Thu, 02/04/2021
On January 25, 2021, the U.S. District Court for the Middle District of North Carolina reaffirmed the minimum wage and overtime rights of restaurant servers and bartenders. Specifically, the Court held that defendant Artisanal Restaurant improperly applied the federal “tip credit” and unlawfully compensated the plaintiffs at $2.13 per hour, rather than the full minimum wage, for all of their hours worked, because the restaurant failed to provide adequate notice to its employees that it would be applying the tip credit. Importantly, the Court held that merely posting federal and local Department of Labor posters, providing a “New Hire Guide” and pay stubs reflecting the hourly rate of $2.13, and providing information to employees about how tips would be redistributed under a tip pool is insufficient to satisfy the notice requirements of the FLSA. As a result, the Court ruled that Defendant could not compensate plaintiffs at the lower “tipped” hourly wage rate and must, instead, pay them the full minimum wage for all of their work hours.
In addition, the Court awarded Plaintiffs full liquidated damages, equal to twice the amount of backpay owed, because Artisanal entirely failed to demonstrate that it acted with good faith. In awarding liquidated damages, the Court held that the Defendant could not abrogate its own FLSA compliance obligations by delegating them to an agent such as an accountant, or to a payroll software program. Further, there was significant evidence in the record that the Defendant decided to implement certain unlawful pay practices in direct contradiction of legal advice, while failing to present any evidence that it took any actions to obtain legal advice or comply with the FLSA with respect to its remaining pay policies and practices.
This decision represents a significant success on behalf of workers, particularly given the rampant minimum wage and overtime violations common in the restaurant industry. To learn more about the minimum wage and overtime rights of tipped restaurant workers, please visit our website at https://www.mselaborlaw.com/practice-areas/unpaid-regular-pay-overtime
