A recent U.S. Department of Labor (DOL) enforcement action serves as a reminder that employers must ensure that wage deductions do not create minimum wage violations.
For a Limited Time receive a
FREE Compensation Market Analysis Report! Find out how much you should be paying to attract and retain the best applicants and employees, with
customized information for your industry, location, and job.
Get Your Report Now!
El Azteca restaurant group, which operates restaurants in Wisconsin, has agreed to pay 129 workers a total of $700,000 in back wages and damages to resolve findings from a DOL investigation.
The department said that the employer failed to pay its employees for all hours worked and paid kitchen staff a salary, regardless of the number of hours they worked, in violation of the Fair Labor Standards Act (FLSA). The restaurant also committed minimum wage violations when it made deductions from workers’ pay for uniform shirts, nametags, and aprons, DOL said.
If an employer requires its workers to pay for uniforms, it must ensure that the employees’ compensation for that week does not fall below the required minimum wage and minimum overtime due, according to DOL’s Field Operations Handbook.
Therefore, if an employee receives more than the relevant minimum wage, the employer is allowed to prorate deductions for uniforms over multiple days, DOL says in its Fact Sheet #16.
Example. If an employee is paid the federal minimum wage of $7.25 per hour, the employer may not make any deduction from the employee’s wages for the cost of the uniform, or require the employee to purchase the uniform on his or her own. However, if the employee were paid $7.75 per hour and worked 30 hours in the workweek, the employer could deduct up to $15.00 ($.50 x 30 hours), according to the department.
To resolve DOL’s findings, El Azteca will pay its workers $350,000 in back wages and $350,000 in liquidated damages; it also will pay $25,000 in civil penalties.
The consent decree also requires the employer to conduct FLSA training and perform quarterly reviews of time and payroll records at each location. In addition, if the owners sell business assets prior to completing the payments, the proceeds of the sale must go directly to the employees. The consent judgment also states that if the individual defendants sell their primary residence, DOL will place a lien on any new residence purchased.
This consent judgment should be a “wake-up call” for restaurant owners, said Thomas E. Perez, secretary of labor, in a press release. DOL “takes these violations very seriously and will continue to use every tool at our disposal to ensure workers get the money they have earned,” he added.