L.A. fines Carl’s Jr. for al­leged wage vi­o­la­tions

Los Angeles Times - - BUSINESS BEAT - By James F. Peltz james.peltz@la­times.com

Los An­ge­les city of­fi­cials al­leged Mon­day that fast­food chain Carl’s Jr. failed to pay the min­i­mum wage to three dozen lo­cal work­ers for six months and is de­mand­ing $1.45 mil­lion in fines and resti­tu­tion.

“L.A. law is clear: Em­ploy­ees must be paid at least the min­i­mum wage,” City Atty. Mike Feuer said in a state­ment. “Any­thing less is a slap in the face to work­ers strug­gling to make ends meet. This is a ma­jor cor­po­ra­tion that should know the rules.”

Carl’s Jr.’s par­ent, CKE Restau­rants Hold­ings Inc., blamed the short­fall on “an in­ad­ver­tent pay­roll er­ror.” It said the 37 em­ploy­ees af­fected “were swiftly made whole” al­ready in the to­tal amount of $5,400.

The Franklin, Tenn.based chain also said the city’s de­mand for $1.45 mil­lion was “on its face sim­ply un­rea­son­able” and un­con­sti­tu­tional.

Af­ter get­ting a tip from a Carl’s Jr. em­ployee, the city’s Of­fice of Wage Stan­dards, part of the Bureau of Con­tract Ad­min­is­tra­tion, and Feuer launched an in­ves­ti­ga­tion.

They al­leged that Carl’s Jr. failed to pay the work­ers the Los An­ge­les min­i­mum wage of $10.50 an hour from July 1 through Dec. 31 last year.

The em­ploy­ees worked at seven of the chain’s 13 lo­ca­tions in Los An­ge­les and were paid $10 or $10.25 an hour in­stead of $10.50, Feuer said in a tele­phone in­ter­view.

The short­fall “was not a small deal” for the work­ers be­cause it “had a sig­nif­i­cant im­pact on their fam­i­lies’ well-be­ing,” Feuer said, adding that he did not know if the prob­lem ex­tended be­yond the Los An­ge­les area.

The Los An­ge­les min­i­mum wage was lifted to $10.50 an hour from $10 last July 1 as the first step in a grad­u­ated plan to have a $15an-hour min­i­mum wage in 2020. The min­i­mum wage in Los An­ge­les is set to rise again, to $12 an hour, on July 1.

City of­fi­cials also al­leged that in two Los An­ge­les restau­rants, Carl’s Jr. failed to post the no­tice of the cur­rent min­i­mum-wage rate, sick-time ben­e­fits and em­ployee rights as re­quired un­der the city’s min­i­mumwage or­di­nance.

The city is de­mand­ing the com­pany pay $910,010 in penal­ties to the 37 em­ploy­ees in­volved, and an ad­di­tional $541,423 in penal­ties and fines.

If CKE fails to make the pay­ments, it could re­sult in a civil le­gal ac­tion against the com­pany, the city said.

CKE in its state­ment said “our em­ploy­ees have been made whole and we are will­ing to pay a rea­son­able fine for our mis­take. How­ever, given the ex­ces­sive de­mands of the [Of­fice of Wage Stan­dards], we have no choice but to de­fend against any OWS ac­tions.”

CKE also ex­plained that the com­pany “mis­tak­enly did not re­al­ize that some of the restau­rants were in the city of Los An­ge­les be­cause ad­dress list­ings for these restau­rants were non-Los An­ge­les street ad­dresses.”

As for whether the prob­lem ex­tended be­yond Los An­ge­les, CKE said “we are en­sur­ing that all of our em­ploy­ees have been prop­erly paid in ac­cor­dance with ap­pli­ca­ble laws.”

Feuer stood by the size of the penal­ties and resti­tu­tion, not­ing among other things that the fail­ure to pay the min­i­mum wage af­fected seven lo­ca­tions in Los An­ge­les, which “rep­re­sents a sys­temic fail­ure to com­ply with the city’s laws.”

“Carl’s Jr. has im­mense fi­nan­cial re­sources and sig­nif­i­cant penal­ties are nec­es­sary to de­ter fu­ture vi­o­la­tions,” he said.

In ad­di­tion to Carl’s Jr., CKE owns the fast-food out­lets Hardees, Green Bur­rito and Red Bur­rito. Over­all, the com­pany has 3,800 out­lets in 44 states and 40 for­eign coun­tries.

CKE’s former chief ex­ec­u­tive, Andy Puzder, stepped down in April and was re­placed by fast-food vet­eran Ja­son