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Wage and Hour Division (WHD)

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U.S. Department of Labor
Wage and Hour Division
Release Number: 13-1049-CHI

Date: 

June 19, 2013

Contact: 

Scott Allen or Rhonda Burke

Phone: 

(312) 353-6976

Subway franchisee to pay nearly $52,000 in back wages and damages to 53 employees following US Department of Labor investigation


ANN ARBOR, Mich. -- Farha Group #4 Inc., which operates eight Subway restaurants in southeast Michigan, has agreed to pay 53 workers back wages and damages totaling $51,872, following an investigation by the U.S. Department of Labor’s Wage and Hour Division. The investigation found violations of the Fair Labor Standards Act’s overtime and record-keeping provisions for failing to pay overtime to workers at one and one-half times their hourly rates for all hours worked beyond 40 in a week.

“An employer cannot avoid its overtime obligations by asking workers to sign agreements to be paid straight time rates for all hours worked. Employees cannot agree to waive their rights under the law,” said Timolin Mitchell, the wage and hour division district director in Detroit. “This investigation highlights the Wage and Hour Division’s commitment to ensuring that employees receive their rightful wages, as required by federal labor laws.”

The investigation determined that Farha Group #4 asked employees to sign letters of agreement stating they would be paid straight time for all hours worked, including their overtime hours. Additionally, Farha Group failed to combine employees’ hours worked at two or more of its locations during the same workweek when determining whether overtime had been worked. Record-keeping violations were also cited during the investigation when the employer failed to maintain time records for the employees.

Investigators found $25,936 in back wages due to 53 employees at the eight Subway franchise locations operated by Farha Group #4. An equal amount in liquated damages was assessed. The Ann Arbor-based company operates a total of eight Subway franchises in Belleville, Allen Park, Canton and Romulus.

The Wage and Hour Division recently announced its collaboration with Subway’s corporate headquarters to increase compliance with federal labor laws at Subway locations nationwide. Although these restaurants are independently owned and operated, the franchisor is providing a forum and resources to assist the division in educating franchisees. The agency is hopeful that this ongoing collaboration and announcements of investigations, such as this one, will ensure Subway franchisee compliance in the future.

The FLSA requires that covered, nonexempt employees be paid at least the federal minimum wage of $7.25 per hour for all hours worked, plus time and one-half their regular rates, including commissions, bonuses and incentive pay, for hours worked beyond 40 per week. Employers also are required to maintain accurate time and payroll records. The FLSA provides that employers who violate the law are, as a general rule, liable to employees for their back wages and an equal amount in liquidated damages. Liquidated damages are paid directly to the affected employees.

For more information about the FLSA and other federal wage laws, call the Wage and Hour Division’s toll-free helpline at 866-4US-WAGE (487-9243) or visit http://www.dol.gov/whd.

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U.S. Department of Labor releases are accessible on the Internet at www.dol.gov. The information in this news release will be made available in alternate format (large print, Braille, audio tape or disc) from the COAST office upon request. Please specify which news release when placing your request at (202) 693-7828 or TTY (202) 693-7755. The Labor Department is committed to providing America’s employers and employees with easy access to understandable information on how to comply with its laws and regulations. For more information, please visit www.dol.gov/compliance.