The U.S. Department of Labor has reached a settlement agreement with the operator of a Little Caesars restaurant in Redwood City, California to pay $409,457 in back wages to thirty-two workers who were victims of wage theft. This settlement comes after a Department of Labor (“DOL”) investigation found the employer failed to pay workers the required minimum wages and overtime, in violation of federal wage law.
The agreement follows a wage theft investigation by the DOL that found franchise operator MG Fast Food Inc. violated minimum wage and overtime provisions of the Fair Labor Standards Act between May 2022 and May 2025. The employer neglected to pay some employees for all hours worked, resulting in minimum wage violations. The Department of Labor found that the employer failed to pay employees time and one-half overtime rates of all hours worked over 40 in a workweek, where MG Fast Food Inc. instead paid workers' straight time. The investigation also found FLSA recordkeeping violations, including discrepancies between timesheet totals and payroll records that affected overtime computations.
In response to the investigation, a DOL spokesperson stated, “All workers must be paid for every hour they work, including overtime premiums when they work more than forty hours in a workweek. The Department of Labor will continue to enforce federal law and help ensure workers receive the wages they earn.”
Franchise operators are frequent violators of wage theft laws. For instance, workers at more than twenty Subway locations across the country brought wage theft claims against franchisees. Subway has been the subject of more than a thousand investigations by the DOL, revealing approximately 17,000 wage theft violations including unpaid wages, overtime, and tip theft. One DOL enforcement action recovered $10,000 in punitive damages and paid $3,907 of back wages for eighteen workers at a New York City location.
The DOL has brought a similar enforcement lawsuit against a Buffalo Wild Wings in Ohio. The lawsuit alleges Buffalo Wild Wings and its franchisee paid servers and bartenders subminimum tipped wages through an unlawfully applied tip credit. That lawsuit claimed that workers were not informed of tip-credit rules, had to cover job-related expenses such as uniforms and materials, and were required to perform large amounts of non-tipped work, sometimes exceeding 20% of their weekly hours, while still being paid the lower tipped wage.
Pechman Law Group has obtained numerous significant settlements against franchise restaurants, including a $40,000 settlement to resolve a lawsuit for a misclassified assistant manager at an IHOP in Staten Island. That lawsuit continues a recent trend of restaurant workers alleging misclassification as “Assistant Managers” so they would be “exempt” from the FLSA requirement to receive overtime pay at time and a half for hours worked over forty in a workweek.
These wage theft cases reveal a broader pattern: established companies such as Subway, McDonald’s, IHOP,Denny’s, and Dunkin Donuts often cheat their workers out of overtime pay. Other franchise chains, such as Red Robin and TGI Friday’s, have also resolved claims involving tip splitting violations. If you believe that you are a victim of wage theft, contact the wage theft attorneys at Pechman Law Group at 212-583-9500.
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