North Carolina pizza chain cooked by DOL

July 2022 employment law letter

Authors:

Richard L. Rainey, Womble Bond Dickinson (US) LLP

The U.S. Department of Labor (DOL) recently obtained a recovery of $276,048 for 63 employees who worked for Cugino Forno Pizzeria, which has locations in Clemmons, Winston-Salem, and Greensboro, North Carolina. The problem area: wages and tips.

$1.19 cash wage isn’t enough

The DOL’s investigation found the restaurant:

Used customers’ tips to pay as little as $1.19 per hour as a cash wage to the workers, which forced them to rely almost entirely on tips for their income;
Collected customer tips left for some workers and used them to pay other employees’ wages, leading to violations of the Fair Labor Standards Act’s (FLSA) minimum wage provisions; and
Failed to pay the required overtime rate when applicable.

The investigation and recovery are part of a nationwide focus on issues arising in the restaurant industry. The rules surrounding tip credits and tip pooling can be violated either purposely or inadvertently since they can be difficult to administer.

In fiscal year 2021, the DOL’s Wage and Hour Division (WHD) recovered more than $34.7 million for more than 29,000 workers in the food service industry. In 2022, the Bureau of Labor Statistics reports near-record numbers of job openings and workers in the accommodations and food services industry quitting their jobs.

In an announcement from the WHD’s Raleigh office, director Richard Blaylock stated:

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