Three restaurants under common ownership and operations recently settled with the Department of Labor's Wage and Hour Division after the agency's investigation found fault with their compensation practices.  The Phoenix restaurants, Grassroots Kitchen and Tap #1 LLC, Grassroots Kitchen and Tap #2, LLC and Twisted Grove #1 LLC, failed to combine the number of hours employees worked at each location in a workweek, opting to instead pay the hours an employee worked at each establishment on a separate check.  The DOL found this practice problematic because the restaurants, deemed to be joint employers, had failed to track employees' combined hours at all locations and pay overtime owed for combined hours exceeding 40 in a workweek.

 

As a general matter, joint employers are responsible, both individually and jointly, for compliance with the requirements of the Fair Labor Standards Act (FLSA).  The FLSA requires each of the joint employers to ensure that the employee receives all employment-related rights under the law, including payment of overtime pay at not less than one and one-half the regular rate of pay for hours worked over 40 in a workweek, unless an exception or exemption applies. Joint employers must also combine all of the hours worked by the employee in a workweek to determine if the employee worked more than 40 hours and is due overtime compensation.

 

To resolve this matter, the restaurant company agreed to pay $52,863 in back wages to 19 employees for overtime violations, as well as $52,863 in damages to the workers and $5,984 in penalties.  This case is a reminder that employers must carefully track the hours that their non-exempt employees work, including those worked at multiple locations under common ownership, to ensure that these workers are adequately compensated for overtime worked.