GRAND RAPIDS, Mich. (WOOD) — Three Michigan taco restaurants — including one in Grand Rapids — and their owner have been ordered to pay about $823,000 in back wages and damages for operating an illegal tip pool, according to the U.S. Department of Labor.
In November, a federal court entered summary judgment against owner Jacob Hawley and three Barrio Tacos restaurants located in Grand Rapids, East Lansing and Traverse City, the Department of Labor announced Friday in a release. This requires the restaurants to pay 177 employees a total of $411,663 in back wages and another $411,663 in damages.
According to the release, the court found that tipped employees were required to give some of their tips to managers, who would give these tips to non-tipped employees like kitchen staff. The Department of Labor says the restaurants failed to pay tipped employees the federal minimum wage of $7.25 an hour, incorrectly paid them overtime based on the tip credit rate and did not keep accurate payroll records.
Feds: Taco shop owner owes workers backpay
“If an employer claims the tip credit, tips may only be shared by employees who customarily receive tips as part of their wage compensation,” said Wage and Hour Division District Director Mary O’Rourke in a statement.
Hawley told News 8 on the phone Friday that his team and their attorneys have worked to negotiate with the Department of Labor to pay the workers while making sure that the restaurants are left in a good financial position.
He said the issue was a tip distribution error, claiming that his business did not benefit.
“We took zero money from staff,” he said.
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