A Sacramento California restaurant is on the hook for $140,000 in back wages and penalties owed to 35 employees after entering into a consent judgment in the U.S. District Court, Eastern District of California. The consent judgment resolves a case brought by the Department of Labor, Wage and Hour Division, against Taqueria Garibaldi and its several owners and operators.
As a primer, the Department of Labor, Wage and Hour Division (“DOL”) is responsible for investigating complaints filed with it regarding violations of the Fair Labor Standards Act (“FLSA”). The DOL may also conduct impromptu audits of employer pay practices to ensure compliance with the FLSA. Investigations and audits will regularly include the review of payroll records and timekeeping practices, but also interviews with employees to verify information.
Where Taqueria Garibaldi really ran afoul and turned its routine FLSA compliance issue into national news is how the business interacted with employees during the DOL investigation. In short, Taqueria Garibaldi retaliated against employees and interfered with the DOL investigation by threatening employees with adverse action if they participated in the investigation, and falsely warned employees that they could face immigration issues if they cooperated with the DOL. Immigration status, in fact, has no bearing on workers’ rights under the FLSA.
In a weirder turn of events, the DOL uncovered evidence that Taqueria Garibaldi also provided a priest to workers in the workplace, so they could confess their sins, presumably committed against the workplace. At least one witness corroborated this odd fact.
In the end, the restaurant was found to have willfully violated the FLSA by distributing employee earned tips to management, failing to properly pay overtime, and paying workers below Sacramento’s minimum wage. Because the investigation found Taqueria Garibaldi’s acts were willful, it was ordered to pay a $5,000 civil fine as well as liquidated damages doubling the $70,000 backpay award.
The important take away from Taqueria Garibaldi is to pay employees within the bounds of the FLSA, including accurately reporting and paying for all hours worked, but also restricting to whom shared tips may be distributed. I previously blogged about proper pay practices for tipped workers here. But more importantly, do not threaten employees when the DOL is auditing or investigating a pay practice. That is illegal retaliation and will lead to bigger issues than a simple order for backpay.
Wage and hour issues are a hot topic. While a DOL investigation can lead to large penalties, such as double recovery under the FLSA, employers can be subject to huge penalties if workers file their own suit. In Maryland, for example, liability can include attorney’s fees in the case of civil lawsuits to recover unpaid wages as well as the possibility of triple damages as a penalty. In any event, it is probably better to call a lawyer rather than a priest.