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Secretary of Labor Thomas E. Perez
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News Release

WHD News Release: [05/26/2011]
Contact Name: Scott Allen or Rhonda Burke
Phone Number: (312) 353-6976 or x4807
Release Number: 11-0690-CHI

Judge finds Decatur-Ill. Mexican restaurants liable for more than $1 million in back wages and damages after US Labor Department investigation

URBANA, Ill. — A federal judge in Urbana has ordered Dolores Onate, owner, and Ricardo Onate, manager, of the El Matador Inc. and El Caporal Inc. restaurants in Decatur to pay a total of $1,149,702.50 in back wages and damages to 64 workers employed as servers and kitchen staff. This judgment resolves a lawsuit filed by the U.S. Department of Labor following an investigation by its Wage and Hour Division that disclosed willful violations of the minimum wage, overtime pay and record-keeping provisions of the Fair Labor Standards Act at three locations.

"The defendants in this case willfully and repeatedly violated federal labor standards, including forcing their employees to repay wages in an effort to conceal their own violations," said Secretary of Labor Hilda L. Solis. "As a result of the Labor Department's enforcement efforts, these vulnerable workers will receive their rightful pay."

The judgment requires the defendants to pay $387,429.87 due to 34 employees at two restaurants operated by El Matador and $187, 421.41 due to 30 employees at one restaurant operated by El Caporal, plus an equal amount in liquidated damages. This case was litigated by the department's regional solicitor in Chicago.

The Wage and Hour Division's investigation found that some employees at all three restaurants did not receive any proceeds from paychecks they received. Wait staff, for example, took home only tips from customers they served. Although they were given paychecks by their employer, they then were required to return those payments to the restaurants. The investigation also found that employees who did not work as servers — such as kitchen staff, busboys and dishwashers — were not paid the minimum wage or overtime compensation and were required to return some of the money from their paychecks to the restaurant. Additionally, employees often were directed to punch or sign in at a predetermined time, even though they actually had begun working much earlier.

In his written decision, Chief Judge Michael B. McCuskey noted that "defendants instituted a pay practice in which servers endorsed their paychecks to the restaurant and only received tips from the clientele. Although payroll records reflect that paychecks to servers were cashed, the servers received none of the check proceeds. Some employees were instructed not to record all of the hours that they worked. These intentional efforts to conceal defendants' noncompliance with the FLSA resulted in false payroll records and demonstrate that the violations of the FLSA were willful."

The court further held the defendants liable for payment of the full minimum wage to the servers. No part of the minimum wage obligation was deemed satisfied with credit for tips servers received from customers.

An earlier investigation by the Wage and Hour Division was conducted in October and November 2005 at one of the restaurants operated by El Matador. At that time, Ricardo Onate was provided with materials and information to ensure knowledge of and compliance with the FLSA. Wage and Hour Division posters reflecting workers' rights were posted at all three restaurants.

Employers of "tipped employees" must pay either a cash wage of at least $2.13 per hour if they claim a tip credit against their federal minimum wage obligation, or the state mandated cash wage, whichever is greater. If an employee's tips combined with the employer's cash wage do not equal the required minimum hourly wage, the employer must make up the difference. The employer must also inform the tipped employees of the intent to treat tips as satisfying part of the employer's minimum wage obligation, and the tipped employees must be able to retain all of their tips, although they may participate in a valid tip-pooling arrangement.

The FLSA requires that covered employees be paid at least the federal minimum wage of $7.25 for all hours worked, plus time and one-half their regular hourly rates of pay for hours worked beyond 40 per week. Additionally, the law requires employers to maintain accurate time and payroll records, and prohibits retaliation against employees who exercise their rights under the law.

For more information about the FLSA and other federal wage laws, call the Wage and Hour Division's area office in Springfield, Ill., at 217-793-5028 or call the division's toll-free helpline at 866-4US-WAGE (487-9243). Information is also available on the Internet at http://www.dol.gov/whd.

Solis v. El Matador Inc., El Caporal Inc., Dolores Onate, Ricardo Onate
Civil Action Number: 08-CV-2237