Wage and Hour Division (WHD)
Archived News Release — Caution: Information may be out of date.
Date: Mar. 4, 2014
Contact: Scott Allen Rhonda Burke
U.S. Department of Labor
Wage and Hour Division
Release Number: 14-251-CHI
US Labor Department files suit against Brown Derby Roadhouse to recover unpaid wages and damages for 18 servers at Akron restaurant
Civil money penalties also sought for repeat FLSA and child labor violations
AKRON, Ohio -- The U.S. Department of Labor has filed suit in the U.S. District Court for the Northern District of Ohio, Eastern Division, to recover unpaid wages and liquidated damages for 18 workers at Brown Derby Roadhouse in Akron. In addition to wages and damages, the suit also seeks a court order permanently enjoining CPS Foods Ltd., and its operators Gillian Harris and Gary Harris, from violating the Fair Labor Standards Act in the future. An investigation by the department’s Wage and Hour Division found violations of the minimum wage, overtime, child labor and record-keeping provisions of the FLSA by CPS Foods Ltd., which operates the restaurant.
Investigators from the division’s Columbus District Office found that the company misclassified servers as independent contractors and, for a time, unlawfully paid no wages for their hours worked. Servers received tips only and were required to pay a daily table fee to the employer for the right to work. In addition to the unpaid wages of $24,199, an equal amount of liquidated damages is included in the suit. The department is also seeking civil money penalties of $23,472 for repeatedly failing to comply with the FLSA and for allowing a minor to operate a trash compactor, an occupation prohibited for minors in DOL regulations. The firm was found in violation of the same child labor regulation in 2012, and unpaid penalties for those violations are included in this case.
“We continue to see problems in the restaurant industry, which employs some of our country’s lowest-paid workers. These are vulnerable workers, and complete failure to pay wages and failure to pay minimum wage and overtime that is legally due impacts these workers, their families and communities,” said George Victory, district director for the Wage and Hour Division in Columbus. “These violations also create an unlawful competitive edge for those who break the law. The Wage and Hour Division is committed to promoting awareness of wage laws and to ensuring compliance, so that all American workers are paid their rightful wages, and the playing field is leveled for all employers.”
Investigators determined that the company violated the minimum wage by failing to compensate servers at an hourly rate. Minimum wage employees were also charged a fee if they elected to receive a paper check instead of direct deposit. The company also failed to pay workers at one and one-half times their hourly rate for hours worked beyond 40 in a workweek and to maintain accurate records of hours worked. A prior investigation in 2012 found almost identical minimum wage and overtime violations—from paying an insufficient cash wage to tipped employees, charging employees to receive wages via direct deposit or payroll check and paying straight time for overtime hours. The company paid back wages to those employees.
The misclassification of workers as something other than employees, such as independent contractors, presents a serious problem for affected employees, employers and to the economy. Misclassified employees are often denied access to critical benefits and protections, such as family and medical leave, overtime, minimum wage and unemployment insurance. Employee misclassification also generates substantial losses to state and federal Treasuries, and to Social Security and Medicare funds, as well as to state unemployment insurance and workers’ compensation funds.
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 of pay 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 an 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, to maintain accurate time and payroll records and to comply with the hours, hazardous orders and other restrictions applying to workers under age 18.
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.
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.