Why A Texas Restaurant Chain Owed Almost $900,000 To Its Employees

A Texan restaurant chain called Hard Eight BBQ shelled out an $867,572 settlement after the Department of Labor's Wage and Hour Division found it guilty of wage theft. In a news brief, the division explained that because the barbecue chain used to include managers in its tip pool, its non-manager workers did not receive all the tips to which they were entitled. On top of that, Hard Eight BBQ neglected to pay both tipped workers and managers the proper time and a half overtime rate. 

The company, which has five restaurants in its affected Roanoke, Texas, branch and over 900 workers, told NBC that this was not intentional wage theft, but an honest mistake. Matt Perry, chief operating officer of Hard Eight BBQ, explained that the managers had received tips because they did the same work as tipped workers, so the company thought they should receive a little extra money. After being informed that this was illegal, per the Wages and the Fair Labor Standards Act, the branch made tips accessible only to non-managers and gave managers a pay raise to offset the loss in income. Perry did not appear to address the issue with overtime pay. 

This is a part of a bigger issue

While the Texas barbecue chain's settlement is eye-popping, the issue of tipped workers not receiving proper pay is widespread. This is even true during a so-called "labor shortage," as Jesus A. Valdez, the Wage and Hour District Director, noted in the news brief announcing the recovered wages: "As businesses struggle to find people to do the work needed to keep operating, employers would be wise to avoid violations or risk finding it even more difficult to retain and recruit workers who can choose to seek jobs where they will receive all of their rightful wages."

Part of the problem, as the Economic Policy Institute reported in 2017, is that the enforcement of proper tipping procedures is largely left in the hands of tipped workers themselves. First, there is the issue that most tipped workers are in precarious positions. Second, the laws concerning tipped workers' rightful wages are made obscure enough that figuring out how much they should legally be paid is difficult. In the case of Hard Eight BBQ, it took an outside investigation and audit to notice something strange was occurring (via NBC).