California State Labor Commissioner Slams Restaurants with Wage Theft Violations

San Francisco, CADespite California restaurants in the past few years receiving huge fines for California labor law violations, some employers seem to have missed the memo, or perhaps they think employees on salary aren’t entitled to overtime compensation. Or perhaps they think restaurant workers, from dishwashers to cooks to General Managers, are afraid of losing their jobs if they file a complaint. Workers at six Rangoon Ruby Burmese Cuisine chains and Kome Japanese Seafood & Buffet, however, did complain, and their complaints resulted in fines totaling more than $10 million.

Those seven restaurants were investigated by the Commissioner's Office after workers reported complaints of wage theft to the Asian Law Caucus. The San Francisco non-profit that advocates for the legal and civil rights of low-income Asian Pacific American communities comments on its website: “The labor commissioner’s citation against Rangoon Ruby sends a clear message to employers that underpaying workers is never acceptable. We’re proud to be a part of this effort to reclaim wages for hardworking employees.”

The San Jose Mercury News reported that one cook told the Asian Law Caucus under condition of anonymity that they were “working such long hours… We were so tired and didn’t have time for our families. We hope this case will finally get us the wages that we believe we are owed.”

Wage Theft Violations

Wage theft violations include unpaid overtime, unpaid minimum wage violations, illegal counting of tips received as part of the minimum hourly wage, waiting time penalties and split shift premiums.

Split Shift Premiums

The State of California defines Split Shift as a work schedule that is interrupted by non-paid and non-working time periods established by the employer. “Workers who earn the minimum wage per hour are entitled to additional pay known as a “split shift premium” when their schedule includes a split shift. The premium is equal to one hour of pay at the rate of the minimum wage.” For instance, a server works lunch shift from 11 am until 2 pm and returns at 4 pm to work the dinner shift.

Tips and Gratuities

Workers are entitled to keep their tips and gratuities and they cannot be credited towards an employer's obligation to pay minimum wage. "Taking tips from workers and paying workers by salary to deny them their hard-earned overtime pay is wage theft," said Labor Commissioner Julie A. Su. "Our job is to protect working people's right to a just day's pay for a hard day's work, and to stop employers who embrace wage theft as a business model." However, tip pooling is legal, but only if “the tip pooling policy is not used to compensate the owner(s), manager(s), or supervisor(s) of the business, even if these individuals should provide direct table service to a patron or are in the chain of service to a patron,” according to the California Labor Code.

Waiting-time penalties

According to the Labor Commissioner's Office, waiting-time penalties are imposed when an employer "intentionally fails to pay all wages due to the employee at the time of separation.” This penalty is calculated by taking the employee's daily rate of pay and multiplying it by the number of days the employee was not paid, up to a maximum of 30 days.

The Labor Commissioner's Investigation

The labor office's enforcement investigations typically include an audit of payroll for the previous three years to determine if there are minimum wage, overtime and other labor law violations and to calculate payments owed and penalties due. The office investigated Kome Japanese Seafood & Buffet in Daly City, Burma Ruby Burmese Cuisine in Palo Alto and Rangoon Ruby Burmese Cuisine located in Palo Alto, San Francisco, San Carlos, Burlingame and Belmont.

According to a news release, the investigation of the seven restaurants' payrolls found that dishwashers, cooks and sushi chefs were paid a fixed salary that did not account for overtime, even though they typically worked more than 55 hours per week. The 87 cooks on salary, who logged over 10 hours of unpaid overtime each week, are owed $3.8 million for unpaid overtime wages, minimum wages, split shift, liquidated damages, waiting time penalties and failure to provide accurate itemized wage statements. Workers at the Rangoon Ruby Burmese Cuisine chain, including 211 servers, hosts, dishwashers and bussers, are owed $590,072 for split shifts and other wages and penalties owed. Kome Japanese Seafood & Buffet owes more than 100 workers more than $5.16 million in wage-theft violations.

The Sacramento Bee reported that the $10 million total is the biggest fine resulting from a labor office investigation since November 2014, when 10 Northern California buffets were fined $16 million. When will they get the memo?

Too many restaurant employers see an opportunity to cheat and take advantage of workers, particularly when English is their second language. They count on people who do not know where to turn and who do not know the California Labor Law. Perhaps they see fines as the cost of doing business, and they gamble at not getting caught. The Labor Commissioner's Office suggests employees with work-related questions or complaints to contact the department's call center in English or Spanish at 844-LABOR-DIR (844-522-6734).