US Department of Labor recovers $157K in back wages for 65 workers of North Carolina restaurant that kept their tips illegally

GOLDSBORO, NC – A federal investigation has recovered $157,287 in back wages for 65 workers after finding that a Goldsboro-based restaurant’s pay practices denied the workers their full wages by keeping portions of their earned tips.

The U.S. Department of Labor’s Wage and Hour Division determined that Mugen Inc. – operating as Jay’s Kitchen – kept a percentage of their employees’ tips, a minimum wage violation of the Fair Labor Standards Act. By doing so, the employer lost their right to claim a tip credit and owed the workers the difference between their paid cash wage and the federal minimum wage. Investigators also found Mugen Inc. failed to keep an accurate record of hours worked, provide the dates of birth for employees under the age of 19 and keep addresses for several employees, all FLSA recordkeeping violations.

Investigators also found that Mugen Inc. allowed three, 15-year-old employees to work outside of permitted hours while school is in session, a violation of federal child labor laws. The employees worked more than 3 hours on a school day, more than 18 hours in a school week and past 7 p.m. while school was in session. The division assessed a $1,915 civil money penalty to address the violation.

“Tipped workers in the food services industry rely on their hard-earned tips to make ends meet. Tips are the property of the worker and, under no circumstances, may employers keep any part of their employees’ tips,” explained Wage and Hour Division District Director Richard Blaylock in Raleigh, North Carolina.

“Our investigation also found Mugen Inc. employed minor-aged workers illegally. The Wage and Hour Division assessed more than $1 million in penalties and identified child labor violations in nearly 200 food service industry investigations in the last two fiscal years,” Blaylock added. “We are determined to ensure the well-being and safety of young workers is not compromised, and that employers understand there can be costly consequences for failing to comply with federal child labor laws.”

In fiscal year 2021, the Wage and Hour Division recovered more than $34.7 million for more than 29,000 workers in the food service industry. In 2022, the Bureau of Labor Statistics reports near record numbers of job openings and workers in the accommodations and food services industry quitting their jobs. 

“Employers who do not respect their workers’ rights will likely struggle to retain and recruit the people they need to remain competitive, as workers look for opportunities with employers that do,” said Blaylock.

In addition to Jay’s Kitchen, Mugen Inc. also owns and operates Jay’s Sushi & Burger Bar in Goldsboro, Ninja Hibachi Express in Goldsboro and Greenville, Ninja Grill in Goldsboro, Ninja Hibachi & Burger in Mount Olive, and Jay’s 108 in Kinston.

View the division’s statistics on child labor investigations through the U.S. and in the Southeast.

For more information about the FLSA and other laws enforced by the division, contact the agency’s toll-free helpline at 866-4US-WAGE (487-9243). Workers can call the Wage and Hour Division confidentially with questions – regardless of their immigration status – and the department can speak with callers in more than 200 languages.

Learn more about the Wage and Hour Division, including resources available online where employers, parents, teachers, and minor workers can get information about protections for young workers on the department’s YouthRules! website, as well as learning the seven child labor best practices for employers.