AMES, Iowa – In “college towns” like the city of Ames, hospitality industry jobs are often filled by students, temporary, or foreign workers – many of whom are new to the workforce. Among the nation’s lowest paid workers, they are often unfamiliar with wage laws and their rights.  Language barriers, fear of retaliation, and fears about immigration status can also cause them to be among those least likely to exercise their rights, leaving them vulnerable to labor violations.

In 2014, the U.S. Department of Labor’s Wage and Hour Division began an education and enforcement initiative in the hospitality industry in Midwest college towns and resorts. In the Ames area, the effort has found employers owed back wages of nearly $100,000 to 158 restaurant and hotel workers so far.

“Many of these workers already struggle to makes ends meet. Paying them less than they are legally entitled to is unacceptable,” said Karen Chaikin, regional administrator for the Wage and Hour Division in Chicago. “Unfortunately, labor violations like these are all-too-common in the restaurant and hotel industry.  Our agency is committed to ensuring that workers take home every cent they have rightfully earned, and to providing a level playing field for employers who play by the rules.”

Currently, the Wage and Hour Division is investigating restaurants and hotels in Bloomington, Indiana; and the twin cities of Bloomington-Normal, Illinois; Lawrence, Kansas; and Madison, Wisconsin. In the coming months, the effort will expand to other cities including Iowa City, Iowa, and Champaign-Urbana, Illinois.

In the Ames cases, investigators found violations of the FLSA’s overtime, minimum wage, and record-keeping provisions at seven of the 13 restaurants and hotels they examined. Violations include:

• Paying employees fixed salaries without regard to how many hours they worked, leading to overtime violations when they worked more than 40 hours in a week. 
• Paying overtime only after 80 hours in a two-week period.  Overtime is due after 40 hours in a workweek, regardless of how often an employer pays employees. 
• Deducting the cost of uniforms from workers’ pay, this reduced workers’ effective hourly wages to below the federal minimum wage.
• Failing to maintain accurate and thorough records of employees’ wages and hours worked.
• Improperly calculating overtime for tipped employees.

Investigators found violations at the following Ames establishments:

• West Towne Pub: Employer paid 65 workers a total of $70,169 in back wages.
• El Azteca (Strange Road): Employer paid $12,907 in back wages to 15 workers.
• El Azteca (South Dayton Avenue): Employer paid $10,068 in back wages to 18 workers.
• Dublin Bay: Employer paid $1,567 in back wages  to 10 workers.
• LaFuente: Employer paid $2,460 owed to seven workers.
• Olde Main Brewing Co. & Restaurant: Employer paid $2,338 owed to 42 workers.
• Best Western Plus University Park Inn & Suite: Employer paid $2,084 owed to one worker.

During an education and enforcement initiative, in addition to conducting investigations, the division conducts outreach events for employers and industry stakeholders to provide compliance assistance and information on legal rights and responsibilities. The initiatives also raise awareness among workers, community organizations and others regarding federal wage and hour laws and protections.

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 for hours worked beyond 40 per week. In accordance with the FLSA, an employer of a tipped employee is required to pay no less than $2.13 an hour in direct wages, provided that amount plus the tips received equals at least the federal minimum wage of $7.25 per hour. If an employee’s tips, combined with the employer’s direct wages do not equal the minimum wage, the employer must make up the difference. Employers also are required to provide employees notice of the FLSA tip credit provisions and to maintain accurate time and payroll records.

Employers are required to comply with all laws that apply to their businesses, including federal, state and local labor laws. Some state and local laws provide greater protections for workers.

Accessible and searchable information on enforcement activities by the department is available at http://ogesdw.dol.gov/homePage.php.

For more information about the FLSA and other federal labor laws, call the division’s toll-free helpline at 866-4US-WAGE (487-9243) or its Des Moines office at 515-323-2194. Information also is available at http://www.dol.gov/whd/.

Employer: Kazu Construction LLC

Type of Action: Fair Labor Standards Act Lawsuit    

Names of Defendants: Kazu Construction LLC Vernon Lowry, owner

Allegations: An investigation by the U.S. Department of Labor’s Wage and Hour Division in Honolulu found that Kazu Construction LLC, and its owner Vernon Lowry, violated the overtime and minimum wage requirements of the Fair Labor Standards Act willfully and repeatedly. The contractor systematically “banked” hours worked over 40 in work week at a straight time rate only to be claimed by workers in future weeks when they worked less than 40 hours, such as for sick leave or other time off. As a result, the employer failed to pay some workers at least minimum wage and overtime rates for all the hours they worked beyond 40 in a week. The employer has refused to pay the wages that the division determined the company owes its employees.

