College Town Restaurants Fork Over $150K in Back Wages

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College Town Restaurants Fork Over $150K in Back Wages

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More than 100 restaurant workers in the Ann Arbor, home of the University of Michigan, area will receive back wages of more than $145,600 as a result of the Department of Labor, the initiative seeking to find and remedy violations of the Fair Labor Standards Act.

In college towns like Ann Arbor, students, temporary workers and immigrants often fill hospitality industry jobs. Many of these workers are new to the workforce, unfamiliar with wage laws and their rights, and vulnerable to labor violations by employers, who hire some of the nation’s lowest-paid workers.

“By illegally underpaying these people, employers cheated already low-paid workers and their families out of their hard-earned income. That is unacceptable,” said Karen Chaikin, Regional Administrator for the Wage and Hour Division in Chicago. “Unfortunately, labor violations like these are common in the restaurant and hotel industry. Our agency is committed to protecting workers from illegal treatment and ensuring that responsible employers, who abide by the law, don’t suffer because others violate it.”

In the Ann Arbor cases, investigators found violations of the FLSA’s overtime, minimum wage, and record-keeping provisions. Violations commonly found included the following:

  • Paying overtime-eligible, back-of-the-house employees fixed salaries despite the fact that some worked more than 60 hours per week.
  • Improperly categorizing and paying some employees as tipped workers, resulting in pay less than the minimum wage.
  • Deducting uniforms, breakages and cash-register shortages from wages, which illegally reduced workers’ hourly wages to below minimum wage.
  • Failing to maintain accurate and thorough records of employees’ wages and hours worked.
  • Misclassifying employees as independent contractors.

Department investigators found violations in Ann Arbor at Tomukun Korean Barbequae; Holiday’s Restaurant; La Marsa Mediterranean Cuisine; Ahmo’s Gyros & Deli; Uptown Coney Island; Uptown/Main Street Coney Island & Restaurant; and Gourmet Garden. In addition to paying back wages owed to the employees, the restaurants’ owners have agreed to comply with the FLSA in the future.

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.

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