A restaurant in San Francisco's Chinatown is paying staff $1.6 million over claims that it stole their tips and failed to pay wages

• A San Francisco restaurant is paying workers $1.6 million to settle claims of unpaid wages and tips.
• Z & Y, a Sichuan restaurant in Chinatown, is paying 22 workers roughly $73,000 each.
• The owners denied illegal conduct but decided that a defense is too expensive, their lawyer said.

Z & Y, a Sichuan restaurant in San Francisco's Chinatown, is paying 22 workers a collective $1.6 million after California's labor commissioner said the business failed to pay wages and stole tips.

Current and former employees told the San Francisco Chronicle that some staff hadn't been paid for all the hours they worked. After staff raised concerns, the restaurant retaliated, in some cases by cutting their hours or firing them, they said.

"Z & Y Restaurant and its owners vigorously deny that they engaged in any illegal conduct," Seth Weisburst, the attorney for Z & Y's owners, told Insider. "The restaurant and its owners never 'stole' any wages or tips from employees, nor did they retaliate against any employees. That simply did not happen."

The California Labor Commissioner's Office started an investigation in 2019. The investigation found that some kitchen staff were paid a fixed salary below the minimum wage that did not include overtime, the office said on Tuesday. The employer illegally kept tips left for the servers and did not pay servers split-shift premiums when they were scheduled to work both the lunch and dinner shifts, the commissioner's office said.

The settlement, amounting to $1.6 million, covers payment for unpaid minimum wages, overtime, and split-shift premiums, as well as more than $400,000 for stolen tips, the California Labor Commissioner's Office said.

The payment is split between 22 servers, bussers, cooks, and other kitchen staff, who are all Chinese or Taiwanese immigrants, the Chronicle reported. They are expected to receive about $73,000 each.

The restaurant is also paying five workers a collective $70,000 in a second settlement over the retaliation claims, the Chronicle reported.

The owners, Jun Yuan Zhang and Li Jun Han, agreed to pay the settlements after they decided it would have been too expensive to defend themselves, Weisburst told Insider. "The restaurant and its owners had to make the difficult business decision to settle these claims instead of spending significant resources on attorneys' fees and several years in court," he said.

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The labor commissioner issued more than $1.4 million in wage assessments and penalties in 2020, which the restaurant appealed.

The nonprofit Asian Law Caucus, which supported the workers throughout the case, said the two settlements also require the restaurant owners to implement a fair and transparent tip-distribution policy, provide training on workplace rights, give workers their schedules two weeks in advance, and allow them to trade shifts.