Wage & Hour Takes Aim At Restaurant & Other Hospitality Employers |

Wage & Hour Takes Aim At Restaurant & Other Hospitality Employers

A slew of recent U.S. Department of Labor Wage and Hour Division (WHD) high dollar recoveries alert restaurant and other hospitality industry employers to clean up their Fair Labor Standards Act (FLSA) wage and hour, H-2B and other workforce compliance.

Popeyes Franchise- $212,000

On February 7, 2024, the Labor Department announced its recovery of $212,000 in Baxley and penalties from California Popeyes franchisee 14th St. Chicken Corp. for violations of federal child labor and wage and hour laws. The WHD says this is the third time that the it has cited the franchisee for violations of the Fair Labor Standards Act

The latest WHD investigation found the Popeyes fast-food chain franchiseedetermined the employer violated the FlSA by shortchanged workers by failing to pay overtime earnings for hours worked over 40 in a workweek.

Additionally, the investigation revealed the franchisee violated child labor rules by hiring children as young as 13-years-old and minors who worked later and longer than permitted by child labor laws at the employer’s three Oakland, Tracy and Newark locations.

Prior violations involved the Oakland and Tracy restaurants in 2003 and 2022, respectively.

For these violations, WHD

Recovered $39,826 in unpaid overtime wages and $39,826 in damages for 15 employees;
Imposed $121,104 in civil money penalties for child labor violations;
Imposed $12,104 in civil money penalties for overtime violations.

In fiscal year 2023, the Wage and Hour Division found child labor violations in more than 950 investigations, resulting in more than $8 million in penalties assessed to employers. on the recoveries.

The announcement warns the Labor Department plans to continue prioritizing child labor law investigations and enforcement quoting Wage and Hour Division Assistant District Director Alberto Raymond as saying:

The U.S. Department of Labor is determined to fight child labor violations in all sectors, including the fast-food industry.”

Sails Restaurant LLC – $184,139

On February 7, 2024, the Labor Department announced its recovery of has recovered $184,139 in back wages and liquidated damages for 56 seasonal guest workers and U.S. workers of a Naples restaurant after finding multiple violations of federal nonimmigrant work program regulations and federal minimum wage and overtime regulations.

The federal H-2B visa program permits U.S. employers to temporarily hire nonimmigrants to perform nonagricultural labor or services. However, the employment must be for a limited, specific period of time, such as a one-time occurrence, seasonal, peak load or intermittent need and the employment must comply with all the conditions for hiring applicable to that program.

The WHD says it’s investigation of Sails Restaurant LLC (Sails) found multiple violations of requirements of the H-2B worker visa program including:

Misrepresenting job requirements despite having previously used and knowing the requirements by willfully misrepresenting access to high-paid server positions with unlimited earnings potential when instead no such job existed; promotional positions out of reach for many; and shifting a dining room attendant to another job as a construction laborer;
Imposing special experience requirements for H-2B workers to qualify for jobs;
Failing to list all qualifications in the job order;
Not giving proper notices related to job termination, denying H-2B workers U.S. work status rights;
Improperly classifing jobs or excluded job tasks on work orders;
Failing to provide job orders or notify workers of their rights; and
Not reimbursing visa expenses for H-2B workers, despite being aware of the requirement.

WHD also found Sails violated the Fair Labor Standards Act (FLSA) by illegally keeping the tips of some H-2B and U.S. workers, failing to pay one worker their last paycheck and paying an incorrect overtime rate to tipped employees.

For these violations, WHD required Sales to pay the wrongfully denied wages and assessed $53,536 in civil money penalties.

Wage and Hour Division District Director Nicolas Ratmiroff warned, “Hospitality and food industry employers must understand that regardless of whether the employer is taking a tip credit, employers are prohibited from keeping employee tips or requiring that an employee give their tips to the employer, a supervisor, or manager.

$359,000 Retaliation Judgment

Along with complying with FLSA, child and migrant labor and other rules, employers also are cautioned to avoid retaliation against workers in violation of federal employment laws by first ever federal court order to jointly impose liability against an employer for violation of the FLSA and the Occupational Safety and Health Act (OSH Act).

