N.C. Food Distribution Company to Pay $136,266 In Back Wages and Damages

ASHEBORO, NC – A national food distribution company based in Asheboro has agreed to pay $136,266 in back wages and damages to 47 employees after a U.S. Department of Labor Wage and Hour Division investigation found overtime and other violations of the Fair Labor Standards Act (FLSA).

The Division’s Raleigh District Office found that El Club Mexicano Inc. had misclassified employees as independent contractors, and subsequently failed to pay them minimum wage or overtime. The employer paid workers a piece-rate based on their production without regard to the number of hours they worked. In some cases, that resulted in workers being paid less than the required minimum wage of $7.25 per hour. The company also failed to pay employees overtime when they worked more than 40 hours in a work week, and instead continued to pay only their piece rates for those hours.

As a result, 47 employees were found due $68,133 in minimum wage and overtime back wages, plus an equal amount in damages, totaling $136,266. 

“Paying a piece-rate does not establish an independent contractor relationship or relinquish the employer from their legal responsibility to pay the required minimum wage and overtime,” said Wage and Hour Division District Director Richard Blaylock. “We appreciate El Club Mexicano’s decision to comply with the law and will continue our enforcement efforts on behalf of American workers, and to level the playing field for employers who play by the rules.”

The investigation also found El Club Mexicano hired minors, ages 14 and 15, to operate a forklift and paper box bailer, both for which the FLSA prohibits use by workers under 18. The agency assessed the company $6,638 in civil money penalties for the child labor violations.

The employer has agreed to comply with all FLSA provisions in the future as well as pay all back wages, damages, and penalties in full.

For more information about the FLSA and other laws enforced by the Wage and Hour Division, contact the Division’s toll-free helpline at 866-4US-WAGE (487-9243). Information is also available at http://www.dol.gov/whd