800,000 Reasons to Not Do What This Restaurant Did
The U.S. Department of Labor recently offered employers a legal cautionary tale of how not to pay employees when it hit a Long Island, New York restaurant with $800,000.00 in back wages and overtime pay liability, liquidated damages, and civil fines because
it determined that this restaurant repeatedly violated the Fair Labor Standards Act (“FLSA”) and wage regulations by:
• Regularly making nonexempt employees work 70 or 80 hours a week without paying them overtime pay;
• Paying less than the minimum wage rate for all hours worked;
• Not keeping records of time, payroll, or tips; and
• Paying wages partially in cash, off the books.
Given that 40 current or former employees were involved, and the FLSA entitles aggrieved employees to receive not just full back wages (and overtime pay), but also an equal amount again in liquidated damages, the restaurant was hit with $390,000.00 in back wages plus $390,000.00 in liquidated damages. An additional $20,000.00 in civil fines was assessed based on the records-related violations.
In addition to the monetary hit, the restaurant is also subject to a compliance plan requiring it to keep accurate records of hours and wages; prohibiting the restaurant from making improper deductions from its employees’ wages; obligating it to ensure that all managers and employees are fully and properly trained with regard to both their rights and their responsibilities under the FLSA; and requiring the distribution of posters and documents to employees to make absolutely sure everyone understands the wage and hour rules.
It could have been worse. Had the lawsuit been brought by private attorneys for the employees, rather than by the Labor Department, the restaurant could have found itself paying tens or hundreds of thousands of dollars in plaintiffs’ legal fees as well. Even with that small “blessing,” however, the lesson is clear. Don’t do what this restaurant did.
Restaurants and other companies need to make sure they understand how the wage and hour laws apply to their industry, properly calculate what employees are owed for the hours they work based on properly maintained records, and pay the employees the full amounts owed in the method required by law. Otherwise, the company may suffer a similar fate as this restaurant.
