$258,524 in Back Pay and Penalties for Violations of the FLSA and Federal Child Labor Regulations

Friday, April 11, 2014

McDonald’s franchise operators Gold Hat Inc. and Gold Hat II Inc., which have the same owner and are based in Annapolis, have agreed to pay $254,224 in back wages and liquidated damages to 138 employees following an investigation by the U.S. Department of Labor’s Wage and Hour Division, which determined that violations of the minimum wage, overtime and child labor provisions of the Fair Labor Standards Act occurred at nine of the operators’ restaurant locations throughout Maryland. The employer has also agreed to pay $4,300 in civil money penalties for the child labor violations.

Gold Hat Inc. operates four McDonald’s restaurants, and Gold Hat II Inc. operates another five restaurants. Investigators from the division’s Baltimore District Office found that when employees worked at more than one location for the employer during the same workweek, the hours they worked at the different locations were not totaled to determine if overtime was due. Instead, employees received separate checks from each location, all at straight-time rates, even if they had worked a total of more than 40 hours.

Investigators also found that both operators took deductions from employees’ pay for cash register shortages, which illegally reduced some employees’ rates of pay below the mandatory minimum wage of $7.25 per hour. Finally, the investigators determined that ten 14- and 15-year old employees worked outside of the hours permitted by federal child labor regulations.

In addition to paying the back wages, liquidated damages and penalties, the Gold Hat companies also agreed to enhanced compliance measures, including conducting an internal audit to evaluate compliance with minimum wage, overtime, wage deductions, child labor and worker classification requirements; providing training covering the employers’ responsibilities under the FLSA; and implementing practices with respect to the FLSA’s child labor provisions, including highlighting the names of minor workers on the schedule to alert managers to their status and posting child labor requirements in a conspicuous place.

The FLSA requires that covered, nonexempt employees be paid at least the federal minimum wage of $7.25 per hour, as well as one and one-half times their regular rates of pay for every hour they work beyond 40 per week. The law also requires employers to maintain accurate records of employees’ wages, hours and other conditions of employment, and prohibits employers from retaliating against employees who exercise their rights under the law. The FLSA provides that employers who violate the law are generally liable to employees for their back wages and an equal amount in liquidated damages, which are paid directly to the affected employees.

The FLSA’s child labor provisions protect young workers by limiting the types of jobs and the number of hours they may work. Children under 14 years of age may not be employed in nonagricultural occupations covered by the FLSA. Individuals 14 and 15 years of age may be employed outside of school hours in a variety of nonmanufacturing and nonhazardous jobs for limited periods of time and under specified conditions.

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