MYNORTHWEST NEWS

Dept. of Labor: Managers of multiple Wash. Subways stole tips from employees

Mar 7, 2024, 12:19 PM

subway tips washington...

(Photo courtesy of KIRO 7)

(Photo courtesy of KIRO 7)

Multiple owners and managers of Subway restaurants throughout Washington were found illegally pocketing tips of employees, according to the U.S. Department of Labor.

An investigation by the Department of Labor’s Wage and Hour Division found 10 Subway restaurants under common ownership allowed owners and managers to participate in employees’ tip pools, according to the news release from the department. Owners and managers receiving employees’ tips is a violation of the Fair Labor Standards Act.

More Wash. news: Leader of near-$7M pandemic fraud scheme sentenced to five years

“These Subway owners and managers willfully violated the Fair Labor Standards Act by underpaying employees and pocketing tips that did not belong to them,” Thomas Silva, Wage and Hour Division District Director in Seattle, stated. “We encourage employers to review their practices and avoid the costly consequences of illegal actions.”

Investigators determined the illegal practice deprived 100 employees of the tips left by customers through credit card payments. Ten Subways in Arlington, Des Moines, Kent, Lake Stevens, Marysville, Monroe and Sultan all had employees affected by this illegal practice.

The U.S. Department of Labor recovered $196,000 while franchisees were assessed $22,017 in penalties.

“Additionally, the employer manually adjusted employee timesheets to reduce hours worked to 40 hours or fewer per week and failed to combine hours worked at multiple locations to evade its legal obligation to pay overtime rates,” the U.S. Department of Labor stated in a press release.

More from Wash. Department of Labor: Young Corporation faces $2M fine

The 10 Subway franchises were owned and operated by four management firms: Jani Enterprises Inc. operates one Subway restaurant in Des Moines and one in Kent; Keeyarah Enterprises Inc. operates two Subway restaurants in Lake Stevens; Kian Enterprises Inc. operates three Subway restaurants in Marysville and one in Arlington and Quantum Enterprises USA Inc. operates one Subway restaurant in Monroe and one in Sultan.

Last October, the U.S. Department of Labor’s Wage and Hour Division found that Subway locations in Burien, Renton, SeaTac and Tukwila were in violation of minimum wage, overtime and tip pool regulations.

The investigation recovered a total of $75,000 for workers employed at those Subways.

Frank Sumrall is a content editor at MyNorthwest. You can read his stories here and you can email him here.

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Dept. of Labor: Managers of multiple Wash. Subways stole tips from employees