Restaurant Must Pay $75K in Back Wages After Illegally Forcing Servers to Share Tips

A restaurant in South Carolina has been forced to pay more than $75,000 in back wages to 10 workers after illegally forcing them to share their tips with the owner and manager, authorities said.

An investigation into Sarku Hibachi Grill & Buffet in Surfside Beach found the restaurant required servers—who were paid an hourly wage of $3 or less—to share their tips with their employer and manager, a violation of federal labor laws, the U.S. Department of Labor said in a news release on Monday.

As a result, the 10 employees ended up working for less than the federal minimum wage of $7.25 an hour, the agency said.

The restaurant must now return shared tips and pay the servers the difference between their hourly wage and the federal minimum wage of $7.25 per hour for all hours worked.

In total, the department's Wage and Hour division recovered $75,953 in back wages for 10 workers.

The investigation also found that the restaurant failed to keep a record of the cooks' work hours.

"Restaurant workers are essential workers. They work hard for their tips and rely on them to pay their bills and feed their families," Jamie Benefiel, the director of the agency's Wage and Hour Division District in Columbia, South Carolina, said in a statement.

"Restaurant owners must understand that keeping workers' tips or requiring workers to share tips with managers or supervisors is illegal.

"The U.S. Department of Labor is just a phone call away, should any restaurant worker, manager or owner need clarification on that matter, or have questions about tip and wage requirements."

Newsweek has contacted the restaurant for comment.

South Carolina is one of a few states that does not have a state minimum wage law.

Employers subject to the Fair Labor Standards Act (FLSA) must pay the current federal minimum wage of $7.25 per hour. This allows employers to pay tipped workers as little as $2.13 an hour as long as their tips and hourly wages add up to $7.25 or more.

The federal minimum wage was raised in 2009 to $7.25 an hour and has not been raised since.

Data from the Department of Labor recently revealed that only around 250,000 people earned the federal minimum wage in 2020, which is fewer than 0.5 percent of all workers.

For more information about the FLSA and other laws enforced by the division, workers can contact the agency's toll-free helpline at 866-4US-WAGE (487-9243).

A compliance assistance toolkit is also available for restaurant employers and the Department of Labor's website features a search tool to use if you think you may be owed back wages collected by the division.

Stock photo cash tips
Stock photo shows money in a tip jar. A South Carolina restaurant must pay more than $75,000 in back wages after illegally forcing servers to share tips with the owner and manager. Robert Alexander/Getty Images