DOL Survey Shows that 72% of Restaurants Violate Wage Laws

The Ohio Employer’s Law Blog by Jon Hyman focused on a recent Department of Labor Press Release announcing a crackdown on Los Angeles restaurants for wage violations. The press release states that over “the past six years, the division’s Los Angeles office found that 72 percent of all restaurants investigated in its jurisdiction were in violation of the FLSA.” This statistic does not include the restaurants not investigated so the percentage of restaurants in violation is probably much higher.
Jon Hyman of the Ohio blog cited above believes that the high rate of wage violations can be attributed to the complexity of the wage laws. He states the “FLSA and its regulations are that complex, twisted, and anachronistic.” I agree that these laws are confusing, but I doubt many restaurant owners and managers ever look at the Fair Labor Standards Act. Also, even though the text of the FLSA is unclear, everyone knows the basics – pay employees the minimum wage and overtime. Pretty simple concepts. In my view, the unclear laws are part of the problem but not the real problem.
Restaurants and many other businesses violate the wage laws for another reason – because they think they can get away with it and most of them do. Violating wage laws makes good business sense. If they get away with it, companies save a fortune in unpaid wages. If caught, the penalty usually is just paying the employee what was owed anyway and often less. In most cases, the end result for employers is a nice interest free loan from the employees.
In rare cases, companies get really burned with a whopping wage and hour class action verdict that imposes serious penalties, interest and full payment – but those results are uncommon. Most of the time the cases settle with a compromise that ultimately lets the employer off for an amount equal to or less than what they owed in the first place if they followed the wage laws. Simply paying what was owed is not a penalty.
Also, another culprit behind the rampant violations is fear. Employees are afraid to report wage violations because they need their jobs and don’t want to get fired for complaining about unpaid wages. I used to work in restaurants as a dishwasher and a cook and I cannot imagine telling my boss about wage violations. If I raised this issue I would be fired, laughed at or punched in the face or maybe all three. If you have not had the pleasure of working in a restaurant, read Kitchen Confidential by Anthony Bourdain where he exposes the “underbelly” of the business – a great read, funny and painfully true. Complaining about wage violations in a restaurant is futile and a good way to get fired and this is another reason why these laws are so blatantly ignored.

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