North Carolina Restaurant That Took Staff Tips Must Pay Back More Than $157K to Employees

A restaurant in Goldsboro, North Carolina, must cough up $157,287 to staffers after failing to give them all their tips. 

According to federal law, a tip is the property of the employee. If a company withholds a tip, it is considered wage theft.

Federal law allows tipped restaurant workers to be paid less than the federal minimum wage. (Photo: Andrea Piacquadio/

Why Tips Belong To Workers

Jay’s Kirchen, which specializes in Asian-American fusion cuisine, has been ordered to pay $157,287 to 65 staff after failing to give them the tips they had earned, the U.S. Department of Labor said on Oct. 11.

“Tipped workers in the food services industry rely on their hard-earned tips to make ends meet,” Richard Blaylock, district director of the Department of Labor’s Wage and Hour Division in Raleigh, North Carolina, said in a statement. “Tips are the property of the worker and, under no circumstances, may employers keep any part of their employees’ tips.”

Jay’s Kitchen is part of a group of restaurants operated Mugen Inc. According to the Department of Labor, the company “denied the workers their full wages by keeping portions of their earned tips,” and thus violated the Fair Labor Standards Act.

Mugen would keep a percentage of staff’s tips and in doing so, it nullified its claim to a tip credit. This resulted in the workers being paid less than the federal minimum wage.

Although tip credit/tip allowance differ from industry to industry, in general it is the amount of tips earned by an employee that the law allows his or her employer to take as a credit against the minimum wage requirements for that industry.

Because Mugen helped itself to a percentage of employee tips, it now owes the workers the difference between their paid cash wage and the federal minimum wage, which is $7.25 an hour, the Department of Labor said in a statement.

More Charges

The Department of Labor also said Mugen violated federal child-labor laws by allowing three 15-year-old workers to work more than three hours on a school day, and past 7 p.m. during the school term. For this violation, the company was ordered the company to pay a $1,915 civil money penalty.

Mugen owns six restaurants in North Carolina.

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