$390,960 in Back Wages for FLSA Violations by Mexican Restaurants in South Carolina

Monday, December 24, 2012

Three San Jose Mexican restaurants establishments, individually owned and operated by Eraclio Leon, Gregorio Leon Sr. and Antonio Leon, have agreed to pay 37 employees $390,960 in back wages following an investigation by the U.S. Department of Labor's Wage and Hour Division, which found violations of the Fair Labor Standards Act's overtime, minimum wage and record-keeping provisions. These violations were disclosed at the following locations: San Jose Restaurant Mexicano, doing business as Eric's San Jose Mexican Restaurant #3 in Columbia; San Jose Mexican Restaurant #13 in Lexington; and San Jose Mexican Restaurant #20 in Columbia.

The investigations were conducted under the division's multiyear enforcement initiative focused on the restaurant industry in South Carolina, where widespread noncompliance with the FLSA's minimum wage, overtime and record-keeping provisions has been found. Since fiscal year 2009, the agency's Columbia District Office has concluded more than 300 restaurant investigations, resulting in the recovery of more than $2.5 million in back wages for more than 2,500 workers.

The FLSA violations found at all three restaurants resulted from the employers' failure to properly compensate employees for all work hours. By reviewing payroll records and conducting employee interviews, investigators determined that tipped employees, such as servers, were made to rely primarily on tips for pay, and were paid direct wages below $2.13 per hour, in violation of the FLSA's minimum wage provision. Additionally, other employees, such as kitchen staff, were paid flat salaries each month — without regard to hours worked — that did not satisfy minimum wage or overtime pay requirements. The employers also failed to maintain accurate records of employees' work hours and wages, as required.

In addition to paying the back wages owed in this case, the restaurants agreed to maintain future compliance with the FLSA by keeping accurate records of employees' work hours, wages and other required employment information; paying all employees at least the federal minimum wage; and providing overtime compensation and informing employees in advance that the tip credit will be used.

The restaurant industry employs some of our country's lowest-paid workers who, due to a lack of knowledge of the law or an unwillingness to exercise their rights, are vulnerable to disparate treatment and labor violations. In addition to the initiative in South Carolina, the Wage and Hour Division has other ongoing enforcement initiatives throughout the U.S. to identify and remedy violations that are common in the restaurant industry.

The FLSA requires that covered, nonexempt employees be paid at least the federal minimum wage of $7.25 for all hours worked, plus time and one-half their regular rates for hours worked beyond 40 per week. In accordance with the FLSA, an employer of a tipped employee is required to pay at least $2.13 an hour in direct wages, provided that amount plus tips received equals at least the federal minimum wage of $7.25 an hour. If an employee's tips combined with the employer's direct wages do not equal the minimum wage, the employer must make up the difference. Employers also are required to provide employees notice of the FLSA tip credit provisions, maintain accurate time and payroll records, and comply with restrictions that apply to workers under age 18.

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