Philly area restaurant owners to pay $1 million for not paying workers tips, overtime

Owners of two Osaka Japan Restaurants, in Philadelphia and Lansdale, have agreed to pay $1 million to settle accusations that they stole tips and failed to pay overtime.

Of the total settlement amount, about $935,000 will go to 201 workers in back wages and damages for what the U.S. Department of Labor called "willful violations” of U.S. Fair Labor Standards Act minimum wage and overtime requirements. The restaurant owners will also pay $65,000 in penalty.

That’s according to the Labor Department’s Wage and Hour Division, which has fined a string of Philadelphia-area restaurants for wage violations in the past few years following investigations responding to workers who feared their pay was shorted.

The agreement "speaks for itself," and the restaurants' owner and management had no comment, their lawyer, David F. McComb, said.

The owner, Kwang Bum Kim, and manager James Kim, the owner's son, "agreed to the $1 million settlement midway through the first day" of a trial in federal court that was expected to last a week, according to a Wage and Hour statement. The deal includes a promise not to violate the law again, or the restaurants face stiffer penalties.

The judgement still awaits approval by a federal judge.

Wage and Hour investigators found "that from at least September 1, 2013, the employers deducted and pocketed 15 percent of customer tips charged on credit cards, well in excess of the 4 percent fee charged by credit card processors," the division said in a statement.

“The employers also failed to notify tipped employees, including servers, bartenders, bussers, and hosts, that the restaurants were claiming a portion of their customer tips as a credit toward the minimum wage,” according to the Labor Department.

The agency says the restaurants also violated overtime law, "since at least September 1, 2013," adding that "hourly tipped employees received straight time for all hours worked, even when their time records clearly showed them working more than 40 hours.

"The employers also paid sushi chefs, hibachi chefs, kitchen cooks, and dishwashers flat daily rates ranging from $80-$150 for all hours worked, even when their time records clearly showed them working upwards of 50-60 hours per week. The company also failed to maintain records required."

These tip and overtime violations “are, unfortunately, common” among restaurants, said Labor Department Regional Solicitor Oscar L. Hampton III. The law requires at least the federal minimum of $7.25 an hour, plus time and a half for overtime after 40 hours a week. Every state bordering Pennsylvania has a higher minimum wage.