Minimum wage can vary from state to state, but the federal Fair Labor Standards Act (FLSA) applies to all employees working in the United States and it requires that all hourly employees earn no less than $7.25 for every hour that they work. This is for forty hours of work per week and is in addition to any overtime compensation, bonuses, or other monetary incentive the employee may earn. If the employee works more than eight hours in a day or forty hours in a week, then the FLSA mandates that she is entitled to one and one-half times their normal hourly rate of pay.
In a recent wage and hour lawsuit filed by the U.S. Department of Labor (DOL), not only were hourly employees allegedly denied minimum wage and overtime compensation, but some of them actually earned less than $7.25 per week. The lawsuit alleges that Arriaga Inc., which owns and operates the restaurant Senor Pancho’s in Orville, Ohio, violated the FLSA. The wage and hour lawsuit was filed after an investigation by the Wage and Hour Division of the DOL found evidence of violations of the overtime, minimum wage, and record keeping provisions of the FLSA. The DOL’s lawsuit is seeking liquidated damages for the employees as well as an injunction from the court to prevent Arriaga Inc. from ever again violating the FLSA.
According to the FLSA, an employer may pay their tipped employees less than minimum wage, but only if the employee earns at least minimum wage through a combination of their tips and wages. If, once tips have been accounted for, the employee has earned less than minimum wage, then the employer is required to make up the balance in the employee’s paycheck. The DOL’s investigations found that, at Senor Pancho’s, tipped employees, such as servers, frequently relied on the tips they received from patrons for all of their pay for the work that they did.
The restaurant also allegedly failed to maintain adequate records of the employees’ hours, dating back at least a year, and did not pay any of the employees the proper overtime compensation when they worked in excess of eight hours in a day or forty hours in a week. The FLSA requires employers to maintain accurate records of all the hours their employees work, as well as all pay received by the employees, for at least three years. Failure to maintain these records is sufficient proof that the employer violated the FLSA knowingly and intentionally which, in certain courts, can result in a much higher fine for the defendant.
Some of the kitchen staff at the restaurant allegedly managed to escape the wage mistreatment by receiving a salary, as opposed to an hourly wage. However, many employees were allegedly misclassified as exempt from overtime compensation and either did not receive paychecks or the paychecks they were given bounced.
The wage and hour lawsuit filed by the DOL alleges that the restaurant owes at least $272,000 in unpaid wages to 34 employees. If the wage and hour lawsuit rules in the DOL’s favor, Arriaga Inc. could be required to pay $272,000 in back wages in addition to $272,000 in liquidated damages. All of this money will be paid directly to the employees.