Labor Department Recovers $85,197 for Workers at Texas Coffee Bar

Stock photo.

The U.S. Department of Labor has recovered $85,197 in back wages for 36 workers at a coffee bar and lounge in central Texas, after an investigation found the business had been operating an illegal tip pool.

The department’s Wage and Hour Division announced April 6 that Nate’s At The Buda Mill & Grain Inc. — operating as Nate’s Coffee & Cocktails, roughly 15 miles south of Austin — violated the Fair Labor Standards Act by allowing its general manager to participate in the employee tip pool. Under federal law, managers and supervisors are prohibited from keeping or sharing in employees’ tips for any reason.

Because the tip pool was unlawful, the company could not claim the tip credit, the DOL said. That meant the employer was required to pay the full minimum wage to affected workers rather than a lower direct wage supplemented by tips.

“By law, managers and supervisors are not allowed to retain employees’ tips or participate in a tip pool,” Charles Frasier, Wage and Hour Division district director in Houston, said in the department’s announcement. “Service workers are entitled to all the tips they earn from customers and managers are not permitted to take away those rewards given for employees’ hard work.”

Nate’s Coffee & Cocktails opened in 2016 with a coffee bar by day and a full bar in the evening with live music and other community events. DCN has reached out to Nate’s for comment.

Wage-and-hour cases involving coffee businesses are not especially common, but there have been several notable examples in recent years. In 2024, the Labor Department sued New York City operators of White Noise Coffee Co. and Milk Under Café over alleged overtime violations. In Louisville in 2023, federal investigators announced wage cases involving Heine Brothers, Please & Thank You, Sunergos and Wiltshire. More recently, Starbucks agreed in December 2025 to a $38.9 million New York City Fair Workweek settlement, including more than $35.5 million in restitution for hourly workers.

For employers, the Wage and Hour Division offers a free compliance assistance hotline at 866-4US-WAGE (487-9243).

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