Dive Brief:
- Ten Subway franchise locations in Washington have paid a total $218,165 in back pay, damages and fines after the U.S. Department of Labor alleged owners and managers illegally participated in employee tip pools.
- An investigation by DOL’s Wage and Hour Division found the franchisees — Jani Enterprises Inc., Keeyarah Enterprises Inc., Kian Enterprises Inc. and Quantum Enterprises USA Inc. — took tips from 100 employees that were left through credit card payments, adjusted timesheets to keep hours below 40 hours per week and didn’t combine hours worked at multiple locations under common ownership to “evade [the] legal obligation to pay overtime rates,” per a DOL press release. The franchise owners did not respond to requests for comment.
- “These Subway owners and managers willfully violated the Fair Labor Standards Act by underpaying employees and pocketing tips that did not belong to them,” Thomas Silva, district director of the DOL’s Wage and Hour Division in Seattle, said in a March 5 statement. “We encourage employers to review their practices and avoid the costly consequences of illegal actions.”
Dive Insight:
WHD enforces the Fair Labor Standards Act, which sets standards on minimum wage, overtime pay, recordkeeping and youth employment.
The agency regularly investigates violations in the restaurant industry, including loss of tips, overtime and improper use of child labor.
A Mexican restaurant chain, Plaza Azteca, agreed in November to pay $11.4 million in back wages and damages for more than 1,000 employees at more than 40 restaurants after the DOL found it allegedly violated overtime and minimum wage requirements.
The Joe Vicari Restaurant Group — owner of the Andiamo Italian food chains in Michigan — in July paid $88,000 in back wages and damages to 127 employees at 13 locations after the DOL said the group denied workers their full wages and let a minor work later and longer than legally permitted.
DOL also in March 2023 recovered $191,000 in back wages and damages for 89 workers at two commonly owned Florida restaurants — Red Mesa Restaurant and Red Mesa Cantina — that the agency said withheld tips from workers to cover unpaid orders, charged employees for their uniforms and didn’t pay workers minimum wage and overtime pay.
