Distillery pays $39k to staff after illegal tip use

A distillery in Pittsburgh has paid back US$38,951 in wages to 41 workers after using its tip pool illegally.

A tip pool means that a portion or all of the tips collected in an evening are redistributed among staff, as opposed to each server keeping the tips they earn individually.

Pittsburgh Distilling Co, doing business as Wigle Whiskey, was accused of violating the Fair Labour Standards Act (FLSA) by the US Department of Labour’s (DOL) Wage and Hour Division.

The employer has been found to have wrongfully allowed managers to receive tips earned by servers, and short-changed tipped employees of overtime wages.

Investigators found that Wigle Whiskey paid an overtime rate of US$4 per hour, rather than US$7.25 per hour as federal law requires.

“Food service workers rely on their hard-earned tips to make ends meet,” said Wage and Hour Division district director John DuMont in Pittsburgh.

“Restaurant employers must understand that keeping workers’ tips or diverting a portion of these tips to managers or supervisors in a tip pool is illegal.

“As restaurants struggle to fill the positions they need to keep their doors open, those who deny workers their rightful wages are likely to find it more difficult to retain and recruit workers than those employers who abide by the law.”

The FLSA allows employers to pay tipped workers US$2.13 per hour in direct wages, as long as a credit of US$5.12 is provided in tips to make up the basic combined cash and tip minimum wage rate of US$7.25.

The employer must notify tipped employees of any required tip pool contribution amount, and the FLSA prohibits employers, managers and supervisors from participating in the tip pool and keeping any portion of workers’ tips.

Wigle Whiskey apologises for ‘mistake’

Alex Grelli, co-owner of Wigle Whiskey Distillery, said: “We had a good faith dispute with the DOL over a new rule, which had been nationally debated for the past two years, that finally became effective in December 2021 concerning the method of allocating tips from a tip pool.

“The DOL agreed that we did not intentionally violate the new rule. Our error was to include an hourly, non-exempt floor manager at the distillery in the tip pool.

“This hourly team member worked 90% of his hours in direct service to customers throughout the pandemic. We erroneously thought that the nature of his work and his contributions to the tip pool entitled him to share in the tips.

“We now understand that this is not in accordance with the DOL’s interpretation of the 2021 rule and we adapted our policies in January and have compensated employees accordingly.

“To be clear, no tips went to senior management or exempt employees, who were not involved in direct service. We are sorry for any disappointment we’ve caused in our mistake.”

In the 2021 fiscal year, the Wage and Hour Division claims to have conducted more than 4,200 investigations of food services establishments, recovering more than US$34 million in missed wages for more than 29,000 workers across the US.

In other legal news, The Wild Geese’s lawsuit against Irish Distillers for alleged breach of EU competition law was thrown out after the former was unable to pay the €1 million (US$1.05m) Security for Costs order.