U.S. Dept. of Labor: Local diner owes $450K to employees after 'tip-pooling scheme'
EVANSVILLE — A local diner is in the middle of a U.S. Department of Labor investigation that accuses the owner of stiffing the staff on tips and wages.
The Department of Labor announced Wednesday that it had learned an Evansville employer engaged in an ongoing attempt to "deprive current and former employees of the money found due to them following a federal wage investigation." Because of that, the department has asked a federal court to issue a temporary restraining order and injunction against Friendship Diner, LLC and its owner, Bardhyl Shabani.
The Courier & Press reached out to Shabani Wednesday and did not hear back prior to publication.
The request was filed Wednesday by the department’s Office of the Solicitor in the U.S. District Court for the Southern District of Indiana, Western Division, according to a news release.
According to the release, the restraining order request was prompted by an investigations that alleges Shabani violated the Fair Labor Standards Act’s anti-retaliation rules "by harassing and threatening employees to coerce them into giving false statements to investigators regarding the mandatory nature of Friendship Diner’s tip pool."
That complaint was filed on Feb. 28, with the Department of Labor requesting back wages and liquidated damages for 44 people employed by Friendship Diner LLC. It was based on the Wage and Hour Division’s findings that the restaurant and owner owe $450,140 to the employees.
Of that, $225,070 is back wages and the rest is liquidated damages.
The investigation looked at pay records from Feb. 22, 2021 to Feb. 19, 2023, and allege these violations:
Operating an illegal tip-sharing pool by requiring servers to return $10 in tips for each weekday shift and $15 in tips for each weekend shift to management. Management kept the servers’ tips or paid bussers' hourly wages.
Failing to pay all workers the federally required minimum wage of $7.25 per hour.
Failing to pay overtime at time and a half the regular rate of pay for hours over 40 per week.
Paying kitchen staff half their wages by payroll check, and half in cash, without combining hours and pay to calculate hours over 40 in a work week for overtime purposes.
Failing to keep accurate payroll records.
The investigation states employees were intimidated and coerced into participating in the "tip-pooling scheme."
"Defendants would accuse employees of misconduct and follow employees around therestaurant berating them if they attempted engage in the protected activity of refusing to participatein the unlawful tip pool," the court filing states.
The filing states the owner continued that type of behavior by following employees around the diner during their shift and calling them at home asking them to sign a statement that the tip pool was voluntary.
“The U.S. Department of Labor will pursue all available avenues to ensure workers receive their rightful wages and to make certain that employers using a tip credit follow all the legal requirements for doing so,” Regional Solicitor Christine Heri said in a news release. “Furthermore, retaliation against employees is a clear violation of the law and we will use every available legal resource to protect workers and end retaliatory practices by employers, including seeking punitive damages for those harassed.”
This article originally appeared on Evansville Courier & Press: U.S. Dept. of Labor: Local diner owes $450K to employees
