A local barbeque chain paid nearly $900,000 to employees after the U.S. Department of Labor says the staff did not receive their fair share of tips and overtime pay. The restaurant says the issue was related to a misunderstanding of the labor law.
Investigators with the DOL said Hard Eight BBQ in Roanoke shared tips earned by servers with managers who were paid an hourly wage and that those managers were not being paid the correct time and a half rate for hours worked over 40 per week.
The Department of Labor said Thursday Hard Eight paid $867,572 in tips and overtime pay to 910 workers at their five restaurants.
"Roanoke Hard Eight violated the law by including managers in their tip pool. By doing so, the employer denied tipped workers some of their tips and managers proper overtime wages," explained Wage and Hour District Director Jesus A. Valdez in Dallas. "As businesses struggle to find people to do the work needed to keep operating, employers would be wise to avoid violations or risk finding it even more difficult to retain and recruit workers who can choose to seek jobs where they will receive all of their rightful wages."
In an interview with NBC 5 Friday afternoon, Matt Perry, chief operating officer of Hard Eight BBQ, said they were contacted in 2020 about the investigation and that an audit revealed a short time later some red flags in their tip share program that needed to be addressed.
Perry said managers were part of the tip pool at their five restaurants because they do the same jobs as other hourly employees on any given shift and that because of that they felt like managers should also receive a small portion of the tip share.
The DOJ told Hard Eight that the Wages and the Fair Labor Standards Act that went into effect in 2019 did not allow an employer or their managers or supervisors to keep tips the business' workers receive for any purposes, regardless of whether or not the employer claims a tip credit.
According to Perry, Hard Eight never withheld wages from any employee, and the company misunderstood the law and simply gave tips out to the wrong people.
Upon learning of the change in regulations, Perry said the restaurant made immediate changes including adjusting the tip pool to only include non-manager hourly employees but also raising the pay for managers to offset the loss of no longer being in the tip pool.
Perry said since August 2021 Hard Eight BBQ has been compliant with the law, which he said they verified again with the Department of Labor on Friday morning.
NBC 5's Patrick Reynolds contributed to this report.