Feds Seek More than $800K from Michigan Taco Chain

The company violated wage and record-keeping laws.

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GRAND RAPIDS, Mich. — The U.S. Department of Labor has filed a lawsuit alleging wage violations at three Barrio Tacos locations.

On Sept. 7, the department filed suit seeking a total of $823,324 – $411,662 in back wages and an equal amount in liquidated damages – for 177 employees of Sparty Tacos in East Lansing, TC Tacos LLC in Traverse City, and GR Tacos LLC in Grand Rapids, all of which operate as Barrio Tacos. The complaint follows an investigation by the department’s Wage and Hour Division involving alleged FLSA violations by the three restaurants and owner Jacob Hawley.

Specifically, investigators found the employer:

  • Required tipped workers to surrender a portion of their cash and credit card tips to managers after each shift. Managers then redistributed these tips to non-tipped employees, including kitchen staff.
  • Failed to pay tipped employees the federal minimum wage of $7.25 per hour. 
  • Incorrectly paid tipped employees overtime based on the tip credit rate instead of the applicable minimum wage rate. 
  • Failed to keep accurate records of employees’ hourly rates of pay and overtime premiums due.

The division also assessed Hawley and his three restaurants $23,904 in civil money penalties for the violations.

“Far too often, our investigators find restaurant industry employers violating the law when they fail to follow applicable wage laws for their employees. There are specific rules for paying tipped employees, for how tips must be distributed, for paying proper overtime and for keeping employment records,” said Wage and Hour District Director Mary O’Rourke in Grand Rapids. “Workers have the right to be paid fairly and fully for the jobs they do and employers must respect these rights.”

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