North Carolina Food Distribution Company Agrees to Pay Workers Over $136,000 in Back Wages

North Carolina Food Distribution Company Agrees to Pay Workers Over $136,000 in Back Wages

RALEIGH, NC — A North Carolina-based food distribution company recently struck a deal with federal investigators to pay back dozens of employees for uncompensated wages after regulators determined the company violated several provisions of federal wage and labor laws. The terms of the settlement include $136,266 in back wages and damages to 47 employees as well as compliance assurances from the defendant to avoid future wage theft and other violations of the law.

According to information on the Labor Department’s Wage and Hour Division web page, the Raleigh District Office found that El Club Mexicano Inc. intentionally misclassified employees as independent contractors and failed to pay these workers minimum wage or overtime wages. Furthermore, the workers earned wages on a piecemeal rate, meaning the defendant compensated employees based on production, rather than the actual number of hours spent on the job.

The Labor Department calculated that the employee’s total compensation did not average out to at least the federal minimum wage of $7.25 per hour, nor did the defendant pay the workers overtime rates for their piecemeal work. When working more than 40 hours in a week, the defendant continued to pay the employees their regular piecemeal rates.

“Paying a piece-rate does not establish an independent contractor relationship or relinquish the employer from their legal responsibility to pay the required minimum wage and overtime,” said Wage and Hour Division District Director Richard Blaylock. “We appreciate El Club Mexicano’s decision to comply with the law and will continue our enforcement efforts on behalf of American workers, and to level the playing field for employers who play by the rules.”

The defendants also paid civil fines to settle other violations of federal labor laws. According to the Labor Department, the defendant employed workers as young as 14 and 15 years old to operate forklifts and paper box folders. Federal regulations forbid workers under 18 years old from using either of the two types of heavy equipment on job sites.

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