Johnny Rockets Restaurants to Pay $571,460 in Back Wages and Liquidated Damages for Wage and Overtime Violations

Thursday, October 13, 2016
The U.S. Department of Labor announced a consent judgment requiring the owners of two Johnny Rockets restaurants in the Washington, D.C. metropolitan area to pay $571,460 in back wages and liquidated damages to 55 servers denied the minimum wage and overtime.

Judge Colleen Kollar-Kotelly of the U.S District Court for the District of Columbia entered the consent judgment against Dariush Inc. and Rockets and Rockets Inc. – both doing business as “Johnny Rockets” – and co-owner Gholam Kazemian.

The judgment resolves a lawsuit filed by the department after an investigation by its Wage and Hour Division focused on the fast food restaurants’ franchise locations at Union Station in the District of Columbia, and in Arlington, Virginia. The lawsuit sought to recover $285,730 in minimum wages and overtime back wages, including the misappropriated tips, plus an equal amount in liquidated damages, for the 55 employees.

The investigation found that as early as February 2013 until at least May 2015, the defendants violated the Fair Labor Standards Act when they required 55 servers to contribute a portion of their total tips back to the employer, who then distributed the money to cooks and dishwashers, who were not tipped employees. Also, in doing so, the employer paid servers less than the federal minimum wage of $7.25 as required.

Additionally, the defendants failed to pay required overtime wages to employees when they worked more than 40 hours in a week, and did not keep accurate records of all hours worked by employees.

The consent judgment orders the defendants to pay $285,730 in back wages and an equal amount in liquidated damages.

Many restaurants require servers to pool their tips for workers to share equally. A valid tip pool may not include employees who do not receive tips customarily and regularly, such as dishwashers, cooks, chefs and janitors. When an employer utilizes employees’ tips for any purpose other than a valid tip pool, as was the case at Johnny Rockets, it is a violation of the tip credit provision of the FLSA. As a result, no tip credit may be claimed, and the employees are entitled to receive the full cash minimum wage on a retroactive basis, as well as a return of the tips that were misappropriated.

The FLSA requires that covered, nonexempt workers be paid at least the federal minimum wage of $7.25 per hour for all hours worked, plus one-and-one-half times their regular wages for hours worked beyond 40 per week. Employers also must maintain accurate time and payroll records.
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