US Labor Department initiative finds Ames restaurants owe nearly $100K in back wages to more than 150 workers

AMES, Iowa – In “college towns” like the city of Ames, hospitality industry jobs are often filled by students, temporary, or foreign workers – many of whom are new to the workforce. Among the nation’s lowest paid workers, they are often unfamiliar with wage laws and their rights.  Language barriers, fear of retaliation, and fears about immigration status can also cause them to be among those least likely to exercise their rights, leaving them vulnerable to labor violations.

In 2014, the U.S. Department of Labor’s Wage and Hour Division began an education and enforcement initiative in the hospitality industry in Midwest college towns and resorts. In the Ames area, the effort has found employers owed back wages of nearly $100,000 to 158 restaurant and hotel workers so far.

“Many of these workers already struggle to makes ends meet. Paying them less than they are legally entitled to is unacceptable,” said Karen Chaikin, regional administrator for the Wage and Hour Division in Chicago. “Unfortunately, labor violations like these are all-too-common in the restaurant and hotel industry.  Our agency is committed to ensuring that workers take home every cent they have rightfully earned, and to providing a level playing field for employers who play by the rules.”

Currently, the Wage and Hour Division is investigating restaurants and hotels in Bloomington, Indiana; and the twin cities of Bloomington-Normal, Illinois; Lawrence, Kansas; and Madison, Wisconsin. In the coming months, the effort will expand to other cities including Iowa City, Iowa, and Champaign-Urbana, Illinois.

In the Ames cases, investigators found violations of the FLSA’s overtime, minimum wage, and record-keeping provisions at seven of the 13 restaurants and hotels they examined. Violations include:

• Paying employees fixed salaries without regard to how many hours they worked, leading to overtime violations when they worked more than 40 hours in a week. 
• Paying overtime only after 80 hours in a two-week period.  Overtime is due after 40 hours in a workweek, regardless of how often an employer pays employees. 
• Deducting the cost of uniforms from workers’ pay, this reduced workers’ effective hourly wages to below the federal minimum wage.
• Failing to maintain accurate and thorough records of employees’ wages and hours worked.
• Improperly calculating overtime for tipped employees.

Investigators found violations at the following Ames establishments:

• West Towne Pub: Employer paid 65 workers a total of $70,169 in back wages.
• El Azteca (Strange Road): Employer paid $12,907 in back wages to 15 workers.
• El Azteca (South Dayton Avenue): Employer paid $10,068 in back wages to 18 workers.
• Dublin Bay: Employer paid $1,567 in back wages  to 10 workers.
• LaFuente: Employer paid $2,460 owed to seven workers.
• Olde Main Brewing Co. & Restaurant: Employer paid $2,338 owed to 42 workers.
• Best Western Plus University Park Inn & Suite: Employer paid $2,084 owed to one worker.

During an education and enforcement initiative, in addition to conducting investigations, the division conducts outreach events for employers and industry stakeholders to provide compliance assistance and information on legal rights and responsibilities. The initiatives also raise awareness among workers, community organizations and others regarding federal wage and hour laws and protections.

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 Des Moines office at 515-323-2194. Information also is available at http://www.dol.gov/whd/.