US Department of Labor obtains court judgment ordering Phoenix employer to pay $281K after forcing employees to pay kickbacks on wages recovered

PHOENIX – A federal court has ordered a Phoenix industrial laundry and dry-cleaning company to pay a total of $281,870 after the U.S. Department of Labor found the employer engaged in a kickback scheme after the department recovered more than $94,135 in overtime wages for 70 workers in 2020. 

The court’s action follows an investigation by the department’s Wage and Hour Division that found Fox Real Estate Group Inc. — operating as Sparklean Laundry and Piper — and owner Benjamin Piper denied its employees overtime for hours over 40 in a workweek. After the investigation, the employers agreed to pay the overtime back wages. Shortly thereafter, they began demanding kickbacks from its employees, submitted false receipts showing that it paid the recovered wages and threatened workers for exercising their labor rights.

In response, the department sought and obtained a consent judgment and order on Oct. 11, 2023, in the U.S. District Court for the District of Arizona, requiring the employers to pay the remaining $87,735 in back wages. The court also ordered the company to pay the workers $94,135 in liquidated damages and an additional $100,000 in punitive damages. 

“Workplace retaliation is intolerable and illegal, and demanding that employees return their hard-earned wages to their employer is among the most egregious types of retaliation we regrettably see,” said Regional Solicitor of Labor Marc Pilotin in San Francisco. “The Department of Labor will use all of its tools to combat retaliation, including through requiring employers who retaliate to compensate workers above and beyond the wages their workers are owed.” 

The FLSA requires that most employees in the U.S. be paid at least the federal minimum wage for all hours worked and overtime pay at not less than time and one-half times the regular rate of pay for all hours over 40 in a workweek. Learn more about the Wage and Hour Division and workers’ rights, including a search tool to use if you think you may be owed back wages collected by the division.

“This was a clear case where punitive damages were appropriate against the employer, which both violated federal law and broke its promises to the department,” Pilotin added.

Employers and workers can call division staff confidentially with questions, regardless of where they are from, and the department can speak with callers in more than 200 languages through the agency’s toll-free helpline at 866-4US-WAGE (487-9243). Download the agency’s new, free Timesheet App for Android and iOS devices, available in English and Spanish, to help track work hours and pay.

This news release is also available in Spanish. 

Julie A. Su, Acting Secretary of Labor, U.S. Department of Labor vs. Fox Real Estate Group Inc., dba Sparklean Laundry, an Illinois corporation; Benjamin Piper, an individual 

Case 2:23-cv-02034-ROS