Investigators from the U.S. Department of Labor’s Wage and Hour Division, Columbia District Office, found that Los Arcos Mexican Restaurant violated overtime, minimum wage and recordkeeping provisions of the Fair Labor Standards Act.

Los Arcos paid cooks and dishwashers fixed salaries without regard to the number of hours they actually worked. This resulted in overtime violations when these employees worked more than 40 hours in a week without additional overtime payment as well as minimum wage violations when they worked so many hours that their salaries failed to cover $7.25 per hour.
Failed to pay hourly workers minimum wage and overtime for hours they worked beyond 40 in a workweek.

The restaurants:

-Required wait staff to work only for tips, resulting in minimum wage and overtimes violations.
-Reduced workers’ pay below minimum wage by charging employees for mandatory uniforms.
-Failed to maintain required time and payroll records.

On November 3, 2016, the department reached a settlement agreement with Los Arcos’ owner, Alberto Reyes. Los Arcos Inc. and Reyes will pay a total of $459,130 to 28 employees, which includes $229,565 in back wages and an additional equal amount in liquidated damages for all affected employees who worked at either of the two restaurants from October 5, 2013 to October 10, 2015.

Under the FLSA, an employer of a tipped employee is only required to pay $2.13 an hour in direct wages if that amount plus the tips received equals at least the federal minimum wage of $7.25 an hour. If an employee’s tips combined with the employer’s direct wages do not equal at least the minimum wage, the employer must make up the difference. Employers may create a tip-pooling or sharing arrangement among employees who customarily and regularly receive tips, but a valid tip pool may not include employees who do not customarily and regularly receive tips, such as managers, dishwashers, cooks, chefs and janitors. Finally, paycheck deductions for uniforms, patrons who do not pay for their orders, broken dishes or cash register shortages are illegal if they reduce an employee’s wages below the minimum wage.