Dive Brief:
- Luxe Bar & Grill in Troy, Michigan, Old Woodward Ventures and Kara Bongiovanni, its owner and president, agreed to pay 11 current and former servers $45,428 in back wages and liquidated damages under an Aug. 8 consent order and judgment, the U.S. Department of Labor announced that day (Su v. Old Woodward Ventures, LLC).
- DOL sued Luxe Bar & Grill for violating the Fair Labor Standards Act after investigators from the DOL’s Wage and Hour Division found the restaurant and Bongiovanni paid servers in cash at straight-time rates for “off the books” overtime, the agency explained. WHD also found the restaurant failed to maintain accurate payroll records, the DOL said.
- “Luxe Bar & Grill’s practice of recording [employees’] and paying them off the books demonstrates they knew the law and chose to ignore it,” WHD District Director Timolin Mitchell stated in the announcement.
Dive Insight:
Low-wage sectors, such as the restaurant and construction industries, have been a big part of recent DOL enforcement, with employers shelling out millions of dollars in damages as a result.
“When employers pay their workers less than the required wage, they will be held accountable — even if they try to hide it by making those payments off the record,” Regional Solicitor Christine Heri said in a statement.
The standout issue is overtime — or, more specifically, failing to pay employees who are not exempt from overtime at the rate required by the FLSA. That rate, as a DOL fact sheet reminds employers, is no less than time and one-half an employee’s regular rate of pay, which can’t be less than minimum wage, for hours the employee works in excess of 40 in a workweek.
For instance, in November 2023, Plaza Azteca, a national Mexican food chain, agreed to pay $11.4 million in back pay and liquidated damages to more than 1,000 employees at over 40 restaurants.
In that case, the DOL alleged that the chain failed to pay some employees time and one half when they worked more than 40 hours a week. The chain also allegedly paid back-of-house employees at various restaurants predetermined amounts, causing them to receive less than minimum wage, according to the DOL.
The year before, in November 2022, Krispy Kreme Doughnut Corp. agreed to pay $1.18 million to settle DOL allegations that it failed to include monthly bonuses in some workers’ regular rate of pay when calculating overtime, thereby paying them less overtime than the FLSA required. Krispy Kreme denied the allegations and settled with no admission of wrongdoing.
In the Luxe Grill case, HR managers may take a cue from the consent order on how to avoid potential FLSA mistakes, specifically with regard to recordkeeping.
Under the court order, to ensure that Luxe Grill maintains accurate time and payroll records going forward, the restaurant must implement and maintain an electronic system that: 1) logs the wages, tips, hours worked and bonuses for each employee on a per-workweek basis; 2) records a description of the work each employee performed and the overtime wages for all hours they work over 40 in a workweek; and 3) records bonus amounts and the reason the bonus was paid.
The restaurant is also expressly prohibited from using handwritten notes as records and paying employees in cash, regardless of whether the payment is a bonus or compensation for hours worked. Additionally, it must give employees copies of several DOL fact sheets on FLSA requirements, including fact sheets on overtime pay requirements, recordkeeping and bonuses.
The payments reflect $22,714 in unpaid overtime from Oct. 30, 2019, through Oct. 29, 2021, the DOL said. The 11 servers will also receive $22,714 in liquidated damages. Luxe Grill and Bongiovanni must additionally pay $4,570 in civil money damages, according to the agency.