Significant violations in the Austin restaurant industry raise concerns for US Labor Department officials

AUSTIN, Texas – In nearly every one of its investigations of restaurants in fiscal year 2016, the U.S. Department of Labor’s Wage and Hour Division says restaurant owners in the Austin area violated federal labor law by not paying their workers the wages they were legally owed.

The division found violations of the Fair Labor Standards Act in 95 percent of its investigations of area restaurants from Oct. 1, 2015, to June 30, 2016, down slightly from the 98 percent violation rate in fiscal year 2015. In just nine months ending in June 2016, investigators helped recover more than $330,000 in back wages for 500 Austin restaurant workers.

“The current level of noncompliance found in these investigations is not acceptable,” said Dr. David Weil, administrator of the Wage and Hour Division. “WHD will continue to use every tool we have available to combat this issue. This includes vigorous enforcement as well as outreach to employer associations and worker advocates to ensure that Austin restaurant workers receive a fair day’s pay for a fair day’s work."

Findings like these are all-too-common in restaurants across the nation. The industry traditionally employs some of the country’s lowest-paid workers who, due to a lack of knowledge of the law or a reluctance to exercise their rights, are vulnerable to labor violations.

Some of the common violations include employers:

• Requiring employees to work exclusively for tips, with no regard to minimum-wage standards.
• Making illegal deductions from workers’ wages for walkouts, breakages, credit card transaction fees and cash register shortages, which reduce wages below the required minimum wage.  
• Paying straight-time wages for overtime hours worked.
• Calculating overtime incorrectly for servers based on their $2.13 per hour base rates before tips, instead of the federal minimum wage of $7.25 per hour.
• Failing to pay proper overtime for salaried non-exempt cooks.
• Creating illegal tip pools involving kitchen staff.
• Failing to maintain accurate and thorough records of employees’ wages and work hours.
• Committing significant child labor violations, such as allowing minors to operate and clean hazardous equipment, including dough mixers and meat slicers.

The Wage and Hour Division uses data and evidence to focus its resources strategically on where violations rates are high but the likelihood of workers speaking up is low, and employs a combination of enforcement and education to boost compliance.  In Austin, the division continues to engage key employer associations and state agencies to educate the restaurant industry about the systemic violations typically found, and to provide employers with FLSA compliance assistance information to improve compliance in the future.

In 2017, the division will expand outreach, education, and enforcement in the industry to more cities and states in the Southwest and beyond to continue to combat these widespread violations.

The FLSA requires that covered, nonexempt employees be paid at least the federal minimum wage of $7.25 per hour for all hours worked, plus time and one-half their regular rates, including commissions, bonuses and incentive pay, for hours worked beyond 40 per week. Employers also are required to maintain accurate time and payroll records.

For more information about federal wage laws, call the Wage and Hour Division’s toll-free helpline at 866-4US-WAGE (487-9243). Information also is available at http://www.dol.gov/whd/.

Editor’s Note: Wage and Hour Division Administrator Dr. David Weil will be available to news media to discuss the state of labor violations in this industry Oct. 5 at 11 a.m. CDT at the Homer J. Thornberry Federal Judicial Building, 903 San Jacinto Blvd., Suite 1400, Austin, TX 78701.

Members of the news media wishing to attend should contact Juan J. Rodríguez via email.