With yet another announcement from the U.S. Department of Labor (DOL) that a Hawaii business has shortchanged employees — this time by skimming off a portion of workers’ tips, in addition to failing to pay overtime — it’s time for a holiday-themed public service announcement to employers: Don’t do that.
U.S. wage and hour laws in place since 1938 set a basic standard: Employees must be paid at least the federal minimum wage per hour worked, and workers putting in more than 40 hours per week must be paid overtime. Additionally, the law prohibits an employer, manager or supervisor from keeping any tips meant for employees.
No business of any size should ignore these important worker protections. Yet a quick scan of announcements by the DOL’s Wage and Hour division will show that enterprises of all kind continue to fall short.
On Monday, DOL announced that the owner of two Domo Cafe restaurants in Honolulu was ordered to pay more than $158,000 in back wages and damages to 14 workers — an amount that includes $72,054 in tips paid by customers that were diverted by the owner and his wife, a manager, along with $7,172 in unpaid overtime wages to one employee.
To enforce the message, DOL added another $79,226 in damages, and fined the owner $2,030 in penalties for the “reckless nature of violations.”
With Hawaii’s high cost of living, it is “critically essential” that service workers retain all the tips they earn, as DOL Wage and Hour Division District Director Terence Trotter stated. It’s understood that times are tough in the service industry, but robbing employees of wages and tips cannot be an option, and employers must note that the consequences for failing to follow legal minimum workplace standards can be even more costly.
One of the most troubling violations of workplace law was revealed on Sept. 3, involving TransAir, a Honolulu air cargo carrier that contracted with the U.S. Postal Service (USPS) to move mail between Hawaii airports between 1982 and 2022, when it was forced to shut down by the Federal Aviation Administration for poor safety practices.
TransAir’s USPS contract for 2019 through 2021 was worth $113 million, and because of the contract, TransAir was required to pay federally determined prevailing wages and fringe benefits on that job. Instead, the company “recklessly disregarded requirements,” DOL stated, paying lower wages to laborers.
DOL found the company shortchanged 250 employees by $268,839 in wages and $156,106 in fringe benefits, and unlawfully deducted pay from workers for lunch breaks they didn’t take, stiffing them for overtime pay by $12,650. With another $12,625 in liquidated damages, the total assessed against TransAir’s parent company, Rhoades Aviation Inc., rose above $450,000.
Another high-profile violation this year involved two Oahu locations of the popular Max’s Restaurants, owned by Colorado-based Asian Restaurant Group, Inc. Here the DOL found that no matter how many overtime hours kitchen employees worked, they earned a fixed salary, while a manager took “a portion” of tips. The Hawaii Workers Center brought this case to the DOL, which recovered nearly $154,000 in OT wages for 23 employees, another $154,000 for damages, and $8,418 in civil penalties.
The DOL is prepared to come down hard on Scrooge-worthy instances like these. “Restaurants failing to pay employees in compliance with the law will pay a hefty price in back wages due plus liquidated damages,” Trotter said.
DOL can and will go after businesses that break the rules, bosses. In the spirit of the season, consider this warning a gift.
