Texas barbecue king caught in federal tip-sharing investigation
A federal investigation into Black's Barbecue found the Central Texas food chain violated a year-old law by tip sharing — reallocating $230,353 in tips from servers to managers, taking away earned wages from more than 270 employees — the U.S. Department of Labor said Monday.
Black's Barbecue locations in Austin, New Braunfels, Lockhart and San Marcos were targeted by the Labor Department's Wage and Hour Division investigation resulting from a 2019 audit and a federal labor rule change making it illegal to share employee-earned tips with managerial staff.
Kent Black, grandson of original Black's Barbecue pit master Edgar Black Sr. and current member of the Black's ownership group, told the American-Statesman on Tuesday that the company outsourced its payroll and was unaware of the rule revision that managers should not take tips.
"We're barbecue experts; we're not payroll experts," Black said. "We weren't closely following that, and apparently our payroll company did not pick up on that."
The Labor Department said Monday that the illegally shared wages had been recovered.
“Food service industry employers must know that tips are the property of tipped employees who earn them, plain and simple,” said Nicole Sellers, the department's Wage and Hour Division district director in Austin. “Workers and their families depend on their rightfully earned wages and benefits. If you take from them, you take from their families."
In 2018, legislative changes to the Fair Labor Standards Act made it illegal for employers to keep employee tips under any circumstances. The changes were then instituted by the Labor Department in 2020 before going into effect in April 2021.
Black said Monday's announcement was unexpected since the federal investigation into the company and conversations with the Labor Department began in 2019.
He said his barbecue namesake in 2021 repaid the misallocated tips that had been divvied with managers at the chain's four locations.
The repayment amounted to about 10% of what employees should have been paid originally under the updated federal guidelines, Black said.
"We've been around for 90 years, we pay our taxes, pay our staff, try to be good citizens. So, we immediately changed the way we were allocating those tips without them asking us to do it," Black said.
So far this year, the Wage and Hour division has identified $35 million in back wages affecting about 29,000 workers.
In the past decade, the Labor Department's records show the food service industry to be one of the most consistent "high violation" wage environments for workers, along with the construction industry, which both lose tens of millions in wages annually.
Employees who feel they might be owed backed wages are asked to use the Labor Department's workers owed wages search tool and search for their company's name.
Black's hold on Central Texas
Founded in Lockhart in 1932, Black's Barbecue has become a staple in Texas barbecue over the decades through expanding its business across Central Texas and by raising generations of pit masters who have gone on to join the family business.
In 2014, Black’s Barbecue added locations near the University of Texas campus and in San Marcos. Another smokehouse went up in New Braunfels in 2018.
Unaffiliated with the original business but very much in the family, Mark and Michael Black, grandsons of Edgar Sr. and nephews of Kent Black, opened their own barbecue chain named after their father, Terry Black's Barbecue.
Since opening its first shop on Barton Springs Road in 2014, the meat smoking offshoot has opened an additional location in Dallas as well as back where the family barbecue game started in Lockhart.
This article originally appeared on Austin American-Statesman: Black's Barbecue tied to illegal tip-sharing by federal investigation