Resolution: The department’s suit asks the court to require Kazu and its owner to pay more than more than $500,000 in back wages and liquidated damages to 17 employees.

Quote: “Banking overtime hours instead of paying employees is an illegal practice used commonly in the construction industry,” said Janet Herold, the department’s regional solicitor in San Francisco. “Employers who fail to pay the wages required by law hurt the workers and their families, and gain an unfair advantage over competitors. We will go to court when necessary to stop illegal labor practices and to restore the lawful wages owed to workers.”

Information: For more information about federal wage laws administered by the Wage and Hour Division, call the agency’s toll-free helpline at 866-4US-WAGE (487-9243), or the Honolulu office at 808-541-1361. Information also is available at http://www.dol.gov/whd/.

Court: United States District Court for the District of Hawaii

Docket Number: 1:16-cv-00077-ACK-KSC

LOS ANGELES – In downtown Los Angeles, as dozens of workers constructed a new affordable housing complex for veterans and chronically homeless individuals in MacArthur Park, their employers were cheating them out of lawfully earned wages in 2015.

Funded in part by the city of Los Angeles and the U.S. Department of Housing and Urban Development, the “Six Apartments” project, awarded to The Six Veterans Housing LP, the project’s contractors are subject the requirements of the federal Davis-Bacon and Related Acts. The law requires all federal contractors and subcontractors to pay their workers prevailing wage rates and fringe benefits, and to certify payrolls for all work on the job.

Investigators from the U.S. Department of Labor’s Wage and Hour Division found that general contractor G.B. Construction, Inc. doing business as Golden Bear Construction, and six subcontractors on the project violated the DBRA’s prevailing wage, fringe benefit and recordkeeping requirements. As a result, federal investigators recovered $190,161 in unpaid wages for 53 workers. Division officials and inspectors from the city’s Housing Community Investment Department worked together to hold the contractors accountable. 

“Taxpayers have a right to expect that federal contractors paid with our tax dollars will comply with the law. The U.S. Department of Labor will not allow companies to abuse that trust,” said Eduardo Huerta, assistant district director for the Wage and Hour Division in Los Angeles. “Golden Bear Construction and their subcontractors put vulnerable, low-wage workers and their families in serious jeopardy. Employers enter into federal contracts knowing they must pay prevailing wages and benefits. When they ignore their responsibilities, they cheat their employees and gain an unfair advantage over those employers who obey the law.”

The Six Veterans Housing LP is a nonperforming prime contractor and subcontracted all construction work to G.B Construction, Inc. that managed the project and hired all subcontractors. The firms found in violation include G.B. Construction and subcontractors G.S. Electrical, Inc., Line Tech Plumbing, Inc., Duracon Development, Inc., DLE Construction, KSM Construction and Best Merit. The department is currently considering debarment action against most of these contractors. Debarment would prohibit them for three years from bidding on federally funded construction contracts.

The Six Apartments investigation found the following violations:

• Paying workers less than the prevailing wage rates for the work they performed.
• Failing to pay required fringe benefits.
• Falsifying certified payrolls to give the appearance of compliance with the law.
• Failing to report some workers on the project at all, instead paying them a fraction of the actual wages due, in cash. For example, one contractor paid workers employed as plumbers less than 20 percent of the hourly wage required on this federally funded contract, and falsified their certified payrolls, which they are required to submit weekly, to claim that they paid the required amounts in full.

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

SAN FRANCISCO – The U.S. Department of Labor has taken action to take away a Central Valley labor contractor’s permit to provide agricultural workers to local growers following a series of safety violations that culminated in 2015 with a vehicle accident that killed four farmworkers.

The department’s Wage and Hour Division is working to revoke the farm labor contractor certificate issued to C.A.T. Labor Services, and its owner Cecilio Arredondo Terrazas, for failing to comply with the Migrant and Seasonal Agricultural Worker Protection Act, which requires contractors who transport farmworkers to and from job sites to meet prescribed safety requirements. In January 2015, four passengers in a minivan were killed in a collision with a tractor trailer near Fresno. The van driver was a C.A.T. foreman carrying farmworkers employed by C.A.T. None of those who died were wearing seatbelts.

“C.A.T. Labor Services’ continued negligence and failure to follow basic safety requirements led to four deaths and countless others being put at risk,” said Wage and Hour Regional Administrator Ruben Rosalez. “The life of a migrant farmworker is already difficult. Tragedies like this one – which devastated the families of these hardworking men and their communities – are avoidable by following basic safety rules and requirements. The Wage and Hour Division is committed to making that happen.”

