Federal investigation finds Algood restaurant illegally used workers’ tips for operating expenses, allowed minors to operate dangerous machines

ALGOOD, TN – The U.S. Department of Labor has recovered $42,373 for 44 employees after finding an Algood restaurant illegally kept tips that employees earned.

The department’s Wage and Hour Division found McCurdy Enterprises LLC – operating as Red Oak Roasters – withheld the tips and used that money to inflate hourly wages by dividing it among workers, including managers. Investigators also found Red Oak Roasters incorrectly classified a salaried employee as exempt from overtime. By doing so, the employer failed to pay overtime premiums to this employee for hours over 40 in a workweek.

“What Red Oak Roasters did is wage theft, plain and simple. Tips are the property of the employees who earn them and rewards them for providing good service to customers,” said Wage and Hour District Director Lisa Kelly in Nashville, Tennessee. “Employers have no right to keep those earned tips and use them to reduce their cost of doing business.”

In addition, the division found the employer allowed five minor-aged employees to engage in prohibited and hazardous activities by operating a vertical dough mixing machine, a violation of the federal child labor standards. The division assessed Red Oak Roasters a $9,900 civil penalty to address the child labor violations.

“In addition to wage theft, our investigators found alarming child labor violations,” Kelly added. “Power-driven bakery machines have the potential to cause serious injuries to even experienced workers. Allowing minor-aged workers – in this case 16 and 17-year-olds – to operate these machines is both troubling and illegal.”

Wage and Hour Division investigators recovered more than $27 million for more than 22,500 workers in the food service industry in fiscal year 2022. In fiscal years 2020 and 2021, the Wage and Hour Division’s Southeast region found child labor violations in more than 190 food service employers investigated, resulting in more than $1 million in penalties assessed to employers.

Learn more about the Wage and Hour Division, including tip regulations under the FLSA and also a search tool to use if you think you may be owed back wages collected by the division. Workers can call the Wage and Hour Division confidentially with questions – regardless of where they are from – and the department can speak with callers in more than 200 languages.