By now you have likely seen recent press regarding an investigation of Fiamma by the Department of Labor. Our attorney advised us to keep our comments to them minimal, thus the story is rather one sided.

We take our compliance and responsibilities as employers and relationships with our employees very seriously and have done so for almost thirty years. Throughout the DOL investigation, there was minimal opportunity to share our side, no final judgment in writing to us, information shared with us contained numerous inaccuracies, there was no site visit to see our operations in person, which is typical for this type of investigation, and most importantly, no opportunity for appeal. We strongly refute the Department of Labor’s assertions, and with no way to appeal their decision, we refused to pay at the advice of our lawyers and another prominent Washington and Oregon company facing a similar investigation. Refusing to pay would force them to litigate or drop the matter.

In November, the DOL informed staff in writing “After reviewing all of the circumstances in this case, it has been decided that it is not suitable for litigation by the Department.” The department ultimately deemed the case unsuitable for litigation, solidifying to us our ongoing compliance.

At both restaurants, some or all tips are “pooled” depending on the position. This means that tips are pooled together and then distributed back to the employees based on position and hours worked. This is standard industry practice. We have some “shift leads/PICs (person in charge)” that assist the general manager with light administrative duties such as inventory, ordering and scheduling, customer service matters, who are included in tip pools. The DOL classified these employees as “essentially managers” and as such, in their eyes, they are ineligible to participate in a tip pool. They claim all these tips distributed to these shift leads were done erroneously and that money instead owed to their peers. This is inaccurate. Shift leads and PICs are permitted to participate in the sharing of pooled tips if they do not meet all conditions of “exempt status”, which would classify them as a true manager.

All pooled tip money was distributed exclusively to employees, including those described above whose primary role is working side by side with their colleagues while occasionally handling minor administrative duties. These administrative hours were tracked separately and never affected tip calculations. Because our tip pool practices were compliant by design, all funds were properly distributed—100% of tips have always gone to direct service employees.

Our salaried managers, office staff, commissary employees, maintenance crew, and owners do not participate in tip pools or take any tips at any time.

The mention of overtime is referring to an oversight on our part. Some employees received a cell phone stipend if their job required regular use of their cell phone. Unknown to us, if an employee receives overtime, those stipends are also subject to overtime escalation. We have fixed this oversight. We always pay overtime when an employee works overtime.

In March last year, after the DOL’s initial judgment, we provided the DOL with an extensive, fully annotated factual analysis addressing their claim regarding “essentially managers.” The department did not respond or engage in any meaningful discussion. Instead, they remained silent for months.

As stated earlier, the DOL offered no formal appeals process for their findings. Since the burden of proof lies with the government, the next procedural step would have been litigation, which they chose not to pursue, and they sent that letter to all employees.  We sent the same employees a letter from us, inviting them to come to us directly or anonymously with any concerns about the matter. Only one former employee, who originally brought the case to the DOL, raised concerns. We have repeatedly offered to meet with this individual— including through mediation via the Whatcom Dispute Resolution Center—to fully explain our compliance. However, they have declined these opportunities, making it difficult to resolve their concerns constructively, thus them turning to the media.

In the aftermath of this article, we have received an outpouring of support from employees, past and present, friends, customers and the broader community. While we value our customer relationships and relationships to the greater Bellingham community, what is most important is that our employees feel that we are serving their best interests. Outside of one former employee, we have not been made aware of any other employees that believe we are, or were, out of compliance. 

Bottom line - ALL TIPS have ALWAYS gone to employees - 100%. WE ALWAYS PAY OVERTIME WHEN OVERTIME WAS WORKED. We stand by the way we run our business; the accuracy, transparency and fairness of our wage, payroll and tip practices. Our practices are not only compliant, but in the best interest of our employees. We will continue to provide a fair, equitable, and respectful work environment for our team in the years to come.