167 Raw's Sister Restaurant In Charleston Cited For Illegal Tip Pool

The Charleston, South Carolina-based sister restaurant of Nantucket’s 167 Raw, the fish market and food truck on Hummock Pond Road, was the target of a recent U.S. Department of Labor Investigation that determined the establishment was running an “illegal tip pool” and had shortchanged 92 workers more than $600,000.

The investigation determined that the 167 Raw restaurant in Charleston had committed federal minimum wage and overtime violations by forcing those employees - including management and other typically non-tipped staff members - to participate in the tip pool.

None of the violations related to the 167 Raw operation on Nantucket.

The Charleston restaurant “required tipped employees to share tips illegally, which invalidated the employer’s claim to a tip credit,” the Department of Labor said in a press release issued this week. “As a result, 167 Raw failed to pay tipped employees the difference between their direct wages and the federal minimum wage. In addition, the invalid tip pool resulted in the employer paying overtime rates to the tipped employees at less than the federal requirement when they exceeded 40 hours in a workweek.”

167 Raw King Street LLC, the umbrella company of the operations in Charleston and Nantucket which is owned by Jesse Sandole, released a statement this week in which it attributed the situation to “incorrect legal advice” and emphasized that the owners never participated in the tip pool.

Below is the full statement from 167 Raw:

"In 2021, 167 Raw King Street LLC entered into a voluntary agreement with the U.S. Department of Labor regarding its tip-pooling procedure. The Department of Labor found the process to be in conflict with provisions of certain regulations. A tip pool was established to include and compensate our team members who are integral to a positive dining experience at our restaurant. Before establishing the pool, we sought advice from legal counsel and were told that it was legal and appropriate to do so. Months later, however, the Department of Labor concluded that these procedures were in direct violation of certain federal guidelines. The Department began a full investigation and determined that while we had not intentionally violated any regulation, we had instead relied upon incorrect legal advice. The full details of this were disclosed to our team members and compensation was handled accordingly. We fully cooperated with the Department of Labor to establish new procedures within the Department's guidelines and took the necessary steps to correct the misallocation of tips. It is important to note that the owners of 167 Raw King Street LLC never shared in or participated in the former tip pool. We continue to prioritize our team members and choosing to enter this voluntary agreement with the Department last year ensured that our valued team members continue to be well-compensated within the framework of evolving federal guidelines.”

The company declined to comment further.

In total, the Department of Labor’s Wage and Hour Division recovered $624,017 in back wages for the affected workers.

“Restaurant industry employers must know and comply with federal requirements to claim the tip credit. 167 Raw King Street LLC’s violations are common in the restaurant industry, and they can quickly add up to costly consequences,” said Wage and Hour Division District Director Jamie Benefiel in Columbia, South Carolina. “As food service industry employers struggle to find people to fill the jobs needed to remain competitive, they must take into account that retaining and recruiting workers is more difficult when employers fail to respect workers’ rights and pay them their full wages.”