Bellingham restaurants Fiamma Burger and La Fiamma Pizza owe employees more than $160,000 due to illegal tip-sharing practices, on top of an almost $14,000 fine, a federal Department of Labor investigation found late last year.
But the owners, who contest the agency’s findings, said they have refused to pay at the advice of their lawyers. As the Department of Labor’s lawyers have decided against pursuing litigation, it seems as though workers’ only avenue to recover the back pay and damages owed is a lawsuit — and even then, the statute of limitations may have expired for some of that money.
Ken and Daniel Bothman are the majority owners of both restaurants.
Former La Fiamma server Rachel Weedman said she reported the owners to the Department of Labor about two years ago “for all of the other people who don’t either have the knowledge or balls to go after these people for this, because it’s not OK.”
Between late 2020 and late 2023, seven managers took part in a tip pool with servers and cashiers at both restaurants, the agency concluded, which is against federal labor law. Those workers are due back wages for the tips their employer required they share.
In a strange quirk of the law, four of the seven managers are also due back wages because their tip pool income now has to be factored into their overtime pay during that time period. In other words, they shouldn’t have received the tips, but because they did, that money is considered part of their “regular rate” used to calculate overtime.
In total, the labor department determined 73 employees are due $82,069 in back pay for tips and overtime, plus that amount again in damages, an agency employee confirmed. The agency also imposed a $13,980 fine on the restaurants.
Payments like these can be resolved through administrative settlements or litigation, a labor department employee told Cascadia Daily News. The employee, who was not authorized to speak on the record, said the agency’s lawyers have to weigh whether to pursue each case individually due to limited resources. The lawyers consider the egregiousness of the case, their caseload and the number of people affected, among other factors, the employee explained.
The department’s lawyers did not move forward with a lawsuit in this case.
In a statement posted to its website this week, Fiamma said, “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.”
Fiamma’s owners have maintained that those seven employees were not managers as they spent the vast majority of their time on customer service. The hours those employees spent on administrative duties were not used to calculate their share of the tip pool, wrote co-owner Ken Bothman in an email.
The disagreement comes down to whether the employees in question met the legal definition of “executive employees” — i.e. managers. Federal code lists four criteria: executive employees are salaried, have management as their “primary duty,” direct at least two employees regularly and have a say in hiring and firing.
Employees must meet all four criteria to be exempt from federal minimum wage and overtime protections. However, tip regulations specify employees need only meet the last three criteria to qualify as managers who must be excluded from tip pools.
The labor agency determined the Fiamma employees met the criteria to be considered managers for the purposes of tips. The department also noted those staff members “generally receive significantly higher pay than the employees they supervise.”
Bothman, who uses they/them pronouns, takes issue with that assessment. They wrote in an email that these employees “spent only 5-10% of their hours on administrative tasks,” adding shift leads and “PICs,” or persons-in-charge, are allowed to take part in tip pools unlike managers.
In a March 2024 letter to the Department of Labor, Fiamma’s lawyer Carrie Blackwood, like Bothman, argued the employees did not meet the “primary duty” requirement. The owners and operations managers at Fiamma handle almost all managerial tasks, she wrote, including setting pay rates, employee discipline and hiring.
However, she noted employees in the lead positions have duties including scheduling, training, ordering and assisting the operations manager with hiring and performance reviews.
Of the primary duty requirement, she wrote: “Generally, this would mean that managerial work constitutes more than 50% of the employee’s work.”
But according to the labor agency, this is a misunderstanding of the legal definition of “primary duty,” which is determined case by case.
The department’s record of its investigation recounted a February 2024 conversation with Fiamma’s owners and their lawyer in which agency staff made clear that primary duties can be less than 50% of managers’ workload.
An agency employee told CDN it is very possible for a supervisor to spend only 5-10% of their time on administrative duties and still qualify as a manager.
Blackwood’s letter also explained that lead employees received a “tip match” for their administrative hours during which they were not eligible for the tip pool, ensuring they did not lose out on income.
“As a sign of goodwill and commitment to this process,” she wrote, “Fiamma has removed these positions from eligibility for participation in the tip-pool, pending resolution of this matter.”
In an email, Bothman wrote Fiamma did not receive a response to Blackwood’s letter. Bothman added the back wage calculations to the 73 servers and cashiers did not include kitchen staff.
“The Department has no authority to demand payment,” they wrote, “and particularly in cases where there is erroneously compiled figures we are not going to pay.”
In an email, a regional labor department employee directed Cascadia Daily News to the agency’s national office for comment. A phone call to that office was not returned.
Weedman, the former Fiamma employee, said she was fired from Fiamma shortly after raising the issue of the tip pool with the Department of Labor and other employees.
Bothman declined to comment on Weedman’s dismissal, citing employee privacy. Bothman added Fiamma’s owners were unaware of Weedman’s report to the labor department until after they let her go for unrelated reasons.
In October, Weedman received a letter from the labor department informing her of the agency’s decision not to litigate the back wages and of her right to file her own lawsuit. It included a note that back wages are “subject to a statute of limitations,” which usually means wages earned more than two years before a potential lawsuit “may not be collectible.”
In response to a recent Bellingham Herald article on the labor department’s investigation, Fiamma’s owners sent a letter to staff and published a statement on their website.
“We stand by the way we run our business; the accuracy, transparency and fairness of our wage, payroll and tip practices,” the letter to employees read. “Our practices are not only compliant, but from our view, in the best interest of employees. If you disagree, let us know.”
Sophia Gates covers rural Whatcom and Skagit counties. She is a Washington State Murrow Fellow whose work is underwritten by taxpayers and available outside CDN's paywall. Reach her at sophiagates@cascadiadaily.com; 360-922-3090 ext. 131.
