A South Carolina restaurant chain has paid more than $718,000 in back wages and penalties after federal investigators found that the company had failed to pay overtime to workers and allowed managers to dip into the tip pool. Company leadership said Wednesday that the violations were unintentional, were complicated by several factors, and were addressed early in the investigation.
Tropical Grille, well known in upstate South Carolina, paid $618,666 in back wages to 779 employees, plus a $100,000 fine for violations found at 13 restaurants across the northern part of the state, the U.S. Department of Labor announced this week. The restaurant, owned by Lazaro and Shadid Montoto, also violated child labor laws by allowing 14-year-olds to work late hours, the department said in a bulletin.
The chain allowed managers and supervisors to participate in the restaurants’ tip pools, something that is prohibited by the U.S. Fair Labor Standards Act, DOL said. The company also failed to combine all hours worked for employees at some locations, which shorted some workers of overtime pay.
“As part of a compliance agreement, the employer is also required to update or create materials that address compliance with child labor laws and provide annual training on child labor regulations for managers and supervisors, among other requirements,” the department said in a statement.
The restaurant owners said in an email to Insurance Journal that the violations were non-willful.
“We understand that $618,666 in back wages and $100,000 in penalties are significant numbers,” the company statement reads. “We also believe our employees, guests, and community deserve the complete context behind those numbers.”
For starters, the overtime discrepancy resulted in part from certain employees who worked at a second Tropical Grille location, managed separately, as a second job. Although neither store’s payroll individually reflected more than 40 hours, the department determined that those hours were required to be combined, the company explained. The practice has been corrected.
On the tip pool, leadership explained that managers often work alongside hourly workers, preparing food and serving guests, and the company’s interpretation of federal rules was that the managers could share in the tip pools. Other restaurant operators had interpreted these requirements in a similar manner, creating enough uncertainty that the DOL issued a letter providing clarity on the rule, the company said.
The Grille also has strengthened its training and procedures to ensure that teenaged workers’ hours are kept in compliance.
The DOL did not say what prompted the investigation, or if the payroll numbers may have affected the restaurant company’s workers’ compensation insurance premiums.
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