Restaurant Has To Pay Back Staff $624,000 Over Illegal Tip Pool

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Employees at a restaurant in South Carolina are entitled to a big payday after the state's Department of Labor ruled that the business operated an illegal tip pool.

All in, 92 staffers are owed $624,017 — or about $6,700 for each worker.

The restaurant in question is 167 Raw, in Charleston.

Interior of a restaurant
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According to a South Carolina Department of Labor release, management at the restaurant "shortchanged 92 workers by forcing them to participate in an illegal tip pool that included management," along with some other employees.

Management isn't supposed to receive tips.

A tip jar
Unsplash | Sam Dan Truong

Anyone who's worked in food service will tell you that managers and supervisors aren't supposed to be part of any tip pool. This isn't just the standard custom — it's actually enshrined in U.S. federal law.

It's important because many staffers make less than minimum wage.

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Unsplash | Towfiqu barbhuiya

Legally speaking, it's permissible to pay employees far below minimum wage — as little as $2.13 an hour, in fact — if tips bring their wage up above the minimum wage.

When managers cut into the pool, it affects the take-home pay of these low-wage workers.

The restaurant says it thought everything was legal.

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Unsplash | 2H Media

"The Department of Labor concluded that these procedures were in direct violation of certain federal guidelines," the restaurant told Insider. "The department began a full investigation and determined that while we had not intentionally violated any regulation, we had instead relied upon incorrect legal advice."

Managers were part of the tip pool, but owners were not.

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Giphy | Schitt's Creek

The restaurant claims that everything was done in good faith, pointing out that the owners didn't take home any of the tip pool. They've reportedly implemented new procedures to correct the issue.

It's a tough world for restaurant workers.

Cook working in restaurant kitchen
Unsplash | Zahir Namane

Low pay has been the industry norm for decades, but the pandemic put added pressure on restaurant workers. Millions across the country were forced to quit their jobs and look for other work as restaurants were forced to operate with restrictions.

The South Carolina decision is a win for workers everywhere.

A tip jar
Unsplash | Aviv Rachmadian

"As food service industry employers struggle to find people to fill the jobs needed to remain competitive, they must take into account that retaining and recruiting workers is more difficult when employers fail to respect workers’ rights and pay them their full wages," said state official Jamie Benefiel.

What do you think?

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Many of us have experience working in a restaurant, and we want to hear your stories. What was your experience like? How did you make ends meet? Did it ever feel like things were unfair? Be sure to share your thoughts in the comments.

h/t: Insider