Illinois Restaurant Owners Receive Million Dollar Lesson in Wage/Hour Compliance

Last month, in the case of Solis v. El Matador, the United States District Court for the Northern District of Illinois ordered restaurant owners Dolores and Ricardo Onate to pay over $1 Million to workers they employed at two restaurants in Decatur, Illinois.

The workers were employed as servers and kitchen staff, and the Court found that their employer had purposefully violated their legal rights in numerous ways. The workers were not paid the minimum wage, did not receive overtime pay, and were told not to punch in before 9am even if they had started work earlier in the day. To give the appearance of legality, many of the workers were given pay checks but were then required to give those checks back to their employer, and were allowed to keep only the tips they had received from customers. In light of these violations, the Court awarded the workers $500,000 in damages for unpaid wages and another $500,000 in liquidated damages (penalties). This case, while egregious, highlights some of the all-too-common violations of minimum wage and overtime laws in the restaurant industry.

The US Department of Labor has compiled a useful factsheet to highlight the protections granted to restaurant employees by the Fair Labor Standards Act("FLSA"), one of the country's most important minimum wage and overtime laws wage and overtime laws.

The FLSA requires that employers pay their employees at least $7.30 an hour ($8.25/hour in Illinois), and one and one-half times their regular rate of pay for overtime hours (all hours worked in excess of forty per week). There are special rules that apply to employees who make money off tips. For example, the law permits some tipped employees to be paid a lower hourly wage (currently $3.63/hour in Missouri; $4.80/hour in Illinois), as long as their hourly wage plus tips equals at least $7.25/hour ($8.25/hour in Illinois). However, employers must inform employees of this compensation scheme if they intend to use it. Also, in many states, employers cannot pay tipped employees at a rate lower than the general minimum wage if those employees frequently engage in non-tipped work, as described elsewhere on thisblog. Additionally, when computing a tipped employee's overtime pay (one and one-half times the regular rate of pay), an employer cannot use a rate of pay below the general minimum wage rate as that employee's regular rate of pay.

Despite the existence of these wage and hour laws to protect employees, some restaurants continue to violate the law, either accidentally or intentionally. If you work at a restaurant and believe your compensation arrangement violates the law, or if you want to better understand your rights, you should contact a St. Louis overtime lawyer.