Ginza Japanese Restaurant Directed to Pay Back $262,000 in Back Wages Following Federal Investigation
A federal investigation has directed Ginza Japanese Restaurant in Fort Myers, Florida, to pay back $262,322 in back wages and damages to 75 workers. The U.S. Department of Labor (DOL) concluded that the restaurant broke various labor laws from June 2020 to June 2022, including improper handling of employee tips and paying less than the minimum wage to workers who performed multiple jobs. This is an example of why adherence to the Fair Labor Standards Act is crucial and what employers need to be reminded of in terms of paying employees properly.
Illegal Tip Pooling Practices
The primary concern that was revealed was Ginza’s policy that servers are required to share their tips with sushi chefs, managers, and owners. Under the FLSA, tips are to be given exclusively to the employees who have earned them. It is illegal for employers to make employees share tips with supervisors, managers, or business owners.
Tip pooling is legal, but only to employees who traditionally receive tips, like bartenders and servers. By including managers and owners, Ginza voided its tip pool altogether. After that occurred, the restaurant no longer could use what’s known as a tip credit against wages, which doubled what it had to pay employees.
How the Tip Credit Works
Florida’s minimum wage is $12 an hour at the present time, and the employers of tipped employees may claim a tip credit of $3.02 an hour, so servers are supposed to be paid at least $8.98 an hour prior to tips. Tips are presumed to fill in the gap or even exceed the minimum wage.
But in order for this credit to be usable, employers need to make sure that workers do retain their tips. At Ginza, because management and owners were erroneously added to the tip pool, the restaurant was not able to legally utilize the credit. This left the business paying for the entire minimum wage for servers something it did not do.
Missing Funds and Poor Record-Keeping
Police also found that Ginza was unable to account for approximately $22,000 in tips. There were no accounts on whether this money ever did make it to employees. Employers taking the tip credit must maintain detailed records of the wage and tip amounts of each server to ensure they make at least minimum wage in total.
Had those records not been missing, there is no evidence that employees were paid what they were due. That failure of accountability at Ginza not only broke the FLSA but disclosed a failure of fiscal responsibility that directly injured its employees.
The 80/20 Rule and Dual Occupations
Aside from tip pooling infractions, Ginza did not also remunerate adequately employees who had dual functions. In restaurants, most employees perform tipped and non-tipped tasks simultaneously. For instance, a server may dedicate some of his or her time to waiting tables and some to cleaning, prepping, or restocking.
There are specific FLSA regulations for this situation, commonly referred to as the 80/20 rule. When the employee spends over 20% of their time or more than 30 consecutive minutes on non-tipped work, the employer is required to compensate the employee with the full minimum wage during that time instead of the reduced tipped wage.
At Ginza, employees who did these extra jobs were still compensated at the tipped wage rate. This is to say that employees who ought to have been receiving the regular minimum wage for non-tipped job work were underpaid instead.
Breakdown of the Back Wages
Intervention by the DOL resulted in $262,322 for Ginza employees. This comprised:
- $32,015 in minimum wage back pay for servers whose tips were illegally withheld.
- $97,861 in repayments of tip credit because the restaurant forfeited its ability to utilize the credit as a result of the invalid tip pool.
- The balance amount in liquidated damages intended to reimburse employees for economic losses incurred as a result of the violations.
Each of the 75 workers averaged approximately $3,497. The payment was not only monetary restitution but also a message to other companies tempted to skirt wage regulations.
Federal Officials Chime In
Tampa Wage and Hour Division district director Nicolas Ratmiroff reaffirmed that tips are the property of the employees, not the employers. He said: “Tips are the property of the employees who earn them. No employer has the right to retain any tips unless they are received directly by the manager who directly serves a customer.”
His remarks highlight the severity of Ginza’s violations and the need to maintain absolute legal boundaries.
Employer Response
When asked for comment, Ginza management wasn’t saying much. Manager Joshua Salinas explained to local media that the incident happened “a year and a half ago” and had been “all cleared up.” No information was given, though, about what changes were implemented to avoid similar issues in the future.
It is owned by Ginza Fort Myers, Inc., which started doing business in 2017. Chang Ying Huang is the company’s president, according to the state’s records.
Increasing Minimum Wages in Florida
This case also coincides with a time when Florida’s minimum wage is continuing to climb. Under state law, it is increasing by $1 annually until it hits $15 in September 2026. For restaurants and other service business firms, this requires more focus on pay compliance and tip distribution regulations.
Employers should also be aware of the difference between tips and service charges. For example, a voluntary amount left by a customer would qualify as a tip, but an automatic service charge on large groups would be considered wages. That differentiation has payroll and tax consequences, and the misinterpretation can quickly cross over into violations.
Wage Theft in the Restaurant Industry
The Ginza case is not isolated. For the 2022 fiscal year alone, the Wage and Hour Division of the DOL recovered over $27 million for more than 22,500 food service employees in the United States. Wage theft, including its forms such as tip theft, unpaid overtime, and off-the-clock work, is a common practice in the restaurant industry.
Since most restaurant workers depend on tips for their income, even minor infractions can have a serious negative effect on their financial stability. Compliance with labor laws is not only an issue of law but also of ethics.
The Broader Importance of Compliance
The Fair Labor Standards Act sets the benchmark for safeguarding workers’ rights to earn a fair wage. Laws, however, are insufficient if they are not honored by employers and enforced by regulators. The Ginza case is an illustration of the consequences when companies disregard these responsibilities: they can face significant monetary sanctions and long-term reputational harm.
For employees, the DOL provides tools to report suspected violations. Complaints are accessible through the department’s website, or by calling the Miami Wage and Hour Division office or the national helpline. Notably, help is confidential and offered in many languages, whether or not one is a documented immigrant.
Lessons for Employers
The resolution of this case has lessons for restaurateurs and managers everywhere:
- Tip pools must exclude owners and managers: Including them not only violates the law but also eliminates the right to claim a tip credit.
- Accurate records are essential: Employers must track both wages and tips to prove compliance.
- Understand the 80/20 rule: Employees who spend substantial time on non-tipped tasks must be paid at least the full minimum wage.
- Keep current with wage legislation: With the minimum wage in Florida rising toward $15 per hour, compliance will become progressively more stringent.
Failure in any of these matters threatens to result in significant back pay awards and fines.
Conclusion
The Department of Labor’s enforcement against Ginza Japanese Restaurant is more than a local enforcement tale it’s a national reminder that tip and wage laws are not up for discussion. For employees, it proves that their rights will be enforced and the government will take action when employers act unlawfully. For employers, it’s an unmistakable warning: mismanaging wages or tips can quickly translate into hundreds of thousands of dollars in liability.
Ultimately, fair pay practices strengthen not only the livelihoods of employees but also the integrity and sustainability of the restaurant industry as a whole.