Based in Reedley, C.A.T. has a history of federal violations. In 2011, division officials cited the company for failing to meet basic transportation safety requirements for transporting farmworkers, including failing to require valid driver’s licenses for drivers, failing to obtain minimum levels of required vehicle insurance and other related violations. The agency also found C.A.T. found in violation of other MSPA requirements in 2008. In both instances, C.A.T. paid fines and back wages and agreed to comply with the MSPA provisions in the future.

Agricultural contractors must apply to the U.S. Department of Labor for a Certificate of Registration before performing any “farm labor contracting activities,” which authorizes them to provide those services. Persons employed by farm labor contractors to perform such these activities must register with the department. The department maintains a list of individuals or corporations that have had their authorizations as farm labor contractors revoked.

The Wage and Hour Division is responsible for enforcing transportation protections under the MSPA, including requiring farmers and their contractors to obtain proper insurance, have vehicles inspected, and ensure other driver qualifications and basic safety measures. The department can fine growers, packer/shippers, or farm labor contractors for failing to ensure safe transportation.

C.A.T. has the option to appeal the department’s findings and request a hearing on the matter. For more information about federal wage laws administered by the Wage and Hour Division, call the agency’s toll-free helpline at 866-4US-WAGE (487-9243). Information also is available at http://www.dol.gov/whd/.

Employers: Elizabeth Homes Adult Residential Care, owned by Elizabeth G. Santos, Inc.

Sites: 7161 Stanton Ave., Buena Park, California (main office)
18 other facilities throughout Orange County

Investigation findings: Wage and Hour investigators found Elizabeth Homes Adult Residential Care in violation of the Fair Labor Standards Act for overtime, hourly wage and record-keeping provisions. The employer failed to pay employees time-and-a-half for overtime hours and also failed to pay for all hours worked during employee’s shifts.

Resolution: The employer will pay 138 workers $113,652 in back wages and an equal amount in liquidated damages. The employer agreed to pay the back wages and liquidated damages under a three-month installment plan, and to comply with FLSA in the future.

Quote: “Many employers in the residential home care field continue to fail to properly compensate workers for their long, hard work in this crucial but challenging field,” said Rodolfo Cortez, director of the Wage and Hour Division’s San Diego District Office. “Better cared-for workers results in better cared-for patients.”

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

PORTLAND – For the second time since 2010, the U.S. Department of Labor is suing the same major Pacific Northwest drywall company for failing to pay its workers $800,000 or more in overtime.

The department’s Wage and Hour Division has filed a lawsuit in the U.S. District Court, District of Oregon, to compel Westside Drywall Inc., and its owner, Moshen Salem, to comply with the Fair Labor Standards Act and to pay back wages to more than 100 employees denied legally required overtime.  

The employer continues to commit willful and repeated violations of the FLSA, including failing to pay piece-rate employees the required time-and-one-half overtime premium when they work more than 40 hours in a workweek. The company is also failing to pay these workers for travel time, as the law requires, and continues to commit recordkeeping violations. 

To date, the affected workers are due at least $800,000 in back wages and liquidated damages, an amount that may increase over the course of litigation. In 2010, the department sued Westside for similar violations that resulted in the payment of $200,000 to 62 drywall workers.

“We will not tolerate employers, like Westside Drywall, that cheat workers out of their hard-earned wages by ignoring their legal responsibilities,” said Thomas Silva, district director for the Wage and Hour Division in Portland. “This lawsuit sends a clear message that the U.S. Department of Labor will not hesitate to ask a court to intervene and enforce the law when an employer willfully withholds wages. When employers fail to play by the rules, like Westside has done repeatedly, they harm workers and their families and gain an unfair advantage over their competitors who pay fair wages.”

Headquartered in Hubbard, Westside is one of the Pacific Northwest’s largest drywall companies. The company has contracts with well-known builders for many commercial and residential contracts.

The division enforces the FLSA that requires that covered, nonexempt workers be paid at least the federal minimum wage of $7.25 per hour for all hours worked, plus one-and-one-half times their regular wages for hours worked beyond 40 per week. Employers also must maintain accurate time and payroll records.

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

Employers: Four Seasons Vineyard Management Inc., Ridge Vineyards Inc.

Site: Healdsburg, northern Sonoma County, California

Investigation findings: Investigators from the U.S. Department of Labor’s Wage and Hour Division found farm labor contractor Four Seasons Vineyard Management and winemaker Ridge Vineyards in violation of the Migrant and Seasonal Agricultural Worker Protection Act for providing deplorable housing conditions to farm workers in northern Sonoma County. Several violations posed a direct and imminent threat to the safety and health of workers living there. The housing facility in Healdsburg, California is on property owned and controlled by Ridge Vineyards, Inc. There was also substantial control of this facility by Four Seasons Vineyard Management. Both entities are jointly liable for the housing conditions.