In a December 15, 2023 judgment, a federal court ordered a Milford sports bar and its owner to pay employees a total of $359,485 in back pay, emotional distress damages, withheld compensation and punitive damages for violating the anti-retaliation provisions of the FLSA and The OSH Act.

The retaliation judgment resulted from a Labor Department lawsuit filed against Milford Sports Bars LLC, doing business as Champions Grill and Bar, and its owner, Loren Drotos, who is also known as Mark Roberts, Mark Drotos and Mark Lawrence.

The suit filed in the U.S. District Court for the District of Connecticut in February, 2022 alleged that in January 2022, the employers threatened an employee who asked the employer to pay him compensation earned then unlawfully terminated employees who participated in an inspection by the Occupational Safety and Health Administration.

The Labor Department also alleged that, after firing employees within days of exercising these federally protected rights, the employers sought to further chill employees from engaging in protected activities and cooperating with federal investigators by sending a message to employees that they should not talk to the Labor Department.

The District Court accepted the Labor Department’s partment’s allegations as true and issued an order granting $6,770 in back pay, $2,715 in withheld wages, $125,000 in emotional distress damages and $225,000 in punitive damages to the affected employees. The court order also prohibits the employers from future violations of the anti-retaliation provisions of the FLSA and OSH Act.

According to Regional Solicitor of Labor Maia Fisher, “The court’s award of $225,000 in punitive damages and over $359,000 in damages overall sends a clear message that the U.S. Department of Labor will not tolerate such behavior.”

Restaurant & Other Hospitality Employers Should Strengthen Compliance & Risk Management

Following on the heels of other similar enforcement actions, these Labor Department actions send a clear signal that restaurant and other hospitality employees should ensure their ability to defend their compliance with the FLSA, H-2B and other foreign labor, OSHA, anti retaliation and other laws enforced by the Labor Department.

The award against Ole Jose Grill & Cantina warns other restaurant and food services employers to use card to properly classify, track hours of work and pay all required wages and overtime.

For More Information

We hope this update is helpful. For more information about these or other health or other legal, management, or public policy developments, please get in touch with the author Cynthia Marcotte Stamer via e-mail or via telephone at (214) 452 -8297.

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About the Author

Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for 35 plus years of health industry and other management work, public policy leadership and advocacy, coaching, teachings, and publications.

A Fellow in the American College of Employee Benefit Counsel, Co-Chair of the American Bar Association (“ABA”) International Section Life Sciences and Health Committee and Vice-Chair Elect of its International Employment Law Committee, Chair-Elect of the ABA TIPS Section Medicine & Law Committee, Past Chair of the ABA Managed Care & Insurance Interest Group, Scribe for the ABA JCEB Annual Agency Meeting with HHS-OCR, past chair of the ABA RPTE Employee Benefits & Other Compensation Group and current co-Chair of its Welfare Benefit Committee, and Chair of the ABA Intellectual Property Section Law Practice Management Committee, Ms. Stamer is most widely recognized for her decades of pragmatic, leading-edge work, scholarship and thought leadership on heath benefit and other healthcare and life science, managed care and insurance and other workforce and staffing, employee benefits, safety, contracting, quality assurance, compliance and risk management, and other legal, public policy and operational concerns in the healthcare and life sciences, employee benefits, managed care and insurance, technology and other related industries. She speaks and publishes extensively on these and other related compliance issues.

Ms. Stamer’s work throughout her career has focused heavily on working with health care and managed care, life sciences, health and other employee benefit plan, insurance and financial services and other public and private organizations and their technology, data, and other service providers and advisors domestically and internationally with legal and operational compliance and risk management, performance and workforce management, regulatory and public policy and other legal and operational concerns. Author of a multitude of highly regarded publications on HIPAA and other medical record and data privacy and scribe for the ABA JCEB Annual Meeting with the HHS Office of Civil Rights, her experience includes extensive involvement throughout her career in advising health care and life sciences and other clients about preventing, investigating and defending EEOC, DOJ, OFCCP and other Civil Rights Act, Section 1557 and other HHS, HUD, banking, and other federal and state discrimination investigations, audits, lawsuits and other enforcement actions as well as advocacy before Congress and regulators regarding federal and state equal opportunity, equity and other laws.

For more information about Ms. Stamer or her health industry and other experience and involvements, see www.cynthiastamer.com or contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.

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