Saturday, February 22, 2014

Too Big to Jail

Sometimes it pays to be the owner. The owner of a Philadelphia restaurant chain was routinely taking more than one fifth of employees’ tips, totaling $4.5 million over three years. The story at

An employee who got caught embezzling that kind of money would be behind bars before the day was over, but in the settlement with the U.S. Department of Labor, the restaurant owner won’t face a criminal indictment. He also got caught paying less than the $2.13/hour federal minimum wage, but he won’t bear any real punishment for that either. Why? Because the laws and the justice system are designed to protect the powerful.

If you run the numbers and adjust for realistic interest rates, it looks like the restaurant owner took a profit of half a million dollars in tip money, so you might say he broke the law and got away with it. But looking at it another way, he probably did take a loss on this illegal scheme. The half-million might not be enough to pay his lawyers for the legal cases, and if the reputation of the restaurant also took a hit from the story, he might be starting all over in a few years, as happens so often in the restaurant business. But that remains to be seen. For now, this is a story of someone in a position of power thumbing his nose at the law, and the law winking in response.