Pancho's Inc., which conducts business as Pancho's Mexican Restaurant I, II and III, as well as Papa's and Beer Mexican Restaurant are to pay 85 employees $485,913 in back wages following investigations by the U.S. Department of Labor’s Wage and Hour Division.

The investigations found violations of the Fair Labor Standards Act's overtime, minimum wage and record-keeping provisions at each restaurant location and were conducted over a multiyear enforcement initiative that targeted the restaurant industry in South Carolina after widespread noncompliance with the FLSA had been discovered. In fact, beginning in the fiscal year 2009, the division's Columbia District Office had completed more than 300 investigations under the initiative that ended in companies paying more than $2.5 million in back wages recovered for more than 2,500 workers.

"We found many low-wage employees working up to 65 hours a week without any overtime compensation and receiving pay below the federal minimum wage,” says Michelle Garvey, director of the division's Columbia office. “Unfortunately, significant labor violations like the ones we found in this case are all too common in the restaurant industry. We are pleased that these workers finally will be paid their rightful wages, and as demonstrated by our ongoing initiative, we will continue to investigate South Carolina restaurants to remedy violations and ensure sustained compliance with the law."

According to investigators, Pancho's Mexican Restaurant I, II and III did not properly compensate employees for all work hours. After examining payroll records and conducting employee interviews, investigators found that tip-earning employees, such as the wait staff, mostly relied on tips for pay and earned wages under $2.13 per hour, which is against the FLSA's minimum wage provision. Other employees, including kitchen staff, were paid flat salaries each month, despite hours worked, and those salaries failed to uphold minimum wage or overtime pay requirements. Accurate records of employees’ work hours and wages also were not maintained.

The investigation found that Papa's and Beer Mexican Restaurant made impermissible deductions for uniforms along with other expenses from the wages of tip-earning employees. This move resulted in their hourly wages hitting below the federal minimum wage. Other employees, such as kitchen staff, were paid flat salaries each month that did not meet minimum wage or overtime pay requirements, and records of hours worked by kitchen staff were not kept.

Both restaurants are to maintain future compliance with the FLSA by keeping accurate records of all hours worked by all employees, compensating employees at least the federal minimum wage, providing overtime pay, and communicating to employees before tip credit will be used.

Instant Insights /

S.C. restaurants to pay nearly $486,000 in back wages

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