Iowa City-based restaurant chain paid its servers only tips, U.S. Department of Labor claims

A chain of Iowa City-based Mexican restaurants is being sued by the federal government for allegedly paying some of its workers only the tips collected from customers.

In a lawsuit filed in U.S. District Court for the Southern District of Iowa, the U.S. Department of Labor is alleging that Rocio Correa-Mata, 33, of Iowa City, as the sole owner and primary manager of the Mexico Lindo Grill & Cantina restaurant chain, violated the Fair Labor Standards Act of 1938.

Mexico Lindo Grill & Cantina has locations in West Branch, Iowa City, and North Liberty.

The department alleges that certain servers at the restaurants were “only paid via direct cash and credit tips from customers” and did not receive the federal minimum wage rate of $7.25 per hour.

The chain also is alleged to have “willfully and repeatedly” paid employees less than the statutory overtime rate of 1.5 times the workers’ regular wages for all hours worked in excess of 40 hours per week.

In addition, the department claims Mexico Lindo paid its “back-of-the-house employees” – a term typically used to describe kitchen workers — a cash salary that was insufficient to compensate them for any overtime hours.

According to the lawsuit, Mexico Lindo then failed to create and preserve accurate records of employees’ hours and failed to document each worker’s full name and Social Security number.

The department alleges defendant Correa-Mata has actively managed and supervised Mexico Lindo’s operations and employees from June 2015 through the present, overseeing the chain’s daily operations, hiring and firing employees, establishing work schedules, and setting rates of pay at each location.

The Department of Labor is seeking a court order enjoining Correa-Mata and the chain from “continuing to withhold employees’ unpaid minimum wages and overtime compensation,” as well as an order finding them liable for any unpaid wages, plus an equal amount in liquidated damages, payable to 25 different employees of the three Mexico Lindo locations.

The Iowa Capital Dispatch was unable to reach Correa-Mata at home or at any of the Mexico Lindo restaurants.

This article first appeared in the Iowa Capital Dispatch.