US Department of Labor recovers $117K for servers after investigation finds restaurants illegally shared tips with managers, supervisors

HONOLULU – A federal investigation has recovered $117,710 in back wages and liquidated damages for 70 workers of a restaurant group in Hawaii that required servers to share their tips with managers, after the employer reduced managers’ salaries by at least 25 percent. The restaurant operators attempted to make up for the reduction in managers’ salaries by drawing from tipped workers’ wages, in violation of the Fair Labor Standards Act.

The U.S. Department of Labor’s Wage and Hour Division found that D.K. Restaurant Group – operator of  Sansei Seafood Restaurants and Sushi Bars in Kapalua, Kihei and Waikoloa; and D.K. Steak House in Honolulu – reduced the managers’ salaries when it reopened the restaurants after a temporary closure forced by the pandemic.

In addition to $58,855 in back wages plus an equal amount in damages, the department assessed D.K. Restaurant Group $8,580 in penalties for the willful nature of its violations.

“Customers tips to restaurant staff for good service are the private property of those workers in the tip pool, such as servers, bartenders and other front-line workers. Any attempt by management to misuse a portion of these tips violates tipped workers’ wage rights,” explained Wage and Hour Division District Director Terence Trotter in Honolulu. “The U.S. Department of Labor is determined to protect workers’ right to keep all their earnings and prevent employers from gaining a competitive advantage by reducing their labor costs.”

In fiscal year 2021, the Wage and Hour Division recovered more than $31.7 million in back wages for workers in the food service industry. The Bureau of Labor Statistics projects there were more than 1.3 million job openings in the accommodations and food service industry in April 2022, and reports that overall employment of food and beverage serving, and related workers is projected to grow 17 percent from 2020 to 2030, much faster than the average for all occupations.

“As restaurant operators struggle to find sufficient staff to do the work needed to operate their businesses, employers who deny workers their full wages and other legal rights are likely to have difficulty retaining and recruiting workers,” Trotter added.

Employers and workers can call the division confidentially with questions regardless of their immigration status. Download the agency’s new Timesheet App for Android devices to ensure hours and pay are accurate. The department can speak with callers in more than 200 languages through the agency’s toll-free helpline at 866-4US-WAGE (487-9243). Learn more about the Wage and Hour Division, and its search tool if you think you may be owed back wages collected by the division.