A federal investigation found a Central Texas food chain violated a year-old law by reallocating $230,353 in tips from servers to managers, taking away earned wages from more than 270 employees – the US Department of Labor announced Monday.
Several Black’s Barbecue locations in Austin, New Braunfels, Lockhart and San Marcos were targeted by the Labor Department’s Wage and Hour Division investigation resulting from a 2019 audit and a federal labor rule change making it to illegal share employee-earned tips with managerial staff.
Kent Black, grandson of original Black’s Barbecue pit master Edgar Black Sr. and current member of the Black’s ownership group, told the Statesman, part of the USA TODAY Network, Tuesday the company outsourced its payroll and was unaware of the rule revision that mangers should not take tips.
“We’re barbecue experts, we’re not payroll experts,” Black said. “We weren’t closely following that, and apparently our payroll company did not pick up on that.”
The Labor Department said Monday that the illegally shared wages had been recovered.
“Food service industry employers must know that tips are the property of tipped employees who earn them, plain and simple,” said Nicole Sellers, Wage and Hour Division district director in Austin. “Workers and their families depend on their rightfully earned wages and benefits. If you take from them, you take from their families.”
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In 2018, legislative changes to the Fair Labor Standards Act made it illegal for employers to keep employee tips under any circumstances. The changes were then instituted by the Labor Department in 2020 before going into effect in April 2021.
Black said Monday’s announcement was unexpected as the federal investigation into the company and conversations with the Labor Department began in 2019.
He said his barbecue namesake in 2021 repaid the misallocated tips that had been shared with managers at four of the chain’s locations.
The repayment amounted to about 10% of what employees should have been paid originally under the updated federal guidelines, Black said.
“We’ve been around for 90 years, we pay our taxes, pay our staff, try to be good citizens. So, we immediately changed the way we were allocating those tips without them asking us to do it,” Black said.
So far this year, the Wage and Hour division has identified $35 million in back wages impacting about 29,000 workers.
In the past decade, the department’s records show the food service industry to be one of the most consistent “high violation” wage environments for workers, along with construction, which both lose tens of millions in wages annually.
Employees that feel they may be owed backed wages are asked to use the labor department’s workers owed wages search tool and search for their company’s name.