Unpaid Tips and Wages in Restaurants: How Common Is It?

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This past Saturday night, the waitstaff and general manager at Ruggles walked out and shut down the restaurant, alleging non-payment of tips over more than a year's time. That came after news that Brasserie 19 is being sued by a former employee for alleged non-payment of wages over a five-month period.

Earlier this year, local chain Taconmadre agreed to pay $275,706 in back wages to 72 of its current and former employees after a U.S. Department of Labor investigation revealed that employees regularly received less than minimum wage and were required to work overtime without compensation.

These issues affect restaurants from large to small, from upscale to dirt-cheap. Wage theft is a $30 billion a year problem, according to the Interfaith Worker Justice Center. Its Houston branch helped workers recover $18 billion in two years alone. And that doesn't surprise attorney Todd Slobin, a partner with the law firm of Shellist Lazarz, LLP, who specializes in labor and employment law.

"The majority of restaurants, there's an FLSA [Fair Labor Standards Act] violation or a wage violation somewhere," Slobin said. "I would like to think that it's not malicious and it's a lack of understanding of the FLSA -- it's a very technical statute and it's very hard even if you know what you're doing to follow it appropriately."

Slobin doesn't represent any of the employees involved with Ruggles, Brasserie 19 or Taconmadre, but has handled local employment litigation here in Houston and on a larger, national scale with companies such as Starbucks and Chili's. FLSA infractions are rampant, he says. But the more troubling fact is that so few employees ever come forward and fight for themselves.

"I think a lot of workers tend not to want to rock the boat," he says. "They may not be paid the amount that they're supposed to be paid, they may not be receiving tips, they may not be receiving overtime yet they are afraid to come forward. You're supposed to come forward. You're supposed to go to someone that can help you."

But they rarely do. "The worst thing that I see is people who've never done anything about it and then tell me on the street later on," says Slobin. "Why didn't you do anything? Those are wages that those people have earned, that they're entitled to, that they should receive. It's a common practice that goes on."

Non-payment of credit card tips, as in the alleged situation at Ruggles, is one of the two most common violations Slobin sees in his line of work. "The other one is overtime," he says. According to the Department of Labor's Wage and Hour division, Houston employers had nearly 20,000 wage violations just since 2008. And of those violators, full-service restaurants were the second most frequent offenders behind construction companies.

Instead of paying employees the back wages they're earned, Slobin says, most restaurants attempt to shut employees up -- even if it's only temporarily. "These small companies try to say, 'Hey, I know I owe you $1,000 and I'll give you $500 just to go away.'"

It's a strikingly similar situation to what waiter Jeremiah Villarreal alleges happened to him at Ruggles: "Half the time we got [paid] it was just out of desperation," he said. "We were fed up and upset and complaining that we had no money for our bills and needed it. And then when we got the checks, they weren't enough."

As of this afternoon, Ruggles owner Bruce Molzan told the Houston Press that he'd gone through payroll records at the restaurant in light of Saturday night's walk-out. Molzan claims to have discovered that he owes his waitstaff around $14,000 to $15,000 in back wages, which he says will be paid in full today.

Slobin says this too-little-too-late scenario is far from uncommon, especially in Houston. However, he's careful not to paint all restaurants with the same FLSA-breaking brush.

"There are good employers out there," Slobin said. "I know that."

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