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Subway franchises in Washington state in hot water with DOL for improperly calculating overtime.
The U.S. Department of Labor recovers over $200,000 in overtime wages and tips, damages, and civil penalties from 10 Subway franchises in Washington state. The DOL alleges that the restaurants violated the Fair Labor Standards Act (FLSA) by allowing managers and owners to pocket tips. Subway franchises also avoided paying overtime rates owed to the employees by manually adjusting timesheets to reduce hours worked or failed to combine hours worked at multiple locations that would contribute to overtime rates.
DOL recovers back wages for employees
During its investigation, the DOL determined that owners and managers were allowed to participate in employee’s tip pools, depriving 100 employees of their tips left by customers on credit card payments. The DOL recovered $80,528 in tips for those employees.
The franchise owners also owed $17,546 in overtime to the employees because they did not pay overtime rates when employees worked over 40 hours at separate locations. The DOL assessed a penalty of $98,074 in liquidated damages for the employees. The franchises were also given a $22,017 civil penalty for “the willful nature of the violations.” The total assessment came out to $218,165.
Avoid expensive consequences of violating the FLSA
Attempting to avoid paying earned overtime and illegally pocketing tips is a problem in many industries. It’s estimated that almost three-quarters of employers are not in compliance with the FLSA. “These Subway owners and managers willfully violated the Fair Labor Standards Act by underpaying employees and pocketing tips that did not belong to them,” said Wage and Hour Division District Director Thomas Silva in Seattle. “We encourage employers to review their practices and avoid the costly consequences of illegal actions.”
For more information about tipped employees, this fact sheet from the DOL gives information to ensure tipped employees are paid correctly. Workers and employers can also contact the Wage and Hour Division for more information or to make a complaint.
