🗞️ DOL Recovers $17K After Ma's Kitchen Owners Steal Workers' Tips

The U.S. Department of Labor's Wage and Hour Division concluded an investigation into Ma's Kitchen, a Rowland Heights restaurant operated by Naya Ding Inc., uncovering multiple violations of the Fair Labor Standards Act (FLSA). The investigation revealed that restaurant owners unlawfully participated in tip pools by directing supervisors to distribute only a portion of earned tips to servers while retaining a percentage for themselves—a practice explicitly prohibited under federal law.

Federal regulations under the FLSA, particularly Section 3(m)(2)(B), categorically prohibit employers, managers, and supervisors from keeping any portion of employees' tips or participating in tip pools, regardless of whether the employer takes a tip credit. This prohibition was strengthened by the Consolidated Appropriations Act of 2018, which made clear that employers cannot retain tips under any circumstances.

In addition to the illegal tip pool arrangement, the investigation found that Ma's Kitchen failed to pay some employees the required overtime rate of time-and-one-half their regular pay for hours worked beyond 40 in a workweek, as mandated by FLSA overtime requirements. The restaurant also violated federal recordkeeping requirements by failing to maintain accurate time records and payroll documentation of tips and cash payments to employees.

The $17,311 in back wages will be distributed among nine affected workers. The restaurant faces a $2,985 civil money penalty due to the willful nature of the violations. Rafael Valles, Assistant District Director of the Wage and Hour Division in West Covina, emphasized that "burdening employees with business expenses takes hard-earned wages out of workers' pockets," underscoring the Department's commitment to enforcement.

This case exemplifies a broader pattern of wage violations in the restaurant industry. Recent high-profile cases include a Boston restaurant fined $1.8 million for allowing managers to participate in tip pools and a Manteca, California restaurant chain ordered to pay $824,405 for failing to pay overtime wages. These violations remain pervasive, with studies indicating that approximately 46% of California workers have experienced at least one serious FLSA violation.

Key Points

• Unlawful Tip Retention: Restaurant owners illegally kept a portion of servers' tips, violating federal law that prohibits employers from retaining any employee tips
• Overtime Violations: Failed to pay time-and-one-half overtime rate for hours worked over 40 per workweek
• Recordkeeping Failures: Did not maintain accurate time and payroll records as required by FLSA
• Financial Penalties: $17,311 in back wages owed to 9 workers plus $2,985 in civil penalties
• Willful Violations: The civil penalty reflects the intentional nature of the wage law violations
• Federal Prohibition: FLSA Section 3(m)(2)(B) explicitly bars managers, supervisors, and employers from tip pool participation
• Industry-Wide Issue: Restaurant wage violations remain common, with 46% of California workers experiencing FLSA violations

Primary Author: U.S. Department of Labor, Wage and Hour Division

Primary Media Contacts Ryan Honick and Chauntra Rideaux, U.S. Department of Labor Media Contacts

Primary Source: U.S. Department of Labor, Wage and Hour Division

Primary Source Link: https://www.dol.gov/newsroom/releases/whd/whd20251219

Supplemental Links

• Fair Labor Standards Act Overview
• FLSA Overtime Requirements Fact Sheet
• Federal Tip Pooling Regulations (29 CFR § 531.54)
• DOL Tip Regulations Partial Withdrawal (2021)
• Thompson Coe: Tip-Pooling Under the FLSA
• Amundsen Davis: DOL Clarifies Management Cannot Keep Tips
• Davis Wright Tremaine: Tip Pooling With Back-Of-House
• LegalClarity: FLSA Tip Cap Rules