U.S. Department of Labor Secures $1,149,965 in Back Wages In Bankruptcy Court for Hair Salon Workers in 15 States

VIENNA, VA – After an investigation by the U.S. Department of Labor’s Wage and Hour Division (WHD), the U.S. Bankruptcy Court for the District of Maryland has ordered Creative Hairdressers Inc. – an operator of unisex hair salons in 15 states and the District of Columbia – to pay $1,149,965 in back wages to more than 7,500 employees.

The court’s action comes after WHD investigators found Creative Hairdressers Inc. – doing business as Hair Cuttery, BUBBLES The Color Salon, Salon Cielo and Salon Plaza – closed all of its 750 salon locations on March 21, 2020, amid the coronavirus health crisis and failed to pay their employees’ final paychecks. By doing so, the employer violated the minimum wage and overtime provisions of the Fair Labor Standards Act (FLSA) and affected more than 7,500 employees. Creative Hairdressers Inc. filed Chapter 11 bankruptcy subsequently, and was purchased by another company. 

Once it learned of Creative Hairdressers Inc.’s failure to pay their employees and of the employer’s bankruptcy filing, the department sought to be included in the bankruptcy proceedings. As a result, the department secured back wages for employees in Connecticut, Delaware, Florida, Illinois, Indiana, Maryland, Massachusetts, New Hampshire, New Jersey, North Carolina, Pennsylvania, Rhode Island, Virginia, Washington, D.C., West Virginia and Wisconsin.

“While the employer’s violations were not found to be willful, its employees are among the thousands of personal service workers in America whose livelihoods have been dramatically affected by the coronavirus pandemic,” said Cheryl Stanton, Wage and Hour Division Administrator. “Like many workers, these employees depend on their paychecks to meet their basic living expenses. Even in these unprecedented times, the U.S. Department of Labor’s Wage and Hour Division is committed to ensuring that workers receive their hard-earned wages.”

In addition to the back wages, the court ordered Creative Hairdressers Inc. to pay an approximate total of $3,100,000 to satisfy state minimum wages, 401(k) contributions, bonus program payments and applicable employment-related taxes.

“The U.S. Department of Labor’s Wage and Hour Division and Office of the Solicitor intervened during bankruptcy proceedings to hold the employer legally accountable for paying owed wages,” said Regional Solicitor Oscar L. Hampton III, Region III’s Office of the Regional Solicitor. “This case serves as a strong signal that the department is working to protect the rights of employees significantly impacted during the coronavirus pandemic.”

WHD is committed to providing employers with the tools they need to assist them in fulfilling their obligation to understand and comply with the variety of laws the division enforces. Employers that discover overtime or minimum wage violations may self-report and resolve those violations without litigation through the PAID program.

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

WHD’s mission is to promote and achieve compliance with labor standards to protect and enhance the welfare of the nation’s workforce. WHD enforces federal minimum wage, overtime pay, recordkeeping, and child labor requirements of the Fair Labor Standards Act. WHD also enforces the Migrant and Seasonal Agricultural Worker Protection Act, the Employee Polygraph Protection Act, the Family and Medical Leave Act, wage garnishment provisions of the Consumer Credit Protection Act, and a number of employment standards and worker protections as provided in several immigration related statutes. Additionally, WHD administers and enforces the prevailing wage requirements of the Davis Bacon Act and the Service Contract Act and other statutes applicable to federal contracts for construction and for the provision of goods and services.

The mission of the Department of Labor is to foster, promote and develop the welfare of the wage earners, job seekers and retirees of the United States; improve working conditions; advance opportunities for profitable employment; and assure work-related benefits and rights.