Labor & Employment Law Daily Wrap Up, DOL NEWS—Restaurant wage, child labor violations draw federal enforcement, (Aug 28, 2026)

By George Basharis, J.D.

Federal investigations found restaurant employers improperly diverted tips, denied overtime, and violated child labor restrictions.

The Department of Labor’s Wage and Hour Division (WHD) has announced three restaurant-industry enforcement actions producing more than $719,000 in back wages for more than 800 workers and about $164,000 in civil penalties for violations of the Fair Labor Standards Act (FLSA). The investigations involved a South Carolina restaurant group, three commonly owned Louisiana restaurants, and a Tennessee Captain D’s franchisee, with violations ranging from improper tip pools and unpaid overtime to unlawful employment of minors.

Managers in tip pool. Tropical Grille Restaurants paid $618,666 in back wages to 779 employees and $100,000 in civil penalties after a WHD investigation found wage and child labor violations at 13 South Carolina locations. Investigators determined that managers and supervisors participated in the restaurants’ tip pool and that some employees working at multiple locations were denied overtime because the employer failed to combine their hours.

The tip-pool arrangement violated the FLSA’s prohibition against managers and supervisors keeping employees’ tips. By failing to aggregate hours worked at different locations, Tropical Grille also denied some employees time and one-half their regular rates for hours exceeding 40 in a workweek.

The investigation extended beyond the restaurants’ pay practices. Tropical Grille violated federal child labor requirements by allowing 14- and 15-year-old employees to work longer and later than permitted and by violating the FLSA’s hazardous occupation provisions.

The $100,000 in civil penalties covered the child labor and tip retention violations. Tropical Grille also entered into a compliance agreement requiring it to update or create materials addressing federal child labor requirements and provide annual child labor training to managers and supervisors.

Tips diverted. Three commonly owned Japanese restaurants in the Baton Rouge area paid $101,125 in back wages to 36 employees and another $2,325 in penalties after investigators found minimum wage, overtime, and tip-credit violations. The restaurants are Gulfcoast Restaurant Group LLC, operating as Umami Japanese Bistro in Baton Rouge; Geishaville LLC, doing business as Geisha, Sushi with a Flair in Prairieville; and Chopstix LLC, operating another Geisha, Sushi with a Flair restaurant in Denham Springs.

At Umami Japanese Bistro, servers were required to share their tips with cooks, dishwashers, and other non-tipped kitchen employees. The practice violated the FLSA and invalidated the restaurant’s use of a tip credit, resulting in more than $66,000 in payments for minimum wages owed to affected employees. Workers received another $7,450 for tips improperly diverted to kitchen staff.

The two Geisha, Sushi with a Flair locations committed a different wage violation. Salaried, nonexempt kitchen employees were denied more than $27,000 in overtime because the restaurants failed to pay them time and one-half their regular rates for hours exceeding 40 in a workweek. The three employers also paid $2,325 in penalties for requiring servers to share tips with kitchen staff.

“The FLSA violations found at these restaurants are far too common in the service industry,” New Orleans Wage and Hour Division District Director Troy Mouton said. Employers taking a tip credit must comply with the rules governing tipped employees and ensure that workers entitled to overtime receive it, he added.

Hazardous equipment. A Tennessee Captain D’s franchisee paid $62,235 in civil penalties and entered into an enhanced compliance agreement covering its seven current locations and any future locations after an investigation found minors performing work prohibited by federal child labor rules. The investigation began after a minor employed by Two Beacons LLC, which operates the restaurants, was injured by hot grease while using a manual fryer at its Cleveland, Tennessee, location.

Investigators found that the franchisee allowed 14- and 15-year-olds to manually lower food into hot-oil deep fryers, work prohibited for employees of those ages. Minors were also allowed to operate a commercial-grade batter mixer, which workers younger than 18 may not operate. In addition, the franchisee allowed 14- and 15-year-olds to work outside the hours permitted by federal law.

The enhanced compliance agreement reaches beyond the Cleveland restaurant where the violations were discovered. Two Beacons will modify the uniforms of employees younger than 16 so they can be distinguished from older workers, inform youth employees of their rights, and hold managers accountable for compliance with federal child labor requirements, including possible termination for violations.

The action comes as federal regulators continue to find widespread child labor violations. During fiscal year 2025, the Department of Labor investigated 976 cases involving 5,272 minors, including 773 employed in violation of hazardous occupation standards. Employers were assessed more than $37 million in civil penalties during the fiscal year.

Companies: Two Beacons LLC; Captain D’s; Gulfcoast Restaurant Group LLC; Umami Japanese Bistro; Geishaville LLC; Geisha, Sushi with a Flair; Chopstix LLC; Tropical Grille Restaurants

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