled tips had been used to pay for business costs. Additionally, federal investigators noted that there were several record-keeping and wage violations.
The co-owners of the restaurant stated that the errors were administrative and the business has since moved into compliance with regulations. They assert that they did not underpay anyone, however the case was settled with the Labor Department last September to the tune of $800,000 with $650,000 in back pay going to both former and current staff. The other $150,000 was earmarked for damages paid to those workers.
It is important for businesses to operate in compliance with regulations governing wages and labor. An attorney can help ensure that a restaurant is abiding by federal, state and local operatives. If an employee files suit, business owners should immediately seek legal counsel in order to protect assets.
Source: CBS DFW, “Famous Texas Steakhouse Settles Labor Dispute,” June 24, 2014