EDISON — QSR Management LLC, the operator of 55 Dunkin’ Donuts franchise locations throughout New Jersey and Staten Island, N.Y., has agreed to pay $197,787 in back wages owed to 64 employees.
The deal comes after an investigation revealed minimum wage and overtime violations of the Fair Labor Standards Act (FLSA), according to the U.S. Department of Labor’s Wage and Hour Division. Investigators from the division’s southern New Jersey district office found that the QSR did not pay overtime to store managers, as required by the FLSA.
Instead, the company incorrectly claimed that the managers at all 55 locations were exempt from overtime. As a result of the violations, 56 nonexempt store managers will be paid a total of $197,550 in back wages.
Investigators also found that management at two locations took tips from customer service workers to cover register shortages, resulting in minimum-wage violations of $237 for eight employees.
“These managers worked long hours and are entitled to the protection the FLSA affords them,” said Patrick Reilly, director of the Wage and Hour Division’s southern New Jersey office.
“An employer’s failure to pay overtime when required gives them an unfair competitive advantage, violates the rights of the employee, and will not be tolerated.”
Authorities said the violations took place at seven Dunkin’ Donuts locations in Edison: 1197 Amber Ave., 1957 Oak Tree Road, 490 Route 1 (at Wooding Ave.), 30 Route 27, 1790 Route 27, 260 Talmadge Road and 1704 Woodbridge Ave.
Other locations on the list include 450 Union Hill Road, Englishtown; 145 Route 27, Metuchen; 200 Buckelew Ave., Jamesburg; 38 Route 9, Morganville section of Marlboro; 169 Texas Road, Old Bridge; and stores in Asbury Park, Belmar, Brick, Neptune, Neptune City, Pennington, Princeton, Skillman, South Plainfield and Toms River, along with 30 Staten Island stores.
“Dunkin’ Donuts restaurants are owned and operated by individual franchisees who are responsible for making their own business decisions, such as employee wages and the benefits they offer their employees,” a representative of Dunkin’ Donuts wrote in a statement emailed to Greater Media Newspapers. “They are required to comply with all state, federal and local laws.”
Investigators found that QSR treated store managers as exempt from the overtime requirements, and argued that these managers were salaried, according to the Department of Labor. The company treated them as hourly employees, reducing their pay when they worked fewer than 60 hours in a week.
Although the FLSA allows an overtime exemption for management employees who perform certain job duties, the exemption only applies if the managers receive a guaranteed weekly salary of at least $455. While these managers performed the duties required for the exemption, QSR failed to pay its managers a guaranteed weekly salary in all workweeks, authorities said. This entitled store managers to overtime pay for hours worked in excess of 40 per week.
In assuring compliance with the FLSA, QSR has agreed to pay all back wages. As part of its commitment to future compliance, the company has changed its employee handbook to reflect its intent to properly apply any valid exemptions, and to no longer allow management to take tips from employees.
The FLSA requires that most U.S. employees be paid at least the federal minimum wage for all hours worked, and overtime pay at time and one-half the regular rate of pay for all hours worked over 40 hours in a workweek. The law provides an exemption from minimum wage and overtime pay for employees in bona fide executive, administrative, professional and outside sales positions.
To qualify for exemption, employees generally must meet certain tests regarding their job duties and be paid on a salary basis at no less than $455 per week.
For more information about the FLSA and other federal wage laws, call the Wage and Hour Division’s toll-free helpline at 866-4US-WAGE (487-9243) or visit www.dol.gov/whd.