Subway franchise owner in Buffalo, Minnesota, to pay 16 workers back wages, damages after US Labor Department investigation finds falsified time records

MINNEAPOLIS — The owner of a Subway sandwich franchise that failed to pay minimum wages and shaved hours from employees' time records will pay 16 workers a total of $9,800 in back wages and liquidated damages under terms of a consent judgment issued by the U.S. District Court for the District of Minnesota. The U.S. Department of Labor Wage and Hour Division found violations of the Fair Labor Standards Act by Subway of Buffalo Inc. and one of its owners and store manager, Marvin Baugus, which resulted in the lawsuit. The consent judgment permanently enjoins Subway of Buffalo Inc. and Baugus from violating the FLSA in the future.

"Subway of Buffalo falsified its records to facilitate underpaying its workers and then provided altered records to our investigators for inspection," said Theresa Walls, district director for the Wage and Hour Division in Minneapolis. "It is unfortunate that there are employers that believe they can exploit vulnerable workers. This judgment will put hard-earned wages back into the pockets of workers and sends a clear message that denying employees their rightfully earned wages will not be tolerated."

The investigation found that employees did not receive minimum wage because the company rounded and shaved hours from time records. Workers were also not compensated for overtime at one and one-half times their regular rates of pay, which must be at least minimum wage, for hours worked beyond 40 in a workweek.

Subway of Buffalo failed to maintain accurate records of all hours worked and cash payments made to workers, and it failed to provide proof of wages paid to employees who appeared on time records, but not on corresponding payroll records. When investigators requested wage records, Baugus acknowledged that he destroyed original time records due to the illegal pay practices.

The Wage and Hour Division recently announced its collaboration with Subway's corporate headquarters to increase compliance with federal labor laws at Subway locations nationwide. Although these restaurants are independently owned and operated, the franchisor is providing a forum and resources to assist the division in educating franchisees. The agency is hopeful that this ongoing collaboration and announcements of investigations, such as this one, will ensure Subway franchisee compliance in the future.

The FLSA requires that covered, nonexempt employees be paid at least the federal minimum wage of $7.25 per hour for all hours worked, plus time and one-half their regular hourly rates for hours worked beyond 40 per week. The FLSA provides that employers who violate the law are, as a general rule, liable to employees for their back wages and an equal amount in liquidated damages. Liquidated damages are paid directly to the affected employees. Additionally, the law requires employers to maintain accurate time and payroll records, and prohibits retaliation against employees who exercise their rights under the law. For more information about the FLSA, visit https://www.dol.gov/whd or call the division's toll-free helpline at 866-4US-WAGE (487-9243).