Chickie's & Pete's to pay $8.5M in short-tipping case

Source: Philadelphia Inquirer

"Pete's Tax" has proved costly. Chickie's & Pete's, the Philadelphia sports bar and restaurant chain, has agreed to pay $8.52 million in back wages and damages to employees for illegally docking a portion of their tips and failing to properly pay minimum wage, overtime, and other required income.

Of that amount, $6.8 million is to be paid to 1,159 past and present employees to resolve an investigation by the U.S. Labor Department. The remaining $1.68 million is to settle federal lawsuits by about 90 current and former employees. Lost income to the workers at the chain's 12 outlets amounted to $4.5 million over two years, eight months, ending in December 2012.

The chain will also pay a $50,000 civil penalty to resolve what the Labor Department called "one of the largest tipped-employee investigations in recent years."

"Chickie's and Pete's behavior is troubling because they both unlawfully took tips from their workers and failed to pay them even the $2.13 per hour the law requires," said Laura Fortman, principal deputy administrator for the department's Wage and Hour Division. Rather, workers were paid $15 a shift, which did not meet the minimum when a shift exceeded seven hours.

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