Government Inadequacy Reveals How Restaurants Get Away With Not Paying Workers

While the government was quick to hand out Business Interruption Grants to businesses across the country struggling from the effects of the pandemic-induced shutdown, company’s applying for the grant did have to meet certain criteria. The companies needed to be able to prove they had been financially impacted by COVID-19, and that they would use the money from the grants for necessary business expenses, such as payroll. What was less widely discussed was the fact that recipients of grants also needed to abide by all city, state, and federal labor laws applicable to their business, something Tank Noodle allegedly failed to do.

The Vietnamese restaurant was asked to return the grant money it received after federal investigators found they were in violation of several labor laws, including allegedly withholding wages from their employees. Tank Noodle also received two loans from the Payment Protection Program totaling almost $400,000, although it is not yet clear whether they will be made to pay back that money in addition to the grant money they received.

Poor working conditions for very little pay is a systemic and long-standing problem throughout the restaurant industry, and it’s not limited to fast-food restaurants. High-end restaurants are equally likely to ignore labor laws, and white employees are just as often subject to very low pay as their minority coworkers (although white servers do tend to receive larger tips).

In the summer of 2020, amidst the nationwide social unrest and calls for racial justice, several Chicago restaurants were accused of abusing their staff, including allegations of racism. Some of those restaurants were forced to permanently shut down as a result of the accusations, but Tank Noodle managed to keep its kitchen open.

Tank Noodle, a Vietnamese restaurant located in the Uptown neighborhood of Chicago, hired a Vietnamese server in 2018, explaining the server could start right away, but that the only pay they would receive would be in tips. The server took the job because they needed the money, not realizing how low the pay would be or the lack of transparency at the restaurant when it came to tips.

Tip pooling is common in the restaurant industry (though not always legal). In most cases, all the tips are combined, then divided up and distributed among the employees in such a way that everyone can see how much money went into the pool and how much money each worker is receiving. At Tank Noodle, workers were allegedly required to give all their tips to the manager, who would then distribute the money among the staff at the end of the shift. No one had any idea how much anyone else had earned in tips for that shift.

Tip pooling is legal in Illinois, but employers and managers must be exempt from the tip pool, and employers are still required to pay their tipped workers minimum wage in addition to whatever tips they earn (albeit a much lower minimum wage than that received by non-tipped workers). According to federal investigators, Tank Noodle’s managers were taking a cut of the tips while also paying many of their workers a flat daily rate, regardless of how many hours they had worked, both of which are illegal.

The server who was hired in 2018 filed a wage complaint with the state of Illinois in April of 2019, but they got bounced around from one agency to another and ended up having to file an additional two complaints before federal investigators finally got involved. All the while, the restaurant employee was told to keep working at Tank Noodle because they could build a stronger case against the restaurant with a current employee than with a former employee.

Two years later, the U.S. Department of Labor finally made Tank Noodle pay almost $700,000 in back wages to 60 employees. The one who requested the investigation and spent an additional two years working in a low-paying job received only $2,644.81 (after taxes) to cover the two years they spent working for insufficient pay.

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