A hibachi restaurant in Keene owes its employees nearly $43,000 in back wages, according to an inspection report by the N.H. Department of Labor.

Koto Japanese Steakhouse on Winchester Street also faces possible fines from the state agency of $3,200, plus an undetermined amount for failing to secure workers’ compensation insurance for at least seven employees. That violation could cost the restaurant up to $2,500, along with another $100 per worker per day of non-compliance.

This follows an inspection that began Sept. 3 and wrapped up Dec. 19 and found violations of several state labor laws, according to inspector Rob Campbell’s report.

Potentially the most costly infraction for Koto was a policy that required servers to split their tips from a hibachi table with the hibachi chef, Campbell writes in his report, and half of their tips from take-out orders went to the sushi chef.

State law says employees can voluntarily share tips, but Koto employees told Campbell they felt they wouldn’t keep their jobs if they refused, according to the report, and that makes the policy coercive under the statute.

It also constitutes a diversion of wages. Between the tip-sharing policy and other violations, Koto owes its 11 employees approximately $42,750, according to Campbell. Individual amounts range from $249.35 to nearly $11,000.

A miscalculation of tips also contributed to the back wages, the report says. When the employer cashed out credit card tips, the point-of-sales system subtracted a 3-percent processing fee that wasn’t added back into the employees’ tips.

Another violation pertained to a statute that requires employees to be paid for a minimum of two hours of work, even if they worked less. For instance, if employees come to the restaurant or the office on their day off for an hour-long staff meeting, they must be paid for two hours. Koto failed to do so for one employee, according to the report.

Two other infractions were factored into the labor department’s assessed fines: paying four employees late, and not having documentation of six employees’ identity and eligibility to work in the U.S. Other violations regarded paperwork issues, specifically a lack of detailed time sheets or written notifications to each employee of their pay rate.

The labor department sent a letter to Jun Xian Wang, the company’s president, Dec. 31 that laid out the warnings and assessed fines. Employers have three paths forward after receiving the department’s letter: dispute the violations with a formal hearing, pay the fines and back wages in full, or get in compliance and request an informal conference to adjust the amount owed.

Deputy Commissioner Rudy W. Ogden III said Tuesday that an informal conference is slated for Feb. 20. While fines can be negotiated, he said, back wages cannot, unless the underlying violations are contested.

In N.H. Secretary of State online corporate filings, Wang is listed as the president of W&G Steakhouse Inc., Koto’s parent company, but his phone number isn’t publicly listed; neither is Jimmy Wang, named as the owner in the inspector’s report. A call Sunday to the number included in corporate filings was answered by a firm that said neither W&G nor Koto was one of its clients.

Sierra Hubbard can be reached at 355-8546 or at shubbard@keenesentinel.com. Follow her on Twitter @SierraHubbardKS.