Wel-known sports bar and restaurant chain Chickie’s & Pete’s signed a consent judgment agreeing to pay current and former employees more than $6.8 million in back wages and penalties for taking tips from servers and violating federal minimum wage, overtime and record-keeping requirements.
Following one of the U.S. Department of Labor’s largest tipped employee investigations in recent years, the company and its owner, Peter Ciarrocchi, Jr., have agreed to pay $6,842,412 to 1,159 employees at nine of the company’s locations, plus a $50,000 civil penalty. The proposed consent judgment has been filed in the U.S. District Court for the Eastern District of Pennsylvania and is subject to the review and approval by the court.
“The egregious actions by Chickie’s & Pete’s harmed real people and violated the promise that a fair day’s work deserves a fair day’s pay,” said U.S. Secretary of Labor Thomas E. Perez. “Restaurant servers are among the lowest paid workers in this country, with many earning incomes below the poverty line. Tipped workers deserve better and this action shows that the Department of Labor is ready to stand up for them.”
Investigators from the Wage and Hour Division’s Philadelphia and southern New Jersey offices conducted investigations at locations in Northeast Philadelphia, South Philadelphia, Philadelphia International Airport, Parx Casino in Bensalem, Pa., Warrington, Pa., Drexel Hill, Pa., Audubon, Pa., Egg Harbor Township, N.J., and Bordentown, N.J. Investigators found that the company improperly retained a fixed portion of the tips servers received from customers.
The investigation disclosed that the company required servers to contribute a portion of their tips to an improper “tip pool,” or tip-sharing arrangement, which was approximately between 2 percent and 4 percent of the server’s daily table sales. The owner retained approximately 60 percent of the tip pool. This amount had come to be known as “Pete’s Tax” and was required to be paid to the manager in cash at the end of each shift, even if the server received all tips on credit cards and did not have cash on hand. In some cases, the company required employees to use their own money to contribute to this pool by withdrawing cash from a nearby ATM or borrowing from another server.
Also, servers and bartenders were paid only a flat rate of $15 per shift at all locations except for Chickie’s and Pete’s airport establishment – an amount that was not sufficient in all cases to even cover the minimum cash wage of $2.13 per hour that must be paid to a tipped employee when an employer claims a tip credit under federal law.
Additionally, the employer failed to pay the required overtime wages to these employees when they worked in excess of 40 hours in a week. Investigators also determined that employees were not paid for time spent in mandatory meetings and training, and were improperly required to pay for uniforms.
