The Big Texan Steak Ranch in Amarillo, Texas, paid $800,000 in back pay and damages for what federal authorities called an illegal tips-pooling arrangement, according to the Amarillo Globe-News and other Amarillo media outlets.
The restaurant, which started on Route 66 in 1960 in Amarillo before moving to Interstate 40, made the settlement with the U.S. Department of Labor in September that was announced Monday. The Big Texan agreed to pay $650,000 in back wages and $150,000 in liquidated damages to 279 current and former employees after an audit in 2011 revealed two years’ worth of discrepancies.
According to KVII-TV, which first broke the story:
The investigation by the Wage and Hour Division’s Albuquerque District Office determined that Big Texan illegally retained a portion of the restaurant workers’ tips to pay for business costs, such as menus, glassware, trays and contest prizes. The employer also made illegal deductions from workers’ paychecks for uniforms and withheld additional percentages of tips as a disciplinary tactic, bringing those workers’ hourly wages below the required federal minimum wage. Additionally, the company failed to maintain accurate time and payroll records.
A statement from Big Texan owners Bobby and Danny Lee hours after the settlement announcement said it was an administrative error:
We want to make a couple of things very clear; first, the type of tip sharing we were doing and are still doing is perfectly legal. Second we did NOT short or underpay anyone. Our mistake was the way we administratively processed and recorded the tipped share amounts, every penny collected that went into the tip pool from the servers was distributed to the employees that participated in the tip pool. The Big Texan was not penalized for intential (sic) wrongdoing, but because of technical issues relating to reporting, and handling tip sharing to tipped employees.
The statement in its entirety can be read here, on the restaurant’s Facebook page.
The KVII story contains a few comments from people who said they were Big Texan employees and had their tips withheld.
Although the Big Texan no longer sits on Route 66, it advertises its Mother Road roots frequently. After Interstate 40 opened in 1970, the Big Texan picked up and moved to ensure its survival. The Big Texan is most famous for its 72-ounce steak dinner, which is free to anyone who can eat it within an hour.
(Hat tip to Nick Gerlich; image of the Big Texan Steak Ranch by Michael Wallace via Flickr)