Hot Wheel City agrees to pay $97,500 in unpaid wages and damages to 61 workers to resolve US Department of Labor lawsuit

DETROIT — Hot Wheel City Inc. and general manager Nael Abouna signed a consent judgment agreeing to pay 61 Detroit-area employees $97,500 in unpaid wages and damages to resolve a lawsuit brought by the U.S. Department of Labor. The lawsuit, filed with the U.S. District Court for the Eastern District of Michigan, was the result of an investigation by the department's Wage and Hour Division. The investigation determined that the company violated the Fair Labor Standards Act by failing to pay employees minimum wage and overtime and by failing to keep required records.

"Hot Wheel City employees worked long hours and, in many cases, were not paid even the required minimum wage and overtime. This affects not only the workers and their families, but also the community. This failure to pay employees even the minimum required by law gives this business and others like it an unfair competitive advantage," said Timolin Mitchell, the division's district director in Detroit. "The Wage and Hour Division is committed to ensuring that the money earned by employees ends up in the hands of those who worked for it, and that all employers have a level playing field. This investigation should send a clear message to other employers to evaluate their pay practices and to ensure that they are in compliance with federal labor laws."

Hot Wheel City is a custom rim and car accessory retailer. Investigators from the division's Detroit District Office found that security guards, installers, mechanics and delivery drivers were paid a fixed weekly salary for all hours worked. Most employees worked 50 to 70 hours per week for a salary that, in many cases, was not sufficient to ensure payment of a minimum wage. No additional overtime premium was paid for hours worked beyond 40 in a workweek, and payroll records were not maintained for most employees. In fact, several employees received cash payments for wages, with no payroll deductions recorded or records kept of such payments. In certain workweeks, the company incorrectly classified sales employees as exempt from overtime, as required under the FLSA.

Under terms of the consent judgment, in addition to paying back wages, the company has agreed to annual audits of its pay practices to determine compliance with the FLSA; it will provide information to current and new employees about the FLSA and the retail commission exemption in both English and Spanish; and it will provide detailed pay stubs to employees for each pay period. The company will also conduct a daylong meeting with its managers and administrators to train them on FLSA minimum wage and overtime provisions and proper documentation of workers' hours, rates and commissions.

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 rates, including commissions, bonuses and incentive pay, for hours worked beyond 40 per week. Employers are required to maintain accurate time and payroll records. For more information about the FLSA and other federal wage laws, call the Wage and Hour Division's toll-free helpline at 866-4US-WAGE (487-9243) or visit http://www.dol.gov/whd/.

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Civil Action Number: 13-cv-13115, Perez v. Hot Wheel City Inc. and Nael Abouna