An East Coast restaurant chain has been ordered to pay $11.4 million back to more than 1,300 employees over claims it paid staff below minimum wage
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- An East Coast restaurant chain failed to pay minimum wages and overtime rates to some workers, the Labor Department says.
- The DOL said some restaurants paid set wages regardless of hours worked, which could reach 65 a week.
- Plaza Azteca has been ordered to pay $11.4 million back to more than 1,300 affected employees.
A restaurant chain with dozens of locations on the East Coast has been ordered to pay $11.4 million back to more than 1,300 employees after a federal agency uncovered a series of apparent labor-law violations.
These include Plaza Azteca failing to pay minimum wages and overtime rates, the Department of Labor said. A consent judgment said that the chain admitted to violating sections of the Fair Labor Standards Act related to minimum wages, maximum hours, and collection of data.
The Department of Labor first filed a lawsuit against the Mexican chain in September 2021.
The suit claimed that numerous Plaza Azteca restaurants paid predetermined amounts to back-of-the-house employees, like bussers, cooks, and dishwashers, regardless of how many hours they worked.
This meant that the employers failed to pay the minimum wage to some employees and didn't pay a time-and-a-half rate pay to some employees for hours worked over 40 in a workweek, the DOL said.
Most back-of-the-house employees at the company's restaurants worked between 56 and 65 hours per workweek, and in some weeks this brought their hourly pay down to just $3, the DOL alleged.
The restaurant also created "false" payroll records claiming that staff received overtime premiums, the DOL's suit said. Some workers were also kept "off the books" entirely, the DOL claimed.
At some of the restaurants, the company also failed to pay "any cash wages whatsoever" to some servers who were forced to work for tips only and also seized a proportion of their tips, the DOL said in the lawsuit. It said that the chain "stole hard-earned wages and tips from hundreds of employees" for years.
In Plaza Azteca's initial answer to the complaint, in October 2022, it denied the allegations and said it didn't have any policies that meant staff worked uncompensated time, including overtime.
The restaurant agreed to a consent judgment this September "after months of litigation and just before a jury trial was scheduled to begin," the DOL said in a press release.
The consent judgment and accompanying press release don't refer to the DOL's claims that the restaurants failed to pay cash wages to some servers and also took a proportion of their tips. Insider has contacted the DOL for further information.
In the consent judgment, the restaurant agreed to pay $5.7 million in back wages and the same amount in liquidated damages to a total of 1,320 current and former employees related to contraventions that occurred between March 2016 and September 2021 at restaurants in Connecticut, Maryland, Massachusetts, New Jersey, North Carolina, Pennsylvania and Virginia.
The consent judgment also included $625,000 in civil money penalties, which the DOL said was due to the "repeat and wilful nature of the violations." Including interest, the restaurant is set to pay a total of around $12 million.
Insider did not immediately receive a response to a request for comment sent to Plaza Azteca outside regular US working hours.