Feds sue owner of Mich. restaurants for workers' back pay

The U.S. Department of Labor is suing a restaurant operator accused of cheating workers out of wages and tips, officials said Tuesday.

They said the lawsuit seeks $411,662 to $823,324 in back wages and damages for 177 employees of Barrio Tacos. The company operates Sparty Tacos in East Lansing, TC Tacos LLC in Traverse City and GR Tacos LLC in Grand Rapids.

The lawsuit, which was filed Sept. 7 in the U.S. District Court for the Western District of Michigan-Southern Division, names the three restaurants as well as the owner of the company, Jacob Hawley, as plaintiffs.

"Far too often, our investigators find restaurant industry employers violating the law when they fail to follow applicable wage laws for their employees," Mary O’Rourke, the department's Wage and Hour District Director in Grand Rapids, said in a statement. "There are specific rules for paying tipped employees, for how tips must be distributed, for paying proper overtime and for keeping employment records. Workers have the right to be paid fairly and fully for the jobs they do and employers must respect these rights."

The suit comes after the department investigated the company for allegedly violating federal laws governing wages.

Officials said the investigation determined the company required tipped workers to surrender a portion of their cash and credit card tips to managers after each shift. The company allegedly managers redistributed these tips to non-tipped employees, including kitchen staff.

It also found the company allegedly failed to pay tipped employees the federal minimum wage of $7.25 per hour, incorrectly paid tipped employees overtime based on the tip credit rate instead of the applicable minimum wage rate and failed to keep accurate records of employees’ hourly rates of pay and overtime premiums.

Company representatives did not immediately respond to a request for comment Tuesday.