WASHINGTON, DC – The U.S. Department of Labor today announced a Notice of Proposed Rulemaking (NPRM) regarding the tip regulations under the Fair Labor Standards Act (FLSA).  Under the proposed rule, workplaces would have the freedom to allow sharing of tips among more employees.  The proposal would help decrease wage disparities between tipped and non-tipped workers – an option that is currently restricted by a rule promulgated in 2011 that has been challenged in a number of courts.

The Department’s proposal only applies where employers pay a full minimum wage and do not take a tip credit and allows sharing tips through a tip pool with employees who do not traditionally receive direct tips – such as restaurant cooks and dish washers. These “back of the house” employees contribute to the overall customer experience, but may receive less compensation than their traditionally tipped co-workers.  The proposal would not affect current rules applicable to employers that claim a tip credit under the FLSA. 

The Department of Labor promulgated tip regulations in 2011 that restricted this option. Since 2011, there has been a significant amount of litigation involving the tip pooling and tip retention practices of employers that pay a direct cash wage of at least the federal minimum wage and do not claim a FLSA tip credit.  There has also been litigation directly challenging the Department’s authority to promulgate the provisions of the 2011 regulations that restrict sharing of tips. 

Moreover, in the past several years, several states have changed their laws to require employers to pay tipped employees a direct cash wage that is at least the federal minimum wage.  This means that fewer employers can take the FLSA tip credit.  The Department’s proposed new rule follows these developments, along with serious concerns that it incorrectly construed the statute when promulgating the 2011 regulations. 

The NPRM will be published in the Federal Register on Dec. 5, 2017, and be available for public comment for 30 days.  The Department encourages interested parties to submit comments on the proposed rule. The NPRM, along with the procedures for submitting comments, can be found at the Wage and Hour Division’s Proposed Rule website.

WASHINGTON, DC – U.S. Secretary of Labor Alexander Acosta issued the following statement today regarding Senate passage of the tax reform bill:

“Senate passage of tax reform is continued good news for America’s job creators and job seekers. Reducing taxes and reforming the tax code will help businesses of all sizes hire more Americans and invest in the workforce. President Trump has brought a spirit of economic optimism back to our nation, with nearly 1.5 million jobs created since January, the lowest unemployment rate in 17 years, and two consecutive quarters of GDP growth over 3 percent. Tax reform will create the conditions for continued economic growth and even more job creation.”

NEW YORK, NY – The U.S. Department of Labor’s Wage and Hour Division has opened an area office in Queens to connect employers, community and trade organizations, employees, and other stakeholders with resources and assistance to ensure compliance with federal labor laws. The new office is located at 68-60 Austin St., Room 601, Forest Hills, New York, 11375.

“This office will serve as a one-stop resource for compliance assistance and information,” said Wage and Hour Division District Director David An, in New York City. “The Queens area office will benefit all the members of the labor and business communities of the second most populous county in New York State and one of the world’s most ethnically diverse urban areas by putting them much closer to available resources.”

Members of the Queens’ office staff are fluent in Spanish and Chinese, and have access to a translation service for other languages. In addition, the Division provides information and publications in numerous languages, including Spanish, Vietnamese, Korean, Chinese, Thai, Haitian Creole, Russian, Hmong, Tagalog, Polish, Portuguese, Nepali, Urdu, Hindi, Samoan, Nepali, Arabic, and Punjabi.

To receive wage and hour-related information, file a complaint, or ask questions about federal wage laws, individuals and businesses should contact the Wage and Hour Division. Services are confidential and are provided at no charge. The Division administers a number of federal labor laws, including the Fair Labor Standards Act, which contains minimum wage, overtime, recordkeeping, child labor, and anti-retaliation provisions; the Family and Medical Leave Act; the Davis-Bacon Act; the Service Contract Act; the Migrant and Seasonal Agricultural Worker Protection Act; and various provisions of the Immigration and Nationality Act that extend protections to different types of nonimmigrant workers.

For more information, call the Wage and Hour Division’s toll-free helpline at 866-4US-WAGE (1-866-487-9243) or its New York City District Office at, (212) 264-8185, Brooklyn Area Office at (718) 254-9410, or Queens Area Office at (718) 834-2090, depending on location of employment. Information also is available at: http://www.dol.gov/whd/. 

NASHVILLE, TN – The U.S. District Court for the Middle District of Tennessee, Nashville Division, issued a consent order and permanent injunction against Casa Vieja Mexican Grille, Inc., and its owners, after a U.S. Department of Labor, Wage and Hour Division investigation determined that Casa Vieja violated the minimum wage, overtime wage, and recordkeeping provisions of the Fair Labor Standards Act (FLSA).

