PHILADELPHIA — A popular sports bar chain will shell out about $8.5 million to compensate employees for failing to pay them minimum wage and improperly keeping a portion of their tips, federal officials and the company said Thursday.
Chickie’s and Pete’s agreed to repay $6.8 million in back wages and damages to more than 1,100 current or former workers in a settlement described by the U.S. Labor Department as the largest wage-and-tip violation case in agency history.
Separately, the restaurant announced it would spend nearly $1.7 million to settle private lawsuits with about 90 other employees who alleged unfair pay practices.
“Our employees are the backbone of our company, and they deserve our respect and appreciation,” owner Pete Ciarrocchi Jr. said in a prepared statement. “We believe these settlements are in their best interests.”
The Labor Department found the restaurant illegally paid servers and bartenders a flat rate of $15 per shift instead of $2.13 an hour, the federal minimum for tipped employees.
Staff members were also required to pay a portion of their tips into a pool. About 40 percent of that money went to bartenders, which is legal, but the restaurant kept the rest, which is illegal, officials said.
“When employers exploit tipped workers, they not only harm their employees who are working hard to earn a living, but also take advantage of the trust of their customers,” said Laura Fortman, a Labor Department administrator.
In addition, officials said the restaurant illegally required employees to pay for their uniforms; failed to pay overtime; and didn’t compensate staffers for time spent in meetings and training.
Chickie’s and Pete’s operates about a dozen restaurants in Pennsylvania and New Jersey.