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Mezcal owner pays nearly $500,000 to employees after creating phony tip pool

A Baltimore area restaurant owner has paid nearly half a million dollars in back wages and damages to 62 workers after federal officials said he bilked employees through a phony tip pool.

A 2017 complaint from the U.S. Department of Labor cited “numerous violations” of the Fair Labor Standards Act at Mezcal Inc., which runs Mezcal Mexican Restaurant and Bar with locations in Owings Mills and Lutherville.

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U.S. Labor Department officials say that from 2013 to at least 2016, Mezcal owner Carlos Ulloa required workers to put 4% of their credit card tips in a tip pool, but never actually distributed any of the money to employees, instead keeping the money for the business.

“All too often, restaurant industry workers fall victim to wage violations,” said Nicholas Fiorello, the department’s wage and hour district director, in a statement sent Monday. “Tips remain the property of those who rightfully earned them, and must never be kept by employers.”

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The restaurants also failed to pay overtime wages, paid some workers less than minimum wage, and paid employees under the table, according to a complaint.

Ulloa could not be reached for comment.

A consent judgment approved in July 2020 included a payment plan extending through June 2021, according to a labor department spokeswoman. But Ulloa paid up all due wages ahead of schedule.

“Some workers have received their money, while others are still being located by the Division,” the spokeswoman wrote in an email.

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Oscar L. Hampton III, the labor department’s regional solicitor, said in a statement that the case was a warning to other businesses that the agency “will continue to use all of the tools we have available, including vigorous prosecution when necessary, to ensure vulnerable workers get paid and that employers compete on a level playing field.”

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