Wage and Hour Division (WHD)
Archived News Release — Caution: Information may be out of date.
Date: March 15, 2013
Contact: Michael D'Aquino
U.S. Department of Labor
Wage and Hour Division
Release Number: 13-363-ATL (52)
Don Gallo restaurants in Knoxville, Tenn., agree to pay more than $29,000 in back wages to 43 employees following US Department of Labor investigation
Wage and Hour Division’s initiative combats labor violations in restaurant industry
KNOXVILLE, Tenn. -- Don Gallo Mexican Grill LLC and Specialty Food Marketing LLC, doing business as Don Gallo, Las Limas Mexican Restaurant Inc. and Don Gallo Mexican Cuisine, have agreed to pay 43 employees $29,061 in back wages 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, minimum wage and record-keeping provisions. Eduardo Lopez, owner and operator of Don Gallo Mexican Cuisine, was also assessed $2,431 in civil money penalties for repeat violations. All three establishments are located in Knoxville.
“At all three Don Gallo restaurant locations we found many low-wage employees working long hours, without any overtime compensation, and at times earning wages far below the federal minimum wage. Unfortunately, these types of labor violations are all too common in the restaurant industry,” said Sandra Sanders, director of the Wage and Hour Division’s Nashville District Office. “The Wage and Hour Division is resolute in its commitment to increase compliance in this industry. Our investigators continue to make unannounced visits to restaurants throughout Tennessee to remedy widespread labor violations and ensure a level playing field for law-abiding employers.”
Investigators found that many kitchen staff employees were improperly classified as exempt from overtime pay and were paid a fixed monthly salary—without regard to the actual number of hours worked—that, in several instances, amounted to less than the federal minimum wage of $7.25 per hour. These salaries also failed to compensate employees at time and one-half their regular rates of pay for hours worked beyond 40 per week, as required by the FLSA. Additionally, tipped employees were paid in violation of the FLSA’s minimum wage requirements when, in addition to their direct wages from the employers, they did not collect enough in tips to earn the minimum wage, yet the employers failed to make up the difference. Tipped employees were also paid in violation of the FLSA’s overtime requirements when their overtime rates were based on time and one-half their direct cash wages rather than the full minimum wage of $7.25 per hour. The employer also failed to maintain accurate records of employees’ work hours, as required.
The employers agreed to full future compliance with the FLSA and to pay the back wages and civil money penalties found due in full.
The restaurant industry employs some of our country’s lowest-paid workers who, due to a lack of knowledge of the law or a reluctance to exercise their rights, are vulnerable to disparate treatment and labor violations. In addition to the initiative in Tennessee, the Wage and Hour Division is conducting other enforcement initiatives nationwide to identify and remedy violations that are common in the restaurant industry.
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 at least $2.13 an hour in direct wages, provided that amount plus 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 hours, hazardous orders, and other restrictions that apply to workers under age 18.
Accessible and searchable information on enforcement activities by the department is available at http://ogesdw.dol.gov/search.
The division’s Nashville office can be reached at 615-781-5343. Information on the FLSA and other wage laws is available by calling the division’s toll-free helpline at 866-4US-WAGE (487-9243) and 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.