The owner of Plaza Azteca restaurants has agreed to pay the U.S. Labor Department $11.4 million in back wages and liquidated damages for over 1,000 employees of the chain that operates more than 40 locations in seven states, including three in eastern North Carolina.
According to a press release, the recovery is related to a consent judgment entered by the U.S. District Court for the Eastern District of Virginia in Norfolk that resolves litigation by the department’s Office of the Solicitor related to pay practices the restaurants owned by Ruben Leon of Virginia Beach.
After an investigation by the department’s Wage and Hour Division, the department filed a complaint alleging Leon and the restaurants violated overtime and minimum wage provisions of the Fair Labor Standards Act.
The consent judgment was agreed to in September after months of litigation and just before a jury trial was scheduled to begin.
A Labor Department spokesperson said the company would have to pay back wages and liquidated damages of $238,882 to 37 employees of the Kill Devil Hills location, and $161,062 to 35 employees of the Elizabeth City location.
The lawsuit also included Plaza Aztecas in Greenville, the Hampton Roads region, and in Connecticut, Maryland, Massachusetts, New Jersey and Pennsylvania.
“Our investigators found Plaza Azteca knew of its legal obligations to pay workers minimum wage and overtime and keep accurate payroll records and yet, willfully disregarded federal law,” said Wage and Hour Administrator Jessica Looman.
“The employers failed to pay full wages to more than 1,000 employees,” Looman said. “The court’s action in this case is an important step in our efforts to make a meaningful difference in the lives of these workers by recovering their hard-earned wages.”
Specifically, the department alleged that numerous Plaza Azteca Mexican restaurants paid back-of-the-house employees predetermined amounts.
By doing so, the employers failed to pay some employees who worked up to 40 hours in a workweek the required minimum wage and did not pay some employees time-and-a-half for hours over 40 in a workweek.
The employers also failed to maintain accurate records of employees’ work hours and wages, as required.
Due to the repeat and willful nature of the violations, the consent judgment also recovered $625,000 in civil money penalties from the employers.
“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,” said Solicitor of Labor Seema Nanda. “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.”
In addition to the back wages and penalties, the consent judgment forbids the employers from violating the FLSA in the future and requires them to retain a qualified independent consultant to make certain the employers’ payroll and recordkeeping practices comply with the FLSA.
The back wages and liquidated damages are due to certain current and former employees of Plaza Azteca restaurants regardless of their immigration status. As some of the workers affected by this case may have relocated, the Wage and Hour Division encourages former or current affected employees to contact the division at 215-861-5180 with any questions.
The Wage and Hour Division district offices in Boston, Pittsburgh and Wilkes-Barre, Pennsylvania, and Richmond, Virginia, conducted the investigations. The Boston and Philadelphia Regional Solicitor’s offices litigated the case.