In West Virginia and many other states, the minimum wage for workers is $7.25 an hour. But restaurant owners must pay their waiters and waitresses only $2.13 an hour, on the assumption that tips will bring their pay up to the minimum wage. Waiters must report their tips, and if their pay doesn’t reach minimum wage, restaurant owners are required to make up the difference.
Over time, those tips can add up — as shown this week, when a company that owns two Morgantown restaurants was told to pay more than $200,000 in back wages to 105 workers.
The violations by Black Bear Burritos included “requiring servers to participate in an illegal tip pool, or tip sharing arrangement,” according to a news release from the U.S. Department of Labor. The company violated the minimum wage and overtime regulations in the federal Fair Labor Standards Act, according to an investigation by the department’s Wage and Hour Division’s office in Charleston.
“Failure to pay legally required minimum wage and overtime poses a serious problem to workers who, in many cases, are already struggling to get by, and also undercuts those employers that choose to obey the law and pay their workers properly,” John DuMont, director of the labor department’s Pittsburgh district office, said in the news release. “Tipped workers rely on customers for the bulk of their income and are especially vulnerable to hardships caused by improper or illegal tip-sharing arrangements, which deprive them of their hard-earned pay.”
“Under the FLSA, tips are the property of the employees who receive them; however, restaurant operators can benefit by claiming a credit, based on the tips, toward their obligation to pay those employees the full minimum wage,” the department’s news release explained.
Sometimes employers also take part of wait staff tips to pay other people working in the restaurant, like hostesses and bartenders, but “an employer may not take the employee’s tips for an invalid tip pool, such as one that includes employees who do not customarily receive tips.”
The new DOL release also stated recent investigations found some employers “unlawfully” used money from the tip pool to pay the salaries for restaurant managers.
Brooke Drake, a community organizer for the West Virginia Citizen Action Group, used to work as a waitress at local restaurants in Charleston.
“Servers never get every penny you give them as a tip. But if you don’t tip your servers, you cost them money,” she said.
Tips vary widely, Drake said. “Sometimes you can make $25 an hour if you have a lot of customers.
“But at the end of a shift, employees must often clean up the restaurant. For $2.13 an hour, that is not worth your time. If you have been there all day, and your tips have been bad, and you are at the point of the day when you don’t get tips anymore, you want to leave,” Drake said.
She said one local chain restaurant she worked at “wanted me to wear more makeup. Making $2.13 an hour and starting at 7 a.m., I said, ‘No.’ It was a very oppressive mentality.
Keeley and Jonathan Steele own the Bluegrass Kitchen, Tricky Fish and Frutcake — three restaurants in Charleston’s East End. Together, their restaurants employ about 50 people.
Keeley Steele said employees at Bluegrass Kitchen make $2.50 an hour plus tips. At Tricky Fish, where tips are not as high, employees make a base wage of $5 an hour, she said.
“There is no one working for us who is making anywhere close to the minimum wage” once tips are factored in, she said. “I can’t run my business with disgruntled employees. I am not in fast food. We don’t have a lot of turnover. A lot of locally owned restaurants will tell you the same thing.”
Drake said most waiters and waitresses face the same issues as other workers. “Many are students. Some may have just left a spouse. The job is just a stepping stone to help you afford to pay back your student loans or make car payments,” she said. “You need consistency in your income that most other people have.”
Robert Lagg, general manager of Mardi Gras Resort and Casino in Cross Lanes, said, “We run a proper business and follow the rules. We believe in keeping our employees happy. We don’t want to be overbearing. We respect you to come into work. We are not taskmasters, and we understand that things come up. We are flexible and fair.
“Almost all service jobs are like that. Everybody makes sub-minimum wage. Usually, their tips far exceed that. I believe that if the tips don’t, if employees are working below the minimum wage, the employer is responsible,” Lagg said. “But our employees have not even approached working as low as the minimum wage.”
Gordon Simmons, a field organizer in Charleston for UE Local 170, the West Virginia Public Workers Union, said, “I know it is pretty commonplace that restaurants don’t pay minimum wages. People are told to sign off that they got it, when then did not necessarily get it. Sometimes they don’t even see their tips. It is modern day slave labor.”
Simmons said he was delighted to hear about federal enforcement of labor rules in the Black Bear Burritos decision.
“There are some decent, honest restaurant owners and managers,” Simmons said. “But you have a whole group of workers who are plagued by not getting the minimum wage.
“As an industry, the food industry is woefully underorganized. Abuses are widespread because of that.”
Simmons said unions tend to exist at big hotels, casinos and major food services. “But you don’t see a lot of unionization in regular restaurants, where there is widespread abuse and violations of labor laws.
Lagg said waiters at the Mardi Gras Casino are not represented by a union, but that a lot of maintenance workers, hotel workers and other people on his staff are represented by the United Steelworkers of America.
“If you walk into a place and people are miserable, customers do not want to stay. Employees set the tone. Customer service is important,” Lagg said.
Steve White, executive director of the Affiliated Construction Trades Foundation, said, “We commonly see, almost on a weekly basis, similar situations where workers are cheated out of their wages, overtime and vacation time.
“The chances of getting caught are very slim. Kudos to the Department of Labor for doing something. People don’t know what their rights are. Every day, workers lose money that is rightfully theirs.”
The federal minimum wage of $7.25 per hour was last increased in 2009. The federal tip credit’s cash wage requirement of $2.13 has not been increased since 1991.
White said, “This all proves to me the need for unions is as strong as it ever was when workers, particularly in the lower wage sectors, are taken advantage of. It adds up to big money.”
Reach Paul J. Nyden at email@example.com or 304-348-5164.