The California Labor Commissioner just cited Five Wingstop fast food restaurants and their owner $3,161,606 for “wage theft” violations for 551 workers.  The owner created separate corporate entities for each of his restaurants, making it seem that each restaurant was a different employer, which deprived employees of a higher minimum wage, overtime pay, and missed meal break premiums when they worked at more than one ow the owner’s Wingstop locations.

The Labor Commissioner stated that:  “This case highlights abuses that take place in low-wage industries such as franchised fast-food restaurants where separate corporate entities are created by the same employer to improperly lower labor costs” and “[t]he law is clear that such corporate schemes undercut law-abiding employers and circumvent worker protections.”

The investigation discovered that between 2019 and 2022, the five Wingstop locations were each operating as separate corporate entities, although owned and operated by the same principal owner and paying the workers the lower minimum wage for small employers with 25 or fewer employees.  That would have likely been ok.  But, the owner had the Wingstop entities sharing employees between the multiple locations and, did not pay overtime to employees who worked more than eight hours/day or forty hours/week because of them working a different locations.  That triggered the investigation and the Labor Commissioner’s determination that the five Wingstop locations was a single employer and the workers should have been paid the higher minimum wage for employers with 26 or more employees and overtime.

Worse yet, the owner tried to avoid paying missed meal break premiums to workers when scheduling them to work at more than one location.  The employees also lost out on getting paid for off-the-clock work for their time traveling from one worksite to another during the workday.

Once there’s an investigation, it typically includes a payroll audit of the previous three years (and possibly four years) to determine minimum wage, overtime, and other labor law violations, and to calculate payments owed and penalties due.

Employers with Questions on requirements may contact Epps & Coulson, LLP.  We are here to help you plan and grow and protect your business.  Please feel free to contact Dawn at: dcoulson@eppscoulson.com.

Information contained in this Memo is intended for informational and educational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.  It is likely considered advertising.  Epps & Coulson, LLP encourages you to call to discuss these matters as they apply to you or your business.  Epps & Coulson, LLP has affiliated Counsel offices in New York and Connecticut with lawyers also admitted in Connecticut, District of Columbia Massachusetts (pending), New Jersey, Hawaii, European Union, England and Whales, France (Paris Bar) and Sweden.

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