Former McDonald's franchisee agrees to pay nearly $211,000 in unpaid wages, damages and penalties following US Labor Department investigation

MIDDLETOWN, Pa. — Former McDonald's franchisee Cheung Enterprises LLC and president Andrew Cheung, based in Middletown, have agreed to pay $205,977 in back wages and liquidated damages to 291 employees, including 178 foreign student workers hired under the U.S. State Department's J-1 visa program. An investigation by the U.S. Department of Labor's Wage and Hour Division found that the company violated the minimum wage and overtime provisions of the Fair Labor Standards Act at the company's six locations across central Pennsylvania.

"Cheung Enterprises not only failed to properly pay its employees, it willfully took advantage of vulnerable student workers living and working in our country under the J-1 visa program," said Al Gristina, director of the division's Wilkes-Barre District Office, which conducted the investigation. "This agreement will ensure that the rights and wages of both U.S. workers and student guest workers are protected."

Investigators from the division's Wilkes-Barre District Office found Cheung Enterprises made improper deductions from employee paychecks, bringing the rate of pay for some employees below the federal minimum wage of $7.25 per hour. The firm failed to pay student workers properly. Other employees did not receive the overtime premium required by the FLSA. Investigators determined that the company charged the student workers excessive rent that was deducted from their paychecks for substandard, employer-owned housing.

In addition to paying back wages and liquidated damages, Cheung Enterprises and Andrew Cheung agreed to pay a $5,000 civil money penalty for the willful nature of the violations and will comply with the FLSA overtime and record-keeping provisions in the future. Cheung no longer operates any McDonald's franchises.

The FLSA requires that covered, nonexempt employees be paid at least the federal minimum wage of $7.25 per hour, as well as one and one-half times their regular rates for every hour they work beyond 40 per week. The law also requires employers to maintain accurate records of employees' wages, hours and other conditions of employment, and prohibits employers from retaliating against employees who exercise their rights under the law. The FLSA provides that employers who violate the law are generally liable to employees for their back wages and an equal amount in liquidated damages, which are paid directly to the affected employees.

For additional information about the FLSA, call the Wage and Hour Division's toll-free helpline at 866-4US-WAGE (487-9243). Information is also available at http://www.dol.gov/whd/.