The Hendersonville-based restaurant and its owners – Martin Salazar, Jaime Salazar, and Alejandro Mendez – failed to accurately record the hours that employees worked and they failed to pay employees in compliance with the minimum wage and overtime wage provisions of the FLSA. In total, the Department determined that Casa Vieja owed $751,682 in back wages and liquidated damages to 45 employees. Casa Vieja agreed to pay this amount in full, after a legal action was filed in the District Court.

“Employees should receive the wages they earn for the hours they work,” said Wage and Hour Division District Director Nettie Lewis. “The outcome of this case serves as a reminder to all employers to review their pay practices to confirm that workers are being paid as the law prescribes. We will continue to work to level the playing field for employers who play by the rules.”

In addition to paying the back wages and liquidated damages, the restaurant and its owners are permanently enjoined from violating the FLSA in the future. The Department’s Office of the Solicitor in Nashville litigated the case.

For more information about the FLSA and other laws enforced by the Wage and Hour Division, contact the Division’s toll-free helpline at 866-4US-WAGE (487-9243). Information is also available at http://www.dol.gov/whd.

ALPHARETTA, GA – A U.S. Department of Labor Wage and Hour Division investigation into an Alpharetta-based furniture installer, determined the company violated the Fair Labor Standards Act (FLSA), and owed employees $194,069.

R.I.O.F Inc. – which provides labor for furniture dealers and other furniture installation businesses –misclassified 109 employees as independent contractors and failed to pay overtime. This violation of the FLSA was discovered in the company’s records, which showed the number of hours employees had worked, and the straight-time payments they had received.

“This employer’s actions led to employees being paid thousands of dollars less than they were owed for the hours they worked,” said Wage and Hour Division District Director Eric Williams. “In addition to hurting workers, this practice creates an economic disadvantage for employers who comply with the law. We encourage all employers to make use of our educational resources to ensure compliance.”

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 rates, including commissions, bonuses and incentive pay, for hours worked beyond 40 per week.

For more information about the FLSA and other laws enforced by the Wage and Hour Division, contact the Division’s toll-free helpline at 866-4US-WAGE (487-9243). Information is also available at http://www.dol.gov/whd, including a search tool to use if you think you may be owed back wages collected by the Division.

PHILADELPHIA, PA – Two Philadelphia restaurants have agreed to pay 156 employees a total of $414,765 in back wages, and an equal amount in liquidated damages, to resolve alleged federal wage violations. A proposed consent judgment filed on Nov. 27 – which must still be reviewed and approved by a federal judge – details the terms of the agreement.

In addition to paying back wages and damages, the employers will pay a $10,000 civil money penalty.

An investigation conducted by the U.S. Department of Labor’s Wage and Hour Division in Philadelphia found that Tierra Colombiana and Mixto violated the overtime and recordkeeping provisions of the Fair Labor Standards Act (FLSA). Minimum wage violations were also found. Both restaurants are owned by Jorge Mosquera, and are operated by Jorge and Mercy Mosquera.

“This resolution restores back wages rightfully earned by hard-working employees,” said Wage and Hour Division District Director James Cain, in Philadelphia. “We encourage all employers to take advantage of the Division’s education and outreach efforts to help them understand their responsibilities and how to properly comply with the Fair Labor Standards Act.”

Division investigators found that servers, bartenders, barbacks, runners, hostesses, kitchen chefs, and dishwashers regularly worked more than 40 hours per week, but were not paid overtime at time-and-a-half as the FLSA requires. The restaurants also failed to maintain required records and made some illegal deductions from employee wages.

“This enforcement action will ensure that workers are paid for all of the hours they worked, and will go a long way in leveling the playing field for employers in the restaurant industry,” said Regional Solicitor Oscar L. Hampton III.

The employers have agreed to comply with the FLSA in the future, including paying the proper overtime premium. The FLSA requires that covered, nonexempt employees be paid at least the 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 must maintain accurate time and payroll records.

The Division is committed to providing companies with the tools they need to understand and comply with the variety of  labor laws the division enforces. It offers useful resources ranging from an interactive Employment Laws Assistance for Workers and Small Businesses advisor to a complete library of free, downloadable workplace posters.  In addition, Community Outreach and Resource Planning specialists conduct ongoing activities to educate stakeholders, including employers, employees, business and labor groups, and professional associations.

For more information about federal wage laws, call the agency’s toll-free helpline at 866-4US-WAGE (548-9243).  Information is also available at http://www.dol.gov/whd/.

