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A restaurant owner in Oregon kept all the customer tips left for workers and used the money to pay employee wages, labor officials said. The owner of LI&YU Restaurant LLC, which operates as Bao Bao House in Eugene, kept $43,000 in tips that should have gone to employees, according to a July 28 news release from the U.S. Department of Labor. Investigators first started looking into the business this past January, Portland District Office Director Carrie Aguilar told McClatchy News. The investigation looked at a two-year period, from Feb. 1, 2020, to Jan. 31, 2022. “The investigator found that none of the credit card tips were being given to the employees,” Aguilar said. The restaurant’s owner, Ji Li, told McClatchy News that he and his employees had an understanding. Instead of including tips in their payment, he agreed to pay employees $200 a day for 10 hours of work.
“I think I paid them more than they could gather in tips during the pandemic,” Li said. The Department of Labor said it recovered $43,013 in wages for five employees, as well as the same amount in damages, totaling $86,026. “That’s the best part of this job is getting money back into the hands of workers,” Aguilar said. The restaurant also faces $1,725 in penalties, according to the department. Aguilar said she’s seen cases where employers participate in a tip pool where they take a portion of tips. This, however, was a more “egregious case.” “These tips belong to the employees,” Aguilar said. Li said he realizes he made a mistake and that he plans to sell his shares of the business. “I’m so, so sorry for what I did,” Li said. Recent regulation changes under the Fair Labor Standards Act say that tips legally belong to employees and not employers, according to Aguilar. “Since we’re able to enforce tips now as property of employees, this is an issue with a lot of restaurants that we’re seeing,” Aguilar said. To file a complaint with the Department of Labor, individuals can look online to find a local office.