Plaza Azteca to pay $11.4 million for restaurant wage violations

November 9, 2023

The U.S. Department of Labor announced last week that it recovered $11.4 million in back wages and damages for more than 1,000 employees who worked for Mexican food chain Plaza Azteca, which has locations in Midlothian, Glen Allen, Henrico and Richmond.

The $11.4 million recovery includes $5.7 million in back wages owed to workers for wage violations that occurred between 2016 and 2021. It also includes $5.7 million in liquidated damages, which accounts for additional damages employees receive when the employer violates the federal wage law.

Plaza Azteca has several locations East Coast including Delaware, Maryland, Connecticut, North Carolina, Pennslyvania and others including Virginia and West Virginia.

The consent decree includes $625,000 in penalties that the restaurant chain will pay.

According to the case, Plaza Azteca denied minimum wage and overtime to its employees. The recovery is related to a consent judgment entered by the U.S. District Court for the Eastern District of Virginia which resolved the litigation related to pay practices at more than 40 Plaza Azteca restaurant locations in seven states, including North Carolina and Virginia.

In its lawsuit, the DOL alleged that the Plaza Azteca Mexican restaurants paid “back-of-the-house” employees predetermined amounts. The DOL stated, “By doing so, the employers failed to pay some employees who worked up to 40 hours in a workweek the required minimum wage and did not pay some employees time-and-a-half for hours over 40 in a workweek. The employers also failed to maintain accurate records of employees’ work hours and wages, as required.”

The Fair Labor Standards Act is a federal law passed in 1938 that requires non-exempt employees to be paid at least minimum wage for all hours worked in a workweek and receive overtime pay at a rate of time and a half of their regular rate of pay for all hours worked over 40 in a workweek.

In Virginia, the minimum wage is $12.00 per hour; and the federal minimum wage is $7.25/hour.

The DOL stated in its announcement that “Plaza Azteca knew of its legal obligations to pay workers minimum wage and overtime and keep accurate payroll records and yet, willfully disregarded federal law.”

The DOL encourages employers and employees to download the “Timesheet app,” which is a free resource for tracking worker’s time. The app calculates pay automatically, records works hours and is available in English and Spanish.

The app can be found at : www.dol.gov/agencies/whd/timesheet-app or on the app store at “DOL-Timesheet.” The app is a bit intimidating at first because it requires information about the employer and employees, but it does have a good mechanism for employees to keep track of start and stop times and will calculate pay.

This case involved non-tipped employees, but many restaurants also have tipped employees. The FLSA has a complex scheme for payment of wages for tipped employees, which includes a minimum wage and a maximum tip credit that the employer can take. These rules are very specific, including when an employer can take a tip credit, when an employer can mandate tip pooling, who can be part of the tip pool, and how to administer it.

Under the FLSA, a tipped employee is one who is engaged in an occupation in which they customarily and regularly receive more than $30 a month in tips.

Employers who operate a business with employees who receive tips in addition to those who do not need to be fully apprised of the complexity of the law for all classifications of employees so as to not run afoul of the law.

As a general rule, employers should comply now or pay much more later.