A Hawaii restaurant group illegally shared $59,000 tips accumulated by 70 servers among managers, DOL says

• A Hawaii restaurant group illegally shared $58,855 of servers' tips among managers, the DOL said.
• The 70 servers' tips were used to top up managers' salaries after the company cut them, per the DOL.

Servers at a restaurant group in Hawaii were illegally forced to share $58,855 in tips with managers whose salaries had been cut by the company, the US Department of Labor (DOL) said.

The DOL said DK Restaurant Group, which operates seafood, sushi, and steak restaurants in Hawaii, reduced managers' salaries by "at least" 25% when it reopened its locations after COVID-19 lockdown — then topped up managers' salaries using tips accumulated by 70 servers.

This violated the Fair Labor Standards Act (FLSA), the DOL said. The law stipulates that managers and supervisors are not allowed to keep staff tips "under any circumstances," including through tip pools.

US employers can pay tipped staff as little as $2.13 an hour, with tips bringing their take-home pay up to at least $7.25 an hour. In Hawaii, the minimum take-home pay for tipped workers is $10.10 an hour, with at least $9.35 of it coming from their employer.

"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," Terence Trotter, district director of the DOL's Wage and Hour Division in Honolulu, said in a statement.

Trotter added: "Any attempt by management to misuse a portion of these tips violates tipped workers' wage rights."

The DOL said it recovered $58,855 in illegally-taken tips and an equal amount in damages. It also fined DK Restaurant Group $8,580 "for the willful nature of its violations."

Previous investigations by the DOL have found that other restaurants have committed similar FLSA violations by withholding servers' tips, including making them participate in illegal tip pools.

A burrito chain in New Hampshire included managers in its tip pool, according to the DOL, leading to the department recovering $62,000 in tips and liquidated damages for 39 employees.

A seafood restaurant in South Carolina had to repay $624,000 to workers after the DOL said it forced 92 workers to participate in an "illegal tip pool."

The DOL has warned that illegal practices such as these could be helping fuel the industry's labor shortage as workers continue to leave in droves.

In the year to April 2022, 9.15 million workers in the accommodation and food-services industry quit their jobs, according to the US Bureau of Labor Statistics — a roughly 17% rise compared to the year April 2019, before the pandemic hit. The industry had 1.34 million job openings in April 2022, per preliminary BLS data, up from 898,000 three years earlier.