Sports Bar in $6.8 Million Settlement Over FLSA Violations; Tipped Wages at Heart of DOL’s Case

Maybe at long last past time for Congress to update the Fair Labor Standards Act’s “tipped wage” rule that allows restaurant to pay their servers less than the federal minimum wage provided the $2.13 minimum wage plus the tips received amount to the regular $7.25 minimum wage.

The tipped wage has been $2.13 since 1991, and plenty of employers have abused that privilege over the years. The latest to be caught with its hands in the cookie jar is Chickie’s and Pete’s, a chain of sports bars located in Philadelphia, other parts of Pennsylvania and Southern New Jersey.

The Department of Labor announced today that the restaurant and its owner, Peter Ciarrocchi, Jr. will pay $6.8 million in back pay and liquidated damages to 1,159 employees at nine locations to settle allegations that the defendants skimmed money from the servers to line the owner’s pocket.

That’s an impolite way of describing what the DOL alleges went on. According to DOL, the owner imposed what came to be known as “Pete’s Tax,” where he illegally retained 60 percent of the combined tip pool of his servers.

This “Pete’s Tax” had to be paid at the end of each shift, even if the server received all tips and credit cards and had no cash on hand.

DOL also alleged another long laundry list of violations, including the payment of a flat $15 per shift , failure to pay required overtime wages, and failure to pay for time spent in mandatory meetings, and requiring servers to pay for their uniforms.

As part of the settlement, the owner has agreed to publish an article for a restaurant trade publication that addresses an employer’s obligations under the FLSA.

Read more about the case and the settlement.

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