Huddle House franchisees were fined and required to pay back wages after the U.S. Department of Labor’s Wage and Hour division found “significant” violations of labor laws while investigating those restaurants as part of a multiyear enforcement initiative in Georgia, the government agency said.
The agency said it also investigated and found violations at Huddle House restaurants in Missouri and West Virginia.
Twenty-five franchised units in Georgia, Missouri and West Virginia were required to pay minimum and overtime back wages totaling $60,302, as well as $48,317 in civil penalties for repeat and child labor violations, the Labor Department said in a release.
Atlanta-based franchisor Huddle House Inc. also was required to pay $292 in back pay due to what the company’s general counsel called clerical errors at three company-owned restaurants.
The investigation began in November 2010.
The release stated that the wages paid to some employees plus the tips they earned did not add up to the federal minimum wage for all hours worked, which is $7.25.
Other employees’ incomes did not meet the minimum wage because they were required to share their tips with non-tipped employees, or because the restaurants took deductions for breakage losses, damages and check-cashing fees.
In addition, some non-tipped employees, such as cooks, were paid less than minimum wage.
The Labor Department also found that some tipped employees were not paid overtime at the correct rate, and that some salaried nonexempt employees didn’t receive overtime pay at all.
Other employees were paid overtime after 80 hours in a two-week period, rather than after the required 40 hours in one work week.
The investigation found one child labor violation. A 15-year-old was allowed to work more hours than the law permits, which is three hours on a school day or 18 hours in a school week.
The investigation that uncovered the violations was part of a multiyear “enforcement initiative” focused on Georgia restaurants, the Department of Labor said, where noncompliance with federal regulations was “widespread,” particularly among franchisees.
“We work very hard to constantly educate our franchisees about labor rules,” said Claudia Levitas, chief administrative officer and general counsel of Huddle House Inc.
She added that the law limits the extent of the company’s involvement in franchised locations.
The Department of Labor said Huddle House Inc. had complied with requiring franchisees to attend Federal Labor Standards Act compliance training, encouraged continued participation in regularly offered trainings, required FLSA posters at all locations, and created business incentives that rewarded compliance among franchisees and managers.