South Carolina Restaurant Owner Ordered to Pay $190,000 in Back Wages and Damages to 58 Employees After U.S. Department of Labor Investigation

CHARLESTON, SC – The U.S. District Court for the Middle District of South Carolina has ordered Hugo Villalpando, the owner of La Carreta Mexican restaurants in Charleston and Summerville, South Carolina, to pay $190,000 in back wages and liquidated damages to 58 employees for violating the minimum wage, overtime, and recordkeeping provisions of the Fair Labor Standards Act (FLSA). The action comes after an investigation by the U.S. Department of Labor's Wage and Hour Division (WHD).

The WHD investigation of the restaurants - owned by Villalpando through entities La Carreta of Folly Inc. and La Carreta Inc. - determined that the restaurants violated minimum wage requirements when it failed to include some employees on the payroll, did not directly pay employees at all, and allowed employees to work only for tips. Overtime violations resulted from several of the employer's pay practices, including paying workers for fewer than 40 hours per week without regard to the number of hours they actually worked. Time records indicated employees regularly worked up to 50 hours per week, yet payroll never included those hours. Additional overtime violations resulted when the restaurants paid cooks and bussers flat salaries, without overtime, for workweeks longer than 40 hours.

In the instances when La Carreta and Villalpando paid overtime to servers, they violated the FLSA when they based overtime rates on the servers' direct cash wages of $2.13 per hour rather than on the full minimum wage of $7.25 per hour, as the law requires.

WHD also cited the employer's failure to record all the hours employees worked, and keep any records of some workers' employment.

"This employer is obligated to pay his employees the wages they have legally earned, and must never gain a competitive advantage over those that comply with the law," said Wage and Hour Division District Director Jamie Benefiel, in Columbia. "The U.S. Department of Labor encourages all to reach out to their local Wage and Hour Division office for information about how to comply, and to make use of the many tools we offer to explain their responsibilities and how to avoid violations."
WHD conducted an investigation of La Carreta's Summerville restaurant in 2011 and found the same violations.

The Department's Office of the Solicitor filed a complaint against the two restaurants and their owner to remedy the violations found in the current investigation. Villalpando settled with Department and the parties filed a consent judgment and order that the court approved on September 10, 2018. In addition to being ordered to pay the back wages and damages, the two restaurants and Villalpando are enjoined from committing future violations under the FLSA.

For more information about the FLSA and other laws enforced by the Wage and Hour Division, contact the toll-free helpline at 866-4US-WAGE (487-9243). Employers who discover overtime or minimum wage violations may self-report and resolve those violations without litigation through the PAID program. Information is also available at https://www.dol.gov/whd.