Restaurants Targeted by US Labor Department Wage and Hour Division to Prevent Wage and Hour Violations

The US Department of Labor is launching an initiative to enforce wage and hour standards for restaurants in Portland, Oregon, according to a press release from the department on April 5, 2012.

“The restaurant industry employs some of our country’s lowest-paid workers, who are particularly vulnerable to exploitation,” said Jeffrey Genkos, director of the Wage and Hour Division’s Portland District Office.

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“…these employees are reluctant to step forward and complain when subjected to wage violations. Investigators will be making unannounced visits to restaurants throughout the area to conduct investigations, remedy widespread labor violations, and ensure that law-abiding employers who pay their workers full and fair wages are not placed at a competitive disadvantage.”

Because of pressure on restaurants to serve low cost meals and still turn a profit, the food service industry is rife with wage and hour violations. In addition, not all restaurants are in compliance with OSHA safety standards.

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Common wage and hour violations include:

  • Not paying for all hours worked
  • Employees performing work duties “off the clock”
  • Designating employees as exempt from overtime when they are not exempt
  • Paying nonexempt employees a flat salary regardless of any overtime they have worked
  • Paying cash wages off the books
  • Not paying employees proper minimum wage and overtime
  • Illegal deductions from workers’ wages for uniforms, breakages, customer walk-outs, and cash register shortages
  • Child labor violations, such as minors to operating hazardous equipment (dough mixers, meat slicers, trash compactors, etc.) or working excess hours

California is also cracking down on wage and hour violations for restaurants. In a high profile case, Brinker Restaurant Corp is being sued for wage and hour violations. This is a very expensive case for them to try.

Since the crackdown seems to be an emerging trend that will only grow bigger, it is important that you stay up to date with OSHA compliance for restaurants, safety standards, and know all the wage and hour laws for your industry.

It is also a good idea to have Employment Practices Liability Insurance (EPLI) for your restaurant, because if you are sued by your employees, the coverage can mean the difference between your business surviving or going belly up.

Invensure’s “Insurance 4 Food Industry” Program is a one stop solution for your California restaurant. We have industry experts who can assist you with your insurance, OSHA compliance, safety programs, and other risks that can affect your business.

Invensure’s holistic approach will not only help you to protect yourself if a problem occurs, it can actually prevent problems from happening in the first case and can lower the costs associated with risk for the long term.

Call (949) 756-4100 to learn more.
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Another Reason Restaurants Need Employment Practices Liability Insurance: Panda Express Sued by Employees

In yet another employee lawsuit, Panda Express was sued by a former employee because she was not allowed to sit down while she was working as a cashier.

According to California Labor Code and Wage Order 7-2001, “all working employees shall be provided with suitable seats when the nature of work reasonably permits.”

The suit is an attempted class action by all cashiers for the company. Rite Aid and Nordstrom are facing similar lawsuits.

We will be watching this case as it evolves, because there seems to be a bit of ambiguity in the term “nature of work reasonably permits.”

If the employee wins this case, it will mean drastic changes for the entire food service industry.

In the meantime, it is just another example where Employment Practices Liability Insurance could help protect the restaurant financially. Learn more about Employment Practices Liability Insurance for Restaurants or call our restaurant insurance experts at (949) 756-4100 if you have questions.

US Department of Labor Sues Subway Restaurant Franchise over Wage and Hour Law Violations

February 6, 2012: According to a press release from the US Department of Labor, a Subway franchise in Ohio owned by Hray Enterprises has been sued for back wages of 68 employees in 5 restaurants. The owners Joseph Hray and Tammy Hray were investigated by the Wage and Hour Division and are alleged to have violated minimum wage, overtime, and child labor laws.

The two-year investigation found that the franchisee did not pay employees for the hours they worked after the store closed (overtime violations) and employees were docked wages when their cash registers were short, (minimum wage violations). Most seriously, minors were found performing dangerous tasks that are prohibited by child labor and OSHA laws.

Workers under the age of 18 have special restrictions about operating hazardous machinery in the workplace. Restaurants have special OSHA regulations about teen workers. Minors are prohibited from operating or loading balers and trash compactors, and five of the employees regularly had to do so as part of their duties.

According to the press release, “employers may make wage deductions for cash register shortages, certain uniforms and food; however, the deductions cannot result in an employee earning less than the minimum wage for all hours worked in every workweek.” In this case, the wages that were deducted lowered the rate of pay as to fall below the allowable amount. Additionally, the overtime work should have been paid at a rate of time and a half to comply with federal laws.

This year, 6 out of 10 restaurants in California will be sued by their employees. Inspections are increasing and wage and hour laws are becoming more complicated. Many employers are not aware of the laws or have difficulty understanding how to comply with them.

This is where Invensure can help. Because we specialize in insuring restaurants in Southern California, it is our job to advise you how to minimize your liability. A good Employment Practices Liability insurance (EPLI) policy could help to recover some of the financial damages from an employee lawsuit.

Are you protected? Call (800) 331-4700 to learn more.