The operator of 55 Dunkin Donuts franchise locations throughout New Jersey and Staten Island, N.Y., has agreed to pay $197,787 in back wages owed 64 employees after an investigation conducted by the U.S. Labor Department’s Wage and Hour Division found minimum wage and overtime violations of the Fair Labor Standards Act.
Investigators from the division’s Southern New Jersey district office found that Edison-based QSR Management LLC, did not pay overtime to store managers, as required by the FLSA. QSR incorrectly claimed its managers at all 55 locations were exempt from overtime. Aa result of these violations, 56 non-exempt store managers will be paid a total of $197,550 in back wages. Investigators also found that at two locations management took tips from customer service workers to cover register shortages, resulting in minimum wage violations.
“The FLSA was passed 75 years ago with minimum wage and overtime provisions to protect workers and level the playing field for employers. There are exemptions to some provisions but employers are responsible for determining exactly when and how these exemptions apply,” said Patrick Reilly, director of the division’s Southern New Jersey Office. “These managers worked long hours and are entitled to the protection the FLSA affords them. An employer’s failure to pay overtime when required gives them an unfair competitive advantage, violates the rights of the employee, and will not be tolerated.”
Department of Labor investigators found that store managers were treated as exempt from the overtime requirements and argued that these managers were salaried. The company actually treated them as hourly employees, reducing their pay when they worked less than 60 hours in a week. Although the Fair Labor Standards Act allows an overtime exemption for management employees who perform certain job duties, the exemption only applies if the managers receive a guaranteed weekly salary of at least $455. Though these managers performed the duties required for the exemption, QSR failed to pay its managers a guaranteed weekly salary in all workweeks, and therefore store managers were entitled to overtime pay for hours worked in excess of 40 in a workweek. QSR has assured compliance with the FLSA and has agreed to pay all back wages. As part of its commitment to future compliance, QSR has changed its employee handbook to reflect its intent to properly apply any valid exemptions, and to no longer allow management to take tips from employees.
The FLSA requires that most employees in the United States be paid at least the federal minimum wage for all hours worked and overtime pay at time and ½ the regular rate of pay for all hours worked over 40 hours in a workweek. However, Section 13(a)(1) of the FLSA provides an exemption from both minimum wage and overtime pay for employees employed as bona fide executive, administrative, professional and outside sales employees. Section 13(a) (1) and Section 13(a) (17) also exempt certain computer employees. To qualify for exemption, employees generally must meet certain tests regarding their job duties and be paid on a salary basis at not less than $455 per week.