Serious violations included the following:

• Exposed electrical wiring present in living area.
• A third-story loft had only one entry and exit ladder, a direct threat to worker safety in the event of fire.
• The floor contained a sharp, knife-like metal object sticking out permanently.
• The bathroom lacked proper ventilation and was not deemed sanitary.
• Four Seasons was not authorized to provide housing and not entitled to collect rent, but collected a rental fee, paid it to Ridge Vineyards, and automatically deducted from the farm workers’ pay.
• Housing lacked protective screens and doors, leading to insect, rodents and other vermin infestation.
• Workers were housed without proper protection against the elements.

Resolution: The jointly liable employers have paid $42,300 in civil money penalties for their failure to ensure the safety and health of workers in the housing provided to them. The department also has recovered $1,750 in back wages due to 10 workers for the rent that the contractor illegally deducted from their pay. The employers are currently working to rectify all violations.

Quote: “The vineyard owners and farm labor contractors who employ and house farm workers are responsible for ensuring the safety of the housing they are providing for their employees,” said Susana Blanco, director of the Wage and Hour Division in San Francisco. “Vineyard owners who use contractors to recruit and hire farm workers can be jointly responsible for ensuring these workers are being paid in compliance with the law and housed and transported safely. The Wage and Hour division remains vigilant in our pursuit of compliance with the law to ensure not only a fair day’s pay for a fair day’s work, but a safe environment in which to work.”

Information: The Migrant and Seasonal Agricultural Worker Protection Act protects migrant and seasonal agricultural workers by establishing employment standards related to wages, housing, transportation, disclosures and recordkeeping. The MSPA also requires farm labor contractors to register with the U.S. Department of Labor. For general information on the MSPA, please see the Employment Law Guide or the Wage and Hour Division’s fact sheet on MSPA.

To operate legally as farm labor contractors, individuals and companies must register with the U.S. Department of Labor. There are special registration requirements for farm labor contractors that intend to house, transport, or drive a migrant or seasonal agricultural worker. Application materials and instructions can be found online.

For more information about federal wage laws administered by the Wage and Hour Division, or to file a complaint, call the agency’s toll-free helpline at 866-4US-WAGE (487-9243). All services are free and confidential. Information also is available at http://www.dol.gov/whd/.

Read this news brief in Españól.

Type of Action: Fair Labor Standards Act lawsuit filing

Names of Defendants: Emidio & Sons Inc. and Emidio Piermarini Jr.

Complaint: The U.S. Department of Labor has filed a lawsuit in federal court to recover back wages and an equal, additional amount in liquidated damages for employees at Emidio’s, an Akron restaurant. The suit also seeks an injunction against the company to prevent future FLSA violations. 

An investigation by the department’s Wage and Hour Division determined the company and one of its owners, Emidio Piermarini Jr., violated the child labor, minimum wage, overtime and record-keeping provisions of the FLSA.

Specifically, investigators found the restaurant:

• Failed to pay employees at least the federal minimum wage, currently $7.25 per hour. Instead the firm paid some employees a cash wage ranging from $5 to $7 per hour.
• Failed to keep legally-required records of hours worked and wages paid. The firm generated a false weekly payroll that did not reflect the hours actually worked or all the employees performing work at the restaurant.
• Gave some workers paychecks, then directed them to sign the checks and “kickback” the money.
• Wrongly claimed delivery drivers were independent contractors and paid them no compensation other than the $5 delivery charged assessed to customers.
• Failed to pay overtime to employees who worked beyond 40 hours in a workweek.

The Wage and Hour Division also assessed civil money penalties of $7,275 for employing a 15 year old minor in violation of child labor laws. The employer illegally required the minor to operate power-driven bakery machines including those used to mix, ball and roll dough. The investigation also found that minor regularly worked until 3 or 4 a.m., for the majority of the period he was underage, in violation of the legal limits to permitted working hours for minors under 16 years old.

