Texas Coffee Bar Owes Back Wages for 36 Workers Over Tip Pool Violations

A Texas coffee bar and lounge must pay $85,197 for operating an illegal tip pool.

The U.S. Department of Labor recovered the back wages for 36 employees after an investigation reportedly found a coffee bar and lounge in Buda operated an illegal tip pool.

An investigation by the department determined that Nate’s At The Buda Mill & Grain Inc. (operating as Nate’s Coffee & Cocktails) violated the Fair Labor Standards Act by allowing its general manager to participate in the employee tip pool. That invalidated the employer’s use of the tip credit and required the employer to pay full minimum wage to affected workers, which the company failed to pay.

The act permits an employer to take a tip credit toward its minimum wage obligations for tipped employees if employees receive enough tips from customers and direct wages per workweek to equal at least the minimum wage compensation required under federal law. Employers, including managers and supervisors, may not keep any portion of tips.