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Island Cow required to pay about $222K in back wages

By U.S. DEPARTMENT OF LABOR - | Mar 5, 2021

The U.S. Department of Labor reported on March 5 that an investigation by its Wage and Hour Division of The Island Cow on Sanibel recovered $222,432 in back wages for 48 workers.

The division’s investigators determined that The Island Cow violated the Fair Labor Standards Act by operating an unlawful tip pool, which required tipped employees to share earnings with non-tipped workers, including dishwashing assistants and kitchen expeditors.

The employer also classified cooks, a bookkeeper and a bar manager incorrectly as exempt from overtime requirements, and paid them flat salaries regardless of the number of hours they worked. By doing so, The Island Cow violated the FLSA when it failed to pay the workers overtime when they exceeded 40 hours in a workweek.

The employer also failed to maintain accurate records of the number of hours employees worked and of the wages paid to workers, violating FLSA record-keeping requirements.

“Front-line employees in the food service industry deserve to be paid all the hard-earned wages they have earned,” Wage and Hour Division’s Tampa District Director Nicolas Ratmiroff said. “The law allows the employers of tipped workers to use those tips as a credit towards the employee’s wages, but only if they meet all the legal requirements. Employers must also understand that paying an employee a flat salary does not automatically make them exempt from overtime.”

On March 8, the Island Cow provided the following statement:

“Due to the complexities of wage/hour laws, especially regarding tipped employees, we relied on an outsourced Professional Employer Organization (PEO) for our payroll needs for many years. Unfortunately, we learned of several issues, primarily involving our tip pool, through a Department of Labor (DOL) investigation into our payroll for the years 2017-2019. Through that investigation, we learned that we should not include expeditors and scrapers in the tip pool.

“As soon as we learned of this issue, we acted immediately to correct it. With the help of an attorney, we worked collaboratively with the DOL to complete the investigation, and we voluntarily agreed to pay the back wages as calculated by the DOL. We have since parted ways with the PEO and have taken many steps to ensure our pay practices are legally compliant. While we regret that there was ever an error, we acted quickly to resolve it and learn from it.

“As a locally-owned, family-owned business operating on Sanibel Island for more than 15 years, we are grateful for the support of our loyal employees, many of whom have been with us for years.”

The U.S. Department of Labor reported that its Wage and Hour Division offers resources to ensure employers have the tools they need to understand their responsibilities and to comply with federal law, such as online videos and confidential calls to local Wage and Hour Division offices.

“We hope the results of this investigation encourage other employers to review their own pay practices, and to ensure they comply with the law,” Ratmiroff said. “They can avoid violations like those found in this case.”

To learn more about the Fair Labor Standards Act, visit https://www.dol.gov/agencies/whd/flsa/2021-independent-contractor. Contact the Wage and Hour Division toll-free at 866-4US-WAGE (487-9243).