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Roy's restaurants ordered to pay back-wages, tips

By Erika Engle

LAST UPDATED: 3:07 p.m. HST, May 2, 2014

Some 326 tipped servers employed at Hawaii-based Roy's restaurants will be receiving $225,000 in back-pay.

Roy's Holdings Inc. has agreed to return $136,761 in tips and pay, as well as $88,424 in back wages to the employees for violations of the Fair Labor Standards Act.

The Wage and Hour Division of the U.S. Department of Labor found that the employer reduced the cash wage of the tipped employees below the minimum wage of $7.25 an hour, without allowing them to fully retain tips during the two year period that was investigated.

In Hawaii, employees who are likely to receive tips can legally be paid $7 an hour due to a 25-cent-an-hour tip credit in the law.

The DOL investigation found that the employer unlawfully required servers to pay a portion of their shift tips to non-tipped hourly kitchen staff that were paid at least the minimum wage.

However, the company disputes some of the Labor Department's contentions and could have contested the violations, "but at the end of the day ... Roy's was more than willing to make sure its past and present employees got what the government regulations said they should get," said Michael Lam, attorney for Roy's.

At no time has any tipped employee been required to surrender a portion of their tips for the benefit of other employees, Lam said. Rather, it is a voluntary practice by employees to acknowledge the "team effort" that co-workers make, he said.

Roy's also was penalized $1,550 for allowing a minor to load a trash compactor, which is considered hazardous for workers younger than 18.

The violation relates to an employee who as part of his job takes out the trash from the King's Shops location of Roy's restaurant on Hawaii island. The trash bin contains a compactor to which Roy's does not have a key and it was not turned on at the time the employee emptied the trash, Lam said. The employee was not placed in harm's way, but the company paid the fine nevertheless, he said.

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