Wigle Whiskey will be required to pay nearly $39,000 in back wages to 41 workers after a federal investigation found that the business had violated the Fair Labor Standards Act by requiring employees to share tips with managers and supervisors.
The ruling against the Strip District distillery and restaurant was announced Wednesday in a news release from the Department of Labor.
When it launched in 2012, Wigle was the first distillery to open in Pittsburgh since Prohibition. Its owners helped lobby the state Legislature to allow distilleries to sell spirits directly to the public, paving the way for a flurry of new craft distilleries in the region.
A decade later, the award-winning spirits maker is under scrutiny. The Department of Labor’s Wage and Hour Division found the business allowed managers to retain tips received by tipped workers, in violation of FLSA regulations, which prohibit employers, managers and supervisors from sharing in tip pools.
The investigation also found Wigle had not paid tipped employees adequate overtime wages, by calculating the employee overtime rate based on their cash wage of $4 per hour rather than the federal minimum wage of $7.25 an hour. The company also underpaid managers for overtime work by failing to include wages managers received via the improper tip pool in overtime calculations.
The FLSA mandates that employers pay workers overtime pay for any hours worked in excess of 40 in a work week, at a rate of no less than one and a half times the normal hourly wage.
“Food service workers rely on their hard-earned tips to make ends meet. Restaurant employers must understand that keeping workers’ tips or diverting a portion of these tips to managers or supervisors in a tip pool is illegal,” said John DuMont, district director of the Wage and Hour Division in Pittsburgh, per the news release.
According to Wigle co-owner Meredith Meyer Grelli, the business did not intentionally violate FLSA regulations, but rather had a “good faith dispute” with the Department of Labor over its rules about manager tipping. Ms. Grelli said Wigle Whiskey shortchanged employees’ overtime pay due to a payroll processing error.
The Department of Labor prohibits managers and supervisors from taking tips from employees under their supervision or participating in tip pools under any circumstances, but, until 2021, did not define which duties classified employees as managers. According to Ms. Grelli, Wigle classified workers who were managers in name as tipped employees because they sometimes served customers.
“We believe that employees who spend the majority of their time serving customers should share in tips, to the extent those tips were earned while serving customers. Regardless of title, our employees, throughout COVID, were often servers, many times carrying the weight of others who were not able to work throughout the pandemic,” Ms. Grelli said in an email.
“We believed we were properly and fairly allocating tips to employees that were actively serving customers. When we learned the Department of Labor had a different interpretation, we immediately changed our method of allocating tips,” she said.
In October 2021, the Department of Labor issued a new rule determining that managers and supervisors can keep tips in very specific circumstances: If they receive them straight from customers for services they “directly” and “solely” provide. The rule went into effect in November 2021. Managers and supervisors still cannot participate in tip pools.
“The rules regarding the tip credit provisions are very specific,” said J. Daniel Doherty, assistant district director with the Wage and Hour Division’s Pittsburgh office. “If employers have tipped employees, they need to be aware of how that works.” Mr. Doherty added that employers can reach out to the Wage and Hour Division to receive information regarding tipping laws.
“We are proud of our legacy as a business that is on the progressive end of pay and benefits,” Ms. Grelli said, adding that Wigle’s front-of-house team members earn more than the statewide average for similar positions. “We hope that the DOL will work with small businesses to help them understand their goals with this new rule.”
The investigation comes at a time when food service establishments are struggling to find employees. According to the Bureau of Labor Statistics, there were more than 1.3 million job openings in the accommodation and food services industry in April 2022, after around 740,000 industry workers quit their jobs.
“As restaurants struggle to fill the positions they need to keep their doors open, those who deny workers their rightful wages are likely to find it more difficult to retain and recruit workers than those employers who abide by the law,” Mr. DuMont said.
In fiscal year 2021, the Wage and Hour Division investigated over 4,200 food service establishments, and recovered over $34 million in back wages for more than 29,000 workers in the country.
Maliya Ellis:mellis@post-gazette.com and Twitter @EllisMaliya.
First Published: June 29, 2022, 9:52 p.m.
