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Roy’s returns tips to servers after illegal policy surfaces

May 3, 2014 - 12:05am

Six Roy’s restaurants, including Roy’s Waikoloa Bar &Grill, are returning money to servers after the U.S. Department of Labor found the chain illegally required the servers to share their tips with the kitchen help.

Roy’s Holdings Inc. agreed to pay $225,000 in tips and back wages to 326 servers following a Department of Labor investigation that dates to August 2011. About 40 servers who worked at the Waikoloa restaurant will be reimbursed, said Terence Trotter, district director for the department’s Wage and Hour Division in Honolulu.

The Department of Labor determined the wage violation was not willful — meaning the restaurants did not understand they had violated the law, Trotter said.

“They took affirmative action in a timely manner and developed a compliance action plan,” Trotter said.

There is nothing wrong with servers voluntarily tipping kitchen workers, Trotter said. The violation of the Fair Labor Standards Act surrounded restaurant policy that servers — who work for less than minimum wage — must divide their tips with the kitchen workers, who are making at least minimum wage.

“Employers cannot take a credit against their minimum wage obligation to tipped staff if they require a portion of those tips to be shared with traditionally nontipped staff such as kitchen employees,” Trotter said in a Department of Labor press release.

Essentially that means restaurants cannot require servers to both work for less than minimum wage and also give up some of their tips.

Trotter said he could not reveal if the investigation was triggered by a complaint or by site visits the department conducts on a routine basis.

“When we go out and visit with employers, the rationale is confidential,” he said.

Michael Lam, an attorney for Roy’s, said the company felt it was right to act quickly to “make those folks whole.”

“This wasn’t a willful violation; it was a difference of interpretation of a rule,” Lam said.

The Waikoloa restaurant was also fined $1,550 for permitting a minor to load a trash compactor, which is considered a hazardous occupation for workers younger than 18. Roy’s agreed to make sure no minors operate or load the compactor in the future and to post signs on the machine clarifying the law, Trotter said.