Quote: “Putting a child at risk of serious injury on the job is inexcusable,” said George Victory, district director for the Wage and Hour Division in Columbus. “Employees in the restaurant industry are already some of the most vulnerable and lowest-paid workers we see – adding a child labor violation to the mix only makes this situation worse. Denying these hard-working restaurant employees their legally-required minimum wage and overtime pay hurts the workers and their families, and gives the employer an unfair competitive advantage over law-abiding employers.  ”

Information: 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 hourly rates for hours worked beyond 40 per week. The FLSA generally provides that employers who violate the law are liable to employees for their back wages and an equal amount in liquidated damages. Liquidated damages are paid directly to the affected employees. 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 toll-free helpline at 866-4US-WAGE (487-9243). Information also is available at www.dol.gov/whd/fmla.                                          

Court: U.S. District Court for the Northern District of Ohio, Eastern Division

Docket Number: 5:16-cv-00442

ATLANTA – The U.S. Department of Labor’s Wage and Hour Division is conducting a building and heavy construction survey statewide in Alabama. The agency is currently collecting data on wages paid to workers on all active building and heavy construction projects throughout the state from Jan. 1, 2014 to Dec. 31, 2014. This survey is not limited to federally funded construction projects. The information provided for this survey will be used to establish prevailing wage rates as required under the Davis-Bacon and Related Acts. 

“Participation in this survey by contractors and other interested parties is crucial to the process. Davis-Bacon prevailing wage rates should reflect the wages and fringe benefits being paid to construction workers in the county where the work is being performed. This can only happen with full participation by Alabama’s construction industry community,” said Wayne Kotowski, the Wage and Hour Division’s regional administrator in Atlanta.

Low participation leads to wage rates that do not reflect actual wages as well as incomplete wage determinations leading to an increase in requests for additional classifications. Wage data should be submitted for all projects meeting the criteria, regardless of how they are funded.

Notification letters and “WD-10” data collection forms are being sent to interested parties and contractors known to the Wage and Hour Division. Data must be postmarked by May 31, 2016 to be included in the survey. To complete the survey electronically, visit http://www.dol.gov/whd/programs/dbra/wd10/index.htm.

You do not need a letter to answer the survey. If you would like to participate, or have questions regarding the survey process and forms, contact Craig L. Jackson at (214) 749-2021.

LOS ANGELES – The country’s top administrator for remedying and preventing wage violations announced a consent judgment today that requires one of the primary clothing suppliers for Ross Stores, one of the largest off-price retailers in the United States, to pay $212,000 in back wages to employees of its garment subcontractors for minimum wage and overtime violations.

The judgment continues a multi-year enforcement crackdown against garment manufacturers in Southern California that Wage and Hour Administrator David Weil first highlighted in Los Angeles in November 2014. U.S. Department of Labor investigators continue to find widespread minimum wage violations nearly a year and a half later. In the last five years, the department’s Wage and Hour division officials in Southern California have concluded over 1,000 investigations in the garment industry, resulting in more than $11.7 million in back wages.

“We are using all means necessary to bring justice for L.A.’s garment workers, whether that means enforcement, outreach and education, or going up the supply chain to engage the retailers selling these clothes,” Weil said. “We should not continue to see 19^th century sweatshop conditions in 21^st century Los Angeles.”

In the consent judgment for YN Apparel, the U.S. District Court for Central California in Los Angeles is requiring the company to pay 270 employees of its subcontractors $212,000 in back wages, and to ensure any of its subcontractors subject to garment registration requirements in California maintain such valid registration. The judgment also requires YN Apparel to hire an independent, third-party monitor to ensure all of its domestic garment contractors comply with the overtime, minimum wage and recordkeeping provisions of the Fair Labor Standards Act, and prevents them from entering into any contracts with those who do not.

The major consent judgment arises from Southern California Wage and Hour District Office investigations of 13 contractor sewing shops which found wide-scale violations of the minimum wage and overtime requirements of the FLSA while sewing clothes for manufacturer YN, including one case finalized in January of this year.

Evidence supporting the division’s findings in this case included detailed analysis conducted by investigators to determine whether prices YN paid to its contractors for their goods were sufficient to enable the contractors to pay their workers legally-required wages, when all overhead costs were taken into account. This analysis showed that, to pay their workers in compliance with the FLSA, the prices the contractors received from YN for their garments would have needed to be up to three times the prices they were actually paid. The analysis further showed that for YN to have paid these contractors amounts sufficient to pay their workers properly, YN would have needed to receive double the price it was paid by its retailer, Ross Stores.  

The consent judgment in this case requires YN to conduct this same analysis for every domestic contractor it uses in the future. If the price is not high enough to support legally required wages for workers, YN must renegotiate the contract.  

Wage and Hour officials have also been using pricing analysis when contacting major retailers selling goods in Southern California to inform them of the results relating to their own supply-chains, and then engaging them in formulating solutions to the consistent and systemic wage violations found in the industry.

The FLSA, enforced by the Wage and Hour Division, requires that covered, nonexempt workers be paid at least the federal minimum wage of $7.25 per hour for all hours worked, plus one-and-one-half times their regular wages for hours worked beyond 40 per week. Employers also must maintain accurate time and payroll records.

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