GRAND RAPIDS, Mich. — The owner of a West Michigan-based taco place is facing a lawsuit from the federal government over allegedly requiring some employees to give up tip money that would later be distributed to kitchen employees. The U.S. Department of Labor claims that the owner and operator of the restaurants failed to pay over 150 employees minimum wage, and overtime pay on certain occasions.
Initially filed on Sept. 7, the federal Department of Labor is suing Jacob Hawley for allegedly violating the Fair Labor Standards Act (FLSA) at three locations: Barrio Tacos restaurants in Grand Rapids, East Lansing and Traverse City.
“For at least two years, Defendant Hawley and his restaurants maintained an unlawful tip-pooling scheme, in which they would take tips from servers and bartenders and redistribute those tips to kitchen staff, in violation of the FLSA’s requirements,” the federal complaint reads.
“The Act prohibits requiring employees who customarily and regularly receive tips (like servers) to turn over those tips to other employees who do not ordinarily receive tips.“
Because the government deems this “tip sharing” as “unlawful,” the complaint argues that employees at these Barrio Tacos locations were deprived of receiving minimum wages and proper overtime pay.
The lawsuit looks to force Hawley to pay a list of employees the money they believe they are owed in back pay, and tips they allegedly missed out on.
A list of 177 employees is included in the federal filing.
According to the documents, the U.S. Department of Labor conducted an investigation into employment and pay practices at the three locations from Oct. 11, 2020 through Oct. 10, 2022.
Hawley is accused of requiring “all tipped employees” to give up a “percentage of cash and credit card tips from each shift to managers, who would then distribute the pooled tips among employees of BARRIO TACOS, including non-tipped employees working in the kitchen.”
The complaint also alleges that employees worked more than 40 hours in a week without being paid a proper overtime rate, at least 1.5x their regular pay rate.
He is also accused of not keeping proper records at the restaurants.
“Specifically, Defendants failed to keep adequate and accurate records of the regular hourly pay, hours worked each workday and each workweek, total daily and weekly straight-time earnings, and total premium pay for overtime for employees working as servers, bartenders, and kitchen staff,” the complaint reads.
“Far too often, our investigators find restaurant industry employers violating the law when they fail to follow applicable wage laws for their employees,” Mary O’Rourke with the U.S. Department of Labor’s wage and hour division said in a statement Tuesday.
“There are specific rules for paying tipped employees, for how tips must be distributed, for paying proper overtime and for keeping employment records.”
FOX 17 has reached out to Barrio Tacos for comment but has yet to hear back.
