WEST OCEAN CITY — A West Ocean City restaurant has been named as a defendant in a class action lawsuit over alleged unfair wages for tipped employees in what could be a test case of sorts for the hospitality industry.
The Sakura Japanese Steakhouse chain, including its local restaurant, has been named as a co-defendant in the class action suit brought by a handful of former employees and filed in U.S. District Court last week. The suit alleges Sakura not only did not meet the minimum wage requirements under the “tip credit,” but also withheld earnings from tipped employees and used them to compensate managers and kitchen staff.
“The defendants violated the requirements of the tip credit by keeping and assigning to their own use a substantial portion of the tips received by the plaintiffs,” the complaint reads. “Specifically, the defendants took the pooled tips belonging only to the plaintiffs and used the tip money to pay and increase the salaries and compensation of managerial and non-customarily tipped employees including but not limited to the general manager, the chefs, the kitchen the back-of-the-house staff.”
The class action suit alleges Sakura’s 13 restaurants failed to meet state and federal minimum wage requirements for its tipped employees. Employers can take advantage of a “tip credit” for certain employees, allowing them to pay the difference between what the employees earn as tips and the $7.25 mandated minimum wage.
As a result, according to the complaint, Sakura owes the named plaintiffs and others who qualify the cash difference of the $3.08 they were paid and the $7.25 mandated minimum wage, or $4.17 per each hour they worked and were not compensated correctly under the tip credit.
Under the federal Fair Labor Standards Act and the state Wage and Hour Law, in order to qualify for the “tip credit,” a business entity must pay employees who receive gratuities at least half of the mandated $7.25 per hour minimum wage. In short, the complaint alleges the plaintiffs should have been paid $3.63 per hour even if they had received their entire share from the tip pool and the gratuities weren’t divided between the managers and back-of-the-house staffs.
“As a consequence of the defendants’ withholding, deducting or refusing the plaintiffs all wages earned in the form of tips or gratuities, the defendants have failed to pay the plaintiffs for all wages earned for work duties performed,” the complaint reads. “The defendants’ failure and refusal to pay plaintiffs all wages earned for work performed was willful, intentional and was not the product of any dispute between any plaintiffs and defendants.”
The named plaintiffs are pursuing the case as a collective action on behalf of themselves and all similarly situated individuals who worked as waiters, waitresses and bussers at all 13 Sakura restaurants in Maryland including the West Ocean City facility. While the number of plaintiffs continues to grow, the number currently comes in at over 200 current or former employees of Sakura.
The class action suit is seeking to hold Sakura liable for all unpaid or improperly deducted wages, plus three times the amount of unpaid wages to be determined by the court as additional damages and interest along with attorney fees.