Wage and Hour Division (WHD)
Archived News Release — Caution: Information may be out of date.
Date: Sept. 9, 2013
Contact: Michael D’Aquino or Lindsay Williams
Phone: 404-562-2076 or 404-562-2078
U.S. Department of Labor
Wage and Hour Division
Release Number: 13-714-ATL (225)
Castillo Real hotel in Florida pays nearly $18,000 in back wages following US Department of Labor investigation
Investigation finds hotel was a joint employer with staffing company
ST. AUGUSTINE, Fla. -- The Castillo Real in St. Augustine has paid 13 employees $17,890 in back wages after an investigation by the U.S. Department of Labor’s Wage and Hour Division identified violations of the Fair Labor Standards Act. Conducted under an ongoing enforcement initiative focused on strengthening labor law compliance in Florida’s hotel and motel industry, the investigation found that the hotel utilized Maja LLC, a staffing company, to obtain workers for essential hospitality services, but failed to properly compensate these employees. This was in violation of the FLSA’s minimum wage and overtime provisions.
An investigation conducted by the division’s Jacksonville District Office found that employees from the staffing company regularly worked more than 40 hours a week—providing services, such as housekeeping, groundskeeping and laundering—but were paid straight time wages for all hours worked, rather than time and one-half their regular rates of pay for overtime hours. Additionally, in some workweeks, employees’ wages fell below the required minimum wage.
Investigators analyzed the employment relationship between the hotel and staffing company and learned that the affected workers performed essential hotel hospitality services under the supervision and control of hotel management. Based on this and other relevant factors, the division determined that the hotel is a joint employer of the workers and, consequently, is liable for the FLSA violations.
“Hotels and motels subject to the FLSA cannot use staffing companies to escape their responsibilities to classify and compensate employees properly for all hours worked,” said Michael Young, district director of the Wage and Hour Division’s Jacksonville District Office. “Through the effort of our ongoing enforcement initiative, the Wage and Hour Division is working to ensure Florida’s workers are protected against exploitation, and that law-abiding hotel and motel employers are not placed at a competitive disadvantage for playing by the rules and paying fair wages. Using an intermediary, or third-party labor provider, is not a way to avoid liability for back wages.”
The hotel is managed by Impact Properties Inc. and is owned by a joint venture partnership consisting of Impact Properties Inc. and DeBartolo Development LLC. The Castillo Real is a member of the Ascend Hotel Collection membership program, which is part of Choice Hotels International Inc. Member hotels of the Ascend Hotel Collection include hotels such as the Inn of Chicago in Chicago, The Admiral Fell Inn in Baltimore and The GEM Hotels in New York City.
Following the investigation, the Castillo Real agreed to comply with the FLSA in the future and has paid the back wages in full.
The hotel and motel industry is characterized by a wide variety of employment arrangements, such as subcontracting, franchising, third-party management and other practices that obscure the worker-employer relationship. The division’s Jacksonville District Office is conducting an initiative to strengthen compliance in the industry and is documenting the structure and complexity of employment relationships in the hotel industry to ensure better targeting of enforcement efforts and accountability in all industry sectors.
The division continues to provide compliance assistance to employers and industry associations, including chambers of commerce and the Florida Hospitality Association, regarding all applicable wage and hour regulations, child labor restrictions and joint employer responsibilities. The division is conducting outreach to workers, community organizations, immigrant rights groups, foreign consulates and other stakeholders to inform them of the ongoing initiative and encourage their participation in promoting industrywide compliance.
The FLSA requires that covered employees be paid at least the federal minimum wage of $7.25 per hour, as well as time and one-half their regular rates of pay for hours worked over 40 per week. In general, hours worked includes all time an employee must be on duty, or on the employer’s premises or at any other prescribed place of work, from the beginning of the first principal work activity to the end of the last principal activity of the workday.
The Wage and Hour Division’s Jacksonville District Office can be reached at 904-359-9292. Information on FLSA and other federal labor laws is available by calling the division’s toll-free helpline at 866-4US-WAGE (487-9243) or visiting 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.