$675,000 in Back Wages and Liquidated Damages for Violations of Fair Labor Standards Act by Boston Restaurant Owner

Friday, September 14, 2012

The U.S. Department of Labor has reached a settlement agreement with three Boston restaurants owned by Marc Kadish resolving violations of the Fair Labor Standards Act found during an investigation by the department’s Wage and Hour Division. The settlement requires Kadish and the restaurants to pay 70 workers a total of $675,000 – $337,500 in back wages plus an equal amount in liquidated damages.

The settlement covers Sunset Management Corp. doing business as Sunset Grill & Tap, Sunset Cantina Management Inc. doing business as Sunset Cantina, Big City Management Corp. doing business as Big City Restaurant and Kadish.

Investigators found that some employees were paid “straight time” for all hours worked instead of the required overtime rate of time and one-half for hours beyond 40 in a workweek. The employer also failed to combine hours for employees working at two locations in the same workweek, and therefore failed to pay the correct overtime premium when their combined hours exceeded 40. Additionally, the employer failed to record cash payments made to employees who were paid part of their wages by check and part in cash. Finally, accurate daily and weekly records of hours worked were not maintained.

This investigation was conducted as part of an ongoing enforcement initiative focused on the restaurant industry that is being conducted by the Wage and Hour Division’s Boston office. Investigators have identified widespread noncompliance with the FLSA’s minimum wage, overtime and record-keeping requirements. Common violations include paying employees flat salaries for all hours worked without overtime pay, failing to combine hours worked at multiple locations for overtime purposes, paying incorrect overtime rates to tipped employees, making illegal deductions from employees’ wages and failing to keep accurate records of the hours employees work. An emerging trend of misclassifying restaurant workers as independent contractors in order to avoid the FLSA’s requirements also has been identified.

The FLSA requires that covered employees be paid at least the federal minimum wage of $7.25 per hour as well as time and one-half their regular rates 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, as a general rule, liable to employees for back wages and an equal amount in liquidated damages. Liquidated damages are paid directly to the affected employees.

The Labor Department has developed a smartphone application to help employees independently track the hours they work and determine the wages they are owed. Available in English and Spanish, users can track regular work hours, break time and any overtime hours for one or more employers. This new technology – at http://www.dol.gov/dol/apps – is significant because, instead of relying on their employers’ records, workers now can keep their own records.

Accessible and searchable information on enforcement activities by the Department of Labor is available athttp://ogesdw.dol.gov/search. Publicly available enforcement data are also available through the free mobile application “Eat Shop Sleep,” which enables consumers, employees and other members of the public to check if a hotel, restaurant or retail location has been investigated by the Wage and Hour Division, and whether FLSA violations were found. The app is athttps://sites.google.com/site/eatshopsleepdol.

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