Read this news release in Spanish.

HARTFORD, CT – A Manchester-based chain of pizza restaurants and its owner will pay $26,575 in back wages and an equal amount in liquidated damages to employees to rectify violations of the federal Fair Labor Standards Act (FLSA) found by the U.S. Department of Labor. The restaurant chain and owner will also pay $14,000 in damages to a former employee who refused to provide false information to investigators.

The U.S. District Court for the District of Connecticut entered a consent judgment ordering Chemro, LLC – doing business as People’s Choice – and its owner, Robert Y. Mercier II, to comply with the FLSA and to refrain from discharging or discriminating against employees who initiate or cooperate with an FLSA investigation. They will also pay $1,168 in civil money penalties to the Department.

An investigation by the Department’s Wage and Hour Division found that the defendants allegedly violated the FLSA’s minimum wage, overtime, and recordkeeping requirements between February 2013 and November 2015. Specifically, they did not pay one-and-one-half their regular rates of pay to three employees who worked overtime hours of up to 75 hours per week and took payroll deductions for cash register shortages that resulted in one employee receiving less than the minimum wage. The unpaid overtime for this period includes wages and damages that the defendants concealed from the Division during a prior investigation in 2015. The previously hidden unpaid overtime dates back to February 2013.

The defendants also maintained and supplied false time and payroll records and statements to investigators during the current investigation and a prior investigation in 2015. The records included receipts that falsely stated that the employees received back wages. Investigators also found that between about December 2015 and April 2016, Mercier continually pressured one employee to make false statements to investigators, leading the employee to believe he had no choice but to resign. In its complaint, the Department charged that this behavior by the employer resulted in the worker’s constructive discharge, in violation of the FLSA’s anti-retaliation provision, the first such claim made by the Department in New England.

“This resolution secures for these hard-working employees the proper compensation they should have received in the first place,” said Wage and Hour’s Hartford District Director David Gerrain. “Employers who knowingly violate or attempt to evade the law gain an unfair competitive advantage over responsible employers who honor their obligations.”

“Intimidating employees – or in any way suggesting they should make false statements or not cooperate with legitimate investigations – is illegal and has consequences,” said Regional Solicitor of Labor Michael Felsen. 

The FLSA requires that most employees receive one-and-one-half times their regular rates of pay when they work more than 40 hours in a work week and that employers maintain adequate and accurate records of employees’ wages and work hours.

The Division’s Hartford District Office investigated, while Senior Trial Attorney Scott M. Miller in Boston’s solicitor’s office litigated the case.

The Division is committed to providing employers with the tools they need to assist them – in a variety of languages – in fulfilling their obligation to understand and comply with the variety of laws the Division enforces. It offers useful resources ranging from an interactive E-laws advisor to a complete library of free, downloadable workplace posters. In addition, the Division’s Community Outreach and Resource Planning Specialists conduct ongoing outreach activities to educate stakeholders, including employers, employees, business and labor groups, and professional associations, among others, with accessible, easy-to-understand information about their rights and responsibilities.

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). Information also is available at http://www.dol.gov/whd. 

# # #

Acosta v. Chemro LLC d/b/a People’s Choice, Robert Y. Mercier II.
Civil Action Number:  3:17-cv-01719-AWT.

AKRON, OH– The U.S. Department of Labor’s Wage and Hour Division and an Akron restaurant have reached an agreement to resolve violations of the Fair Labor Standards Act (FLSA), including payment of $59,177 in back wages and an equal amount in liquidated damages – totaling $118,354 – owed to 21 workers.

Division investigators found Azteca Restaurante Mexicano Inc. and its named owner, Salvador Alatorre, failed to comply with the FLSA’s minimum wage, overtime and recording-keeping provisions. The Division assessed a civil money penalty of $9,646 for willful and repeated violations.

“Failing to pay workers a legal wage is not only wrong, but it allows companies to gain an unfair advantage over competitors who abide by the law,” said Wage and Hour Division District Director George Victory, in Columbus. “Wage violations can be avoided, and we encourage companies to reach out to us for guidance.”

Investigators found Azteca Restaurante Mexicano paid kitchen staff fixed salaries, ranging from $550 to $675 per week, without regard to how many hours they worked. This practice resulted in failure to pay required overtime when these employees worked more than 40 hours in a week. The restaurant also illegally deducted 3 percent of servers’ credit card sales from their tips, resulting in some servers receiving less than the minimum wage. The Division found the company computed overtime for servers based only on their cash wages instead of the minimum wage of $7.25 per hour, resulting in additional overtime violations. When the employer failed to record and pay for some of the hours employees worked, more overtime violations resulted.

