The United States Department of Labor is suing the ownership of two Kentucky brunch restaurants for unpaid overtime, saying the owners of the North End Cafe, with two locations in Louisville, stiffed a total of eighteen employees out of thousands in overtime pay.
North End Cafe Sued For $131K In Back Wages
Labor Department representatives say eighteen employees at the two restaurants are owed $131,409.66 in unpaid back wages, plus “liquidated damages” in the same amount, equaling a total of $262,819.32 in compensation. That’s approximately $14,601 per employee.
The lawsuit against the two cafes was filed on November 14, 2018 in the US District Court for Kentucky, Western Division. North End Cafe, opened in 2003, is owned by Christopher Seckman and brothers Walton Jones and Whitney Jones.
An attorney for the North End Cafe, John Walters, says the core of the dispute rests on whether or not the two businesses should be considered separate employers for the purposes of overtime calculations. The ownership group considers the two restaurants separate employers, but obviously, the Labor Department has taken the opposite position.
The Department of Labor declined to comment on the case, when questioned by the Courier Journal. North End Cafe has locations on Bardstown Road and Frankfort Avenue.
The Department of Labor’s investigation goes back to January 5, 2016. There is no indication as to whether or not the alleged overtime violations go back further. Labor Department officials generally look at payroll numbers for a two-year period to make their enforcement decisions.
Overtime Violations In The Restaurant Industry
Unfortunately, overtime and wage violations remain rampant within the food service industry, where many workers make tips. While it’s still unclear what positions the eighteen employees at North End Cafe worked in, servers and bussers do hard, often thankless, work. Many of these workers also struggle to make ends meet on low wages.
Thankfully, the Fair Labor Standards Act is here to ensure that workers are fairly compensated for their labor. The Fair Labor Standards Act, or FLSA, entitles the vast majority of America’s workers to the minimum wage and overtime pay.
Overtime is a right for most American employees. That’s even true for many employees who make a salary; overtime isn’t just for salaried workers. Overtime must be paid at one-and-one-half times your regular rate of pay for all hours worked over 40 in a single week.
Most workers who make tips are also entitled to overtime, but the calculations that go into figuring out your overtime wage can be difficult. Employers are allowed to take a “tip credit” when an employee makes over $30 in tips in a normal month.
By taking a tip credit, the employer reduces the hourly cash wage, sometimes below the applicable minimum wage. This is legal, so long as your hourly cash wage and your hourly wage in tips still add up to at least the minimum wage.
Calculating Tipped Wages & Overtime
Let’s say you work 46 hours for one week at a minimum wage job and made $120 in tips. You can easily convert the tips you made into an hourly tip wage, by dividing $120 by 46 to get $2.60 per hour. Since you made over $30 in tips for the month, your employer is allowed to take a tip credit. Your employer should take a tip credit of $2.60, because that’s how much you made per hour in tips. Your employer can take the minimum wage, $7.25 per hour, and subtract $2.60, to get a cash wage of $4.65. That makes your straight-time compensation for the week a total of $213.90, which is $4.65 times 46 hours.
Calculating your overtime wages is a little more complicated than usual, because we have to factor in the tip credit. Remember that you worked 46 hours for the week. That’s 6 hours over the 40-hour threshold set for overtime wages. To calculate your overtime wage for the week, take the applicable minimum wage and multiply it by 1.5. We’re using the federal minimum wage so we’ll multiply $7.25 by 1.5 to get $10.88. Now we subtract the amount of the tip credit from $10.88; $10.88 minus $2.60 equals $8.28. That should be your overtime wage for the week. Now you can multiply $8.28 by your 6 overtime hours to get $49.68.
With your straight-time compensation and overtime wages calculated, we can begin to put everything together. Add $213.90 to $49.68, which is $263.58. That’s your cash wage for the week.
For an in-depth guide to calculating overtime, click here.