A 40-unit Mexican restaurant chain has ended months of litigation by agreeing to pay $11.4 million in back wages and damages to 1,000 employees whose pay was allegedly capped illegally.
The U.S. Department of Labor had accused Plaza Azteca of shorting kitchen workers by paying them a set fee instead of a per-hour wage. In at least some instances where those back-of-house employees clocked up to 40 hours per week, their lump-sum compensation amounted to less than the minimum wage they were legally due for those hours, according to DOL.
The company also failed to pay the workers overtime when they worked more than 40 hours per week, DOL said.
Plaza Azteca, which operates full-service casual restaurants mostly along the Eastern Seaboard, agreed to settle with DOL right before a jury trial pivoting on the allegations was scheduled to begin. Juries are often more generous in deciding damages and penalties than court judges or labor resolution arbiters. As part of the agreement, the company acknowledged that it had violated federal labor laws.
Civil penalties account for just $625,000 of the $11.4 million Plaza Azteca agreed to pay. The fines were necessitated by “the repeat and willful nature of the violations,” DOL said.
The department said the company knew its obligations but purposely shirked them.
The other $10.8 million will go to employees who were shortchanged, DOL said in announcing the consent agreement.
“This outcome sends a strong message to other restaurant industry employers of the costly consequences that can occur when they deprive employees of their full and rightful wages,” DOL Solicitor of Labor Seema Nanda said in a statement. “As we did in this case, the U.S. Department of Labor will strategically deploy our investigative and litigation resources to remedy systemic violations of the law at a national scale across an enterprise’s locations.”
Plaza Azteca did not respond to a request for comment.
An investigation of the chain had been underway for months, DOL indicated.
The situation was the latest instance of the department’s efforts to curb violations of federal labor laws within the restaurant business. The labor watchdog has been focused in particular on violations of child-labor regulations.
Members help make our journalism possible. Become a Restaurant Business member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.