Restaurant chain goes the distance in FLSA violations: $500k tab is the result
Now here’s a company that seems to believe in the old adage: “If you’re going to break one rule, you might as well break them all.”
A chain of Mexican restaurants in North Carolina will pay a total of $511,745 in back wages to 125 employees for violations of the FLSA.
A DOL investigation found that 10 San Jose Mexican Restaurant locations throughout the state had been:
- Paying workers a fixed salary without regard to the number of hours they actually worked, which allowed the employer to pay workers less than the federal minimum wage for every hour worked.
- Failing to pay workers overtime when they worked beyond 40 hours in a workweek.
- Requiring wait staff to work only for tips, resulting in minimum wage and overtimes violations.
- Reducing workers’ pay below minimum wage by charging employees for mandatory uniforms.
- Failing to maintain required time and payroll records, and falsifying payroll documents.
All of which, of course, run afoul of the Fair Labor Standards Act.
“The restaurant industry employs some of our country’s lowest-paid workers, who are often vulnerable to disparate treatment and wage violations. Failure to pay these workers the wages they have worked long hours to earn hurts them and their families, and it provides a competitive advantage over law-abiding employers. Enforcement actions like these should motivate all North Carolina restaurant owners to follow the law and provide a fair day’s pay for a fair day’s work to all employees,” Richard Blaylock, DOL’s Wage and Hour Division’s Raleigh district director, said in a press release
The San Jose Mexican Restaurants involved in the investigation are:
- San Jose Mexican Restaurant Elizabethtown Inc., Elizabethtown
- San Jose Mexican Restaurant of Lumberton Inc., Lumberton
- San Jose Mexican Restaurant No. 2 of Lumberton Inc., Lumberton
- San Jose Mexican Restaurant of Pembroke Inc., Pembroke
- San Jose of Roanoke Rapids Inc., Roanoke Rapids
- San Jose Flores Inc., Rocky Mount
- San Jose Restaurant Inc., Wilson
- San Jose of Zebulon Inc., Zebulon
- Flores Restaurant Inc., Whiteville, and
- San Jose Mexican Restaurant of Raleigh.
A quick review of the regs covering restaurant workers, courtesy of the DOL:
The FLSA requires the payment of at least the federal minimum wage of $7.25 per hour to covered, nonexempt employees for all hours worked. It also requires that employees receive time and one-half their regular rates of pay, including commissions, bonuses and incentive pay, for hours worked beyond 40 per week. Additionally, employers must maintain accurate time and payroll records.
Under the FLSA, an employer of a tipped employee is only required to pay $2.13 an hour in direct wages if that amount plus the tips received equals at least the federal minimum wage of $7.25 an hour. If an employee’s tips combined with the employer’s direct wages do not equal at least the minimum wage, the employer must make up the difference.
Employers may create a tip-pooling or sharing arrangement among employees who customarily and regularly receive tips, but a valid tip pool may not include employees who do not customarily and regularly receive tips, such as dishwashers, cooks, chefs and janitors. Finally, paycheck deductions for patrons who do not pay for their orders, broken dishes or cash register shortages are illegal if they reduce an employee’s wages below the minimum wage.
