US Labor Department initiative in Midwest college towns finds workers at Ann Arbor, Michigan, restaurants owed nearly $150K in back wages

Violations found by investigators will help more than 100 restaurant and hotel workers

ANN ARBOR, Mich. — At a University of Michigan Wolverines' home game, 109,000 college football fans often cram into "The Big House," the stadium known to hold nearly all Ann Arbor residents. Game weekends mean an increased demand for workers at packed bars, restaurants and hotels.

In college towns like Ann Arbor, students, temporary workers and immigrants often fill hospitality industry jobs. Many of these workers are new to the workforce, unfamiliar with wage laws and their rights, and vulnerable to labor violations by employers, who hire some of the nation's lowest-paid workers.

An ongoing education and enforcement initiative by the U.S. Department of Labor's Wage and Hour Division in Midwest college towns and resorts has identified cases where back wages of more than $145,600 were owed to more than 100 restaurant workers in the Ann Arbor area. Begun in the fall of 2014, the initiative seeks to find and remedy violations of the Fair Labor Standards Act.

"By illegally underpaying these people, employers cheated already low-paid workers and their families out of their hard-earned income. That is unacceptable," said Karen Chaikin, regional administrator for the Wage and Hour Division in Chicago. "Unfortunately, labor violations like these are common in the restaurant and hotel industry. Our agency is committed to protecting workers from illegal treatment and ensuring that responsible employers, who abide by the law, don't suffer because others violate it."

Currently, the division initiative has opened investigations of restaurants and hotels in Ames, Iowa; Bloomington, Indiana; and the twin cities of Bloomington-Normal, Illinois.

In the Ann Arbor cases, investigators found violations of the FLSA's overtime, minimum wage, and record-keeping provisions. Violations commonly found included the following:

• Paying overtime-eligible, back-of-the-house employees fixed salaries despite the fact that some worked more than 60 hours per week.
• Improperly categorizing and paying some employees as tipped workers, resulting in pay less than the minimum wage.
• Deducting uniforms, breakages and cash-register shortages from wages, which illegally reduced workers' hourly wages to below minimum wage.
• Failing to maintain accurate and thorough records of employees' wages and hours worked.
• Misclassifying employees as independent contractors.

Department investigators found violations in Ann Arbor at Tomukun Korean Barbeque; Holiday's Restaurant; La Marsa Mediterranean Cuisine; Ahmo's Gyros & Deli; Uptown Coney Island; Uptown/Main Street Coney Island & Restaurant; and Gourmet Garden. In addition to paying back wages owed to the employees, the restaurants' owners have agreed to comply with the FLSA in the future.

"We are pleased to secure back wages for so many workers," said Timolin Mitchell, director of the division's Detroit District Office. "Using all the enforcement tools at our disposal, we can hold employers accountable and deter future violations. For workers, we will ensure a fair day's pay for a fair day's work."

To assist employers and workers, the division is collaborating with the Restaurant Opportunities Center of Michigan, an area organization that seeks to improve employee working conditions and opportunities at restaurants. The nonprofit, member-based organization offers members educational resources and training, and provides links to Wage and Hour Division information on its website and through its social media outreach.

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 for hours worked beyond 40 per week. In accordance with the FLSA, an employer of a tipped employee is required to pay no less than $2.13 an hour in direct wages, provided that amount plus the tips received equals at least the federal minimum wage of $7.25 per hour. If an employee's tips, combined with the employer's direct wages do not equal the minimum wage, the employer must make up the difference. Employers also are required to provide employees notice of the FLSA tip credit provisions and to maintain accurate time and payroll records.

Employers are required to comply with all laws that apply to their businesses, including federal, state and local labor laws. Some state and local laws provide greater protections for workers.

Accessible and searchable information on enforcement activities by the department is available at http://ogesdw.dol.gov/homePage.php.

For more information about the FLSA and other federal labor laws, call the division's toll-free helpline at 866-4US-WAGE (487-9243) or its Detroit office at 313-309-4500. Information also is available at http://www.dol.gov/whd/.