CHARLESTON, S.C. (WCBD) – The U.S. Department of Labor (DOL) on Monday announced thousands of dollars in tips recovered for workers at a Downtown Charleston restaurant who had been forced to participate in an illegal tip pool.
According to the DOL, management at 167 Raw on King Street “required tipped employees to share tips illegally,” splitting the funds between “management and other typically non-tipped employees.” The restaurant also “failed to pay tipped employees the difference between their direct wages and the federal minimum wage” and paid less than the federal requirement for overtime rates.
The investigation found 92 workers were shortchanged a total of $624,017 as a result of the illegal financial structure.
Wage and Hour Division District Director, Jamie Benefiel, explained that such violations “are common in the restaurant industry, and they can quickly add up to costly consequences.”
Benefiel went on to say “restaurant industry employers must know and comply with federal requirements to claim the tip credit,” and that “retaining and recruiting workers is more difficult when employers fail to respect workers’ rights and pay them their full wages.”
167 Raw issued the following statement in response:
“In 2021, 167 Raw King Street LLC entered into a voluntary agreement with the U.S. Department of Labor regarding its tip-pooling procedure. The Department of Labor found the process to be in conflict with provisions of certain regulations.
A tip pool was established to include and compensate our team members who are integral to a positive dining experience at our restaurant. Before establishing the pool, we sought advice from legal counsel and were told that it was legal and appropriate to do so. Months later, however, the Department of Labor concluded that these procedures were in direct violation of certain federal guidelines. The Department began a full investigation and determined that while we had not intentionally violated any regulation, we had instead relied upon incorrect legal advice. The full details of this were disclosed to our team members and compensation was handled accordingly. We fully cooperated with the Department of Labor to establish new procedures within the Department’s guidelines and took the necessary steps to correct the misallocation of tips. It is important to note that the owners of 167 Raw King Street LLC never shared in or participated in the former tip pool.
We continue to prioritize our team members and choosing to enter this voluntary agreement with the Department last year ensured that our valued team members continue to be well-compensated within the framework of evolving federal guidelines.”
– 167 RAW KING STREET LLC
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