Following federal court judgment, Maryland restaurants operator pays more than $500K in back wages, damages and penalties

BALTIMORE, MD – As many restaurant servers’ base wage is well below $7.25 per hour, they depend on customers’ appreciation of their service to make ends meet. When an employer keeps a portion of the tips they earned or fails to pay them for all the hours they worked, paying their own bills becomes a very tall order.

Following an investigation and summary judgment in the U.S. District Court for the District of Maryland in Baltimore, the U.S. Department of Labor has recovered a total of $499,258 in back wages and liquidated damages for 62 workers employed by Mezcal Inc., operator of Mezcal Mexican Restaurant and Bar in Owings Mills and Lutherville, Maryland.

The department’s Wage and Hour Division conducted an investigation that found numerous violations of the Fair Labor Standards Act’s minimum wage and overtime requirements. Following the investigation, the department’s Office of the Regional Solicitor filed a complaint in federal court against Mezcal Inc. and owner, Carlos Ulloa. During the course of that litigation, the court ruled on summary judgment that Mezcal and Ulloa violated the FLSA willfully. Mezcal and Ulloa then agreed to a consent judgment requiring them to pay back wages and liquidated damages as well as $15,357 in civil money penalties. The court approved and entered the consent judgment.

Defendants recently made full payment of the back wages, liquidated damages and civil money penalty.

In its investigation, the division determined that Mezcal Inc. violated the FLSA when it:

• Withheld money from workers’ tips for an alleged tip pool, but failed to distribute those funds among tipped employees, instead keeping the money for the business.  
• Paid servers straight time rates for overtime hours.
• Paid kitchen staff a fixed salary, off the books, without overtime pay regardless of the number of hours they worked.
• Failed to maintain required payroll records, with many employees paid in cash and not appearing in the employer’s payroll records at all.

“All too often, restaurant industry workers fall victim to wage violations,” said Wage and Hour District Director Nicholas Fiorello in Baltimore. “Tips remain the property of those who rightfully earned them, and must never be kept by employers. The U.S. Department of Labor will continue to hold employers accountable when they attempt to gain an unfair competitive advantage, at the expense of their workers.”

“Employers must pay their employees all of the wages they have earned. This case serves as notice to other employers that the U.S. Department of Labor will continue to use all of the tools we have available, including vigorous prosecution when necessary, to ensure vulnerable workers get paid and that employers compete on a level playing field,” said Regional Solicitor Oscar L. Hampton III.

View the complaint and consent judgment.

The division offers numerous resources to ensure employers have the tools they need to understand their responsibilities and to comply with federal law, such as online videos and confidential calls to local Wage and Hour Division offices. Learn more about the FLSA. Contact the Wage and Hour Division toll-free at 866-4US-WAGE (487-9243) for more information.