Wage and Hour Division (WHD)
U.S. Department of Labor
SAN JUAN, Puerto Rico -- The U.S. Department of Labor has sued three companies doing business as “Regal Nails” salons located in Carolina, Canovanas and Ponce, Puerto Rico, and three officers of the common corporations. The department’s lawsuit was filed following an investigation by its Wage and Hour Division, which disclosed, among other violations, that the defendants had misclassified more than 100 employees as “independent contractors,” thereby illegally depriving workers of the minimum wage and overtime to which they are entitled under the federal Fair Labor Standards Act. All three companies are independently owned and operated franchises of Regal Nails LLC.
“This department will not tolerate the exploitation of vulnerable employees in the nail salon industry, many of whom are unaware of wage and hour laws. Employers like Regal Nails cannot avoid paying fair wages to workers simply by misclassifying them as independent contractors,” said Jose R. Vazquez, director of the Wage and Hour Division district office in Guaynabo, which oversaw the investigation. “Misclassification causes hard working Americans to lose out on the wages they rightfully earned and places law-abiding employers at a competitive disadvantage that they cannot afford.”
The Wage and Hour Division’s investigation focused on the employment practices of Nikkie Nail Inc., located at Wal-Mart Plaza Escorial, Carr #3, Carolina; Cannovana Nail Inc., located at Wal-Mart Carr #3 Int Ruta 66, Canovanas; and Top Nails Inc., located at Wal-Mart Super Center, Ave. Baramaya, Ponce. In each location, investigators found that workers were paid on a commission basis – earning less than the federal minimum wage of $7.25 per hour. In addition, where employees worked more than 40 hours in a week, they were not adequately compensated for overtime hours. Moreover, defendants unlawfully deducted from workers’ commissions the costs of uniforms, nail machines and other materials required to provide manicures and pedicures.
After conducting employee interviews and reviewing time and payroll records, the Wage and Hour Division determined that more than 100 employees are owed substantial amounts of back wages for minimum wage and overtime violations. The defendants were also found to have willfully and repeatedly violated the FLSA’s recordkeeping provisions by failing to accurately record the hours worked and monies paid to misclassified workers.
The Wage and Hour Division referred the case to the Labor Department’s regional solicitor’s office in New York City, which filed the lawsuit in the U.S. District Court for the District of Puerto Rico. The suit alleges that the companies and their officers, Binh Dinh Hoang, Henry Cao and Wilberto Velazquez, willfully and repeatedly failed to pay employees the federal minimum wage and overtime compensation for hours worked over 40 in a week, as well as to keep adequate and accurate pay records as required under the FLSA. The suit asks the court to permanently prohibit the defendants from future violations of the law and to order them to pay employees the minimum wage and overtime back wages due, along with an equal amount in liquidated damages or prejudgment interest.
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 hourly 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.
Current and former employees of all three Regal Nails salons who have worked for these employers between May 14, 2008, and the present, and believe they might be due back wages, are encouraged to contact the Guaynabo office of the Wage and Hour Division at 787-775-1947. For more information about the FLSA, call the Wage and Hour Division’s toll-free helpline at 866-4US-WAGE (487-9243). Information is also available on the Internet at http://www.dol.gov/whd.
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