NEW YORK — A recent report by Bloomberg BNA provides great insight into wage theft practices plaguing some of the nation’s biggest and well known restaurants as well as analysis on why the practice is so prevalent among different types of establishments. Sadly, the report indicates that most restaurant wage theft allegations center around tipped employees relying on gratuities to provide for themselves and family members.
The reports’ analysis indicates that IHOP and Denny’s restaurants see the greatest number of fines for large full-service restaurant chains by the Department of Labor over wage theft allegations. IHOP averaged six wage theft violations at over $1,000 per restaurant while Denny’s averaged just over four per restaurant. McDonald’s came in first for total number of fines for a large restaurant chain.
The article speculates that the prevalence of wage theft allegations in large, full-service restaurant chains could be attributed in part to the need to maintain larger staffing levels to accommodate customer needs. However, the article goes on to note that these same businesses commit wage theft at rates two to three times higher than other restaurants without waitstaff.
Tipped Employees Especially Vulnerable to Wage Theft
According to the report, tipped employees are especially vulnerable to wage theft under what is known as the “80/20” rule of the Fair Labor Standards Act (FLSA) requiring tipped employees spend no more than 20%of their time on duties other than serving customers. Additionally, servers must earn at least $7.25 per hour, regardless of how many tips or tables the server takes and the employer is obligated to make up the difference if that occurs.
Also of note was the prevalence of wage theft affecting servers at 24-hour full service restaurants like Denny’s and IHOP, most likely because overnight hours are slower and restaurants fail to ensure that servers earn $7.25 per hour. Furthermore, overnight shifts see multiple cases of employees forced to cover checks that customers may walk out on even though the practice violates state and federal labor laws.
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