Dive Brief:
- Plaza Azteca agreed to pay $11.4 million in back wages and liquidated damages for over 1,000 employees who worked at over 40 restaurants, the U.S. Department of Labor said in a Thursday press release.
- The DOL filed a complaint against owner Ruben Leon and the restaurants after the department’s Wage and Hour Division discovered that Leon and the restaurants violated overtime and minimum wage practices under the Fair Labor Standards Act.
- This consent judgment appears to be the DOL’s largest recovery in back wages from a restaurant this year, according to a review of past settlements by Restaurant Dive, HR Dive’s sister publication.
Dive Insight:
The DOL said that various Plaza Azteca restaurants paid predetermined amounts to back-of-house employees, which led to some employees who worked up to 40 hours in a workweek not receiving minimum wage. It also alleged that some employees didn’t earn time-and-a-half if they worked over 40 hours in a week, and that the restaurants didn’t maintain accurate records of staff work hours and wages. The department’s investigation began in 2019 and the agency reviewed records from 2016 to 2020.
Plaza Azteca was also ordered to pay $625,000 in penalties “due to the repeat and willful nature of the violations,” per the press release. The lawsuit included locations in Connecticut, Maryland, Massachusetts, New Jersey, North Carolina, Pennsylvania and Virginia. The employers were also forbidden to violate the FLSA in the future and must “retain a qualified consultant to make certain the employer’s payroll and recordkeeping practice comply with the FSLA.” Back pay and liquidated damages will be given to current and former employees regardless of immigration status.
“This outcome sends a strong message to other restaurant industry employers of the costly consequences that can occur when they deprive employees of their full and rightful wages,” said Solicitor of Labor Seema Nanda in a statement. “As we did in this case, the U.S. Department of Labor will strategically deploy our investigative and litigation resources to remedy systemic violations of the law at a national scale across an enterprise’s locations.”
The DOL has recovered back wages from dozens of restaurant owners across the country this year. The most severe case involved two Subway franchisees who were ordered to close their 14 restaurants after it was revealed that they coerced employees not to cooperate and threatened children during the Wage and Hour Division’s investigations. The owners also had to pay $1 million in back wages.