Under terms of the agreement, Azteca Restaurante Mexicano has implemented a computerized time-keeping system in addition to paying the back wages, liquidated damages, and penalties.

A 2011 investigation by the Division disclosed minimum wage, overtime and record-keeping violations at Azteca. The restaurant then paid back wages, liquidated damages, and a civil money penalty.

Workers and employers with questions about the FLSA and all of the federal wage laws administered by the Division should call the agency’s toll-free helpline at 866-4US-WAGE (487-9243). All calls are confidential. More information is available online at http://www.dol.gov/whd/.

BOSTON, MA – A Dudley contract packager of aerosol containers and the U.S. Department of Labor have reached a settlement agreement resolving alleged violations of the federal Fair Labor Standards Act (FLSA). Shield Packaging Co. Inc. has paid $210,227 and an equal amount in liquidated damages to 205 employees and pledged future compliance with the FLSA.

The Department’s Wage and Hour Division found that the company failed to pay the employees overtime based on their regular pay rates between April 1, 2015, and Oct. 31, 2016. The company also failed to pay employees for – and keep proper records of – the time they spent putting on and removing safety equipment required for their jobs. The FLSA requires that employees receive one-and-one-half times their regular rates of pay for hours they work beyond 40 in a workweek and that employers maintain accurate records of employees’ wages and work hours.

The Division’s investigation was part of a joint enforcement effort with the Fair Labor Division of the Massachusetts Attorney General’s Office. The state’s investigation identified alleged violations of state laws including failure to pay minimum wage, hindrance, and paystub violations, for which the company will pay more than $564,000 in wages and penalties.

“This cooperative federal-state effort and the resulting settlements compensate these employees for wages they rightfully earned but did not receive. As the Department of Labor enforces the Fair Labor Standards Act, we encourage all employers to take advantage of the Division’s education and outreach efforts to help them understand their responsibilities and how to properly comply with the law,” said the Wage and Hour Division’s Northeast Regional Administrator Mark Watson Jr.

Senior Trial Attorney Susan Salzberg of the Department’s Boston Regional Solicitor’s Office provided legal support in this matter.

The Wage and Hour Division is committed to providing employers with the tools they need to understand and comply with the variety of labor laws the Division enforces in a variety of languages. It offers useful resources ranging from an interactive E-laws advisor to a complete library of free, downloadable workplace posters. In addition, the Division’s Community Outreach and Resource Planning Specialists conduct ongoing outreach activities to educate stakeholders, including employers, employees, business and labor groups and professional associations, among others, with accessible, easy-to-understand information about their rights and responsibilities.

For more information about the FLSA, contact the Division’s toll-free helpline at 866-4US-WAGE (487-9243) or its Boston District Office at 617-624-6700. Information also is available at http://www.dol.gov/whd.

CHATTANOOGA, TN – MetalTek International Inc. – a foundry and machinist shop in Chattanooga – has agreed to pay a total of $335,680 in back pay and liquidated damages to 68 employees after a U.S. Department of Labor Wage and Hour Division investigation found the company violated the Fair Labor Standards Act (FLSA) by not allowing its workers to put on and remove protective equipment while on the clock.

Investigators found that the company did not pay the workers for the time spent taking safety precautions before and after work amid high levels of lead and other job hazards. The precautions, which MetalTek required, included donning protective equipment before entering work areas, and then removing and storing the equipment, and showering before leaving work each day. In doing so, the company violated the FLSA overtime provision.

“The FLSA requires employers to pay employees for all hours that they work, which includes putting on or removing protective equipment required to perform their duties,” said Wage and Hour Division District Director Nettie M. Lewis, in Nashville. “The resolution of this case ensures that these workers are paid the wages they have legally earned, and levels the playing field for law-abiding employers.”

The investigation covered a three-year period. In addition to the wage violations, the Division also found MetalTek violated FLSA recordkeeping provisions by failing to maintain accurate time and payroll records.

The company agreed to pay the back wages and damages, and to comply with the FLSA in the future.

Headquartered in Waukesha, Wisconsin, MetalTek produces machined centrifugal, continuous and sand cast components.

For more information about the FLSA and other laws enforced by the Wage and Hour Division, contact the Division’s toll-free helpline at 866-4US-WAGE (487-9243). Information is also available at http://www.dol.gov/whd, including a search tool to use if you think you may be owed back wages collected by WHD.