Restaurants Serve Up Thousands of Wage & Hour Claims Each Year
Wage and hour disputes have surged across the U.S. restaurant industry, making it one of the most heavily targeted sectors for federal enforcement.
In the past year alone, the U.S. Department of Labor (DOL) handled more than 7,000 hospitality wage and hour claims — recovering over $483 million in back wages for employees. This amount is nine times higher than any other industry, highlighting how widespread compliance mistakes have become.
Why Restaurants Lead the Nation in Wage & Hour Claims
Restaurants consistently top federal enforcement lists due to:
1. Complex Wage Regulations
Tipped wage rules, overtime requirements, and tip credit laws are difficult to follow correctly.
2. High Turnover and Inconsistent Processes
Constant staff changes create gaps in onboarding, documentation, and payroll accuracy.
3. Widespread Misunderstanding of Labor Laws
Many owners are unaware of how easily tip and overtime violations can occur.
4. Use of Tipped Workers
Tipped positions create significantly more opportunities for mistakes — especially around tip credit, dual roles, and tip pooling.
5. Increased Legal and WHD Activity
Both plaintiff law firms and the Wage and Hour Division are focusing heavily on the restaurant sector.
The combination of these factors makes restaurants highly vulnerable to investigations and lawsuits.
Common Violations Leading to Thousands of Claims
The most frequent wage and hour violations in the restaurant industry include:
1. Improper Tip Pools
Including non-tipped workers, kitchen staff, or supervisors in tip pools.
2. Tip Credit Misuse
Failing to provide written notice or applying the tip credit incorrectly.
3. Overtime Violations
Paying overtime based on the tipped wage instead of full minimum wage.
4. Off-the-Clock Work
Requiring employees to clean, prep, or close outside recorded hours.
5. 80/20 Rule Violations
Tipped workers spending too much time on non-tip-producing tasks.
6. Incorrect Pay for Dual Job Roles
Not separating tipped vs. non-tipped duties in payroll.
Even small mistakes can result in large settlements, especially when multiple employees join a claim.
$483 Million Recovered — A Warning to All Restaurant Owners
Recovering nearly half a billion dollars in back wages in just one year shows how aggressively the DOL is enforcing wage laws in hospitality.
Restaurants that violate wage and hour laws — even unintentionally — may face:
Back wage payments
Liquidated damages
Civil money penalties
Attorney fees
Class-action exposure
Long-term monitoring agreements
Reputational harm
For many restaurants, these costs are devastating.
Why Restaurant Owners Need to Act Now
Due to increased enforcement and litigation, restaurant owners must:
Understand tipped employee laws
Ensure proper tip pool structures
Pay overtime correctly
Track non-tipped duties accurately
Maintain detailed payroll and time records
Train managers on wage laws
Conduct regular internal audits
Without proactive compliance, the risk of investigation or lawsuit is extremely high.
To understand how these violations happen and how to prevent them, read our Ultimate Guide to Wage & Hour Compliance for Restaurants.”
Protect Your Restaurant Before a Wage & Hour Claim Happens
The restaurant industry now leads the nation in wage disputes — and most violations could have been prevented with proper compliance.
Get Your Free Labor Risk Assessment
Find out where your restaurant may be exposed — and what you can do about it.