A federal court has ordered four Washington-based Rancho Chico restaurants to pay $750,000 in back wages and damages to 42 employees after a U.S. Department of Labor investigation found violations of the Fair Labor Standards Act.
According to the department, investigators found workers were denied legally required overtime pay, with some employees receiving fixed salaries that resulted in earnings below the federal minimum wage for the hours they worked. The investigation also found an employee was unlawfully terminated after filing a wage complaint and that minors were allowed to operate hazardous equipment in violation of federal child labor laws.
The Department of Labor said the restaurant owners had previously agreed to pay the back wages identified during the investigation but later failed to fulfill that agreement. The department then worked with the U.S. Attorney’s Office for the Eastern District of Washington to obtain a federal consent judgment requiring payment.
Under the court order, the restaurants must pay $750,000 in back wages and damages, comply with federal minimum wage and overtime requirements, maintain accurate payroll records, and refrain from retaliating against employees who exercise their workplace rights.
For insurance professionals, the case highlights the financial and legal consequences employers face when wage and hour violations escalate into federal enforcement actions. Employment practices, management liability, and directors and officers insurers may closely monitor these types of claims because they can lead to substantial defense costs, settlements, and regulatory scrutiny, even when they are not covered under all policy forms.
