Two New Hampshire restaurants ordered to pay $900,000 in backwages and damages after an investigation found some staff received only tips and no wages

• Two New Hampshire restaurants admitted that four servers worked for tips only.
• The restaurants also admitted to failing to properly compensate around 58 employees for overtime.

A judge has ordered two New Hampshire restaurants to pay almost $900,000 in back wages and damages to staff after a labor department investigation uncovered workplace violations, including not paying wages to some servers and only letting them take home tips.

The US Department of Labor said Monday that the La Carreta restaurants in Derry and Londonderry and a general manager agreed to pay $445,085 in back wages, plus the same amount in damages, to 63 employees after the investigation found that they had violated fair labor requirements, including on paying overtime premiums to some staff.

In a lawsuit filed in December 2020, the DOL said that the restaurant in Derry paid three front-of-house employees "no wage at all, requiring them to rely exclusively on tips for their pay." Two of the employees received no wages during "most or all" of the time between November 2016 and November 2019, the department said. The restaurant admitted to the allegations in a response filed in February 2021.

The Londonderry restaurant also made one employee rely solely on tips, the DOL said. The employee didn't get wages during "most or all" of the time from July 2016 to July 2017, the department said, although the restaurant only admitted that it had occurred between November 2016 and July 2017, saying the longer time period was out of the scope of the lawsuit.

According to the labor department, by not paying wages, the restaurant violated the Minimum Wage Act, which stipulates that workers must be paid at least $7.25 an hour. For tipped employees in New Hampshire, the company has to pay at least $3.26 an hour, with tips bringing the minimum up to $7.25 an hour.

The DOL said the restaurants also failed to pay overtime premiums. On top of the four servers not paid any wages, around a further 60 staff across the restaurants were not paid the one and a half-times pay rate applicable for time worked beyond a weekly total of 40 hours, the DOL said. Staff at the restaurants were required to work on average 63 hours a week, the department added.

Some staff received their regular rate of pay during overtime hours, while others were given a lump sum that didn't match the rate set out by the Fair Labor Standards Act, the DOL said.

The restaurants admitted that they failed to properly compensate "approximately" 58 employees, and that some were paid regular wages for overtime hours.

The restaurants also failed to keep "adequate and accurate records" of employers' names, hours worked, and wages paid, according to the DOL.

In addition to the two restaurants – La Carreta owns six in total across southern New Hampshire – the lawsuit listed Heriberto Leon, general manager at the Londonderry restaurant, as a defendant.

In a response to the lawsuit, the restaurants denied claims that their violations of the FLSA were knowing, deliberate, or intentional. The restaurants did not respond to Insider's request for comment.

In a consent judgment on April 5, Paul Barbadoro, a US district judge in New Hampshire, ordered the restaurants to pay the back wages and damages to the affected workers. One of the employees is set to receive more than $143,000, while two will be paid around $135,000 each.

"Paying restaurant workers straight-time for their overtime hours and requiring servers to work for tips only with no cash wages is quite simply wage theft," Steven McKinney, district director of the DOL's Wage and Hour Division in Manchester, New Hampshire, said in a press release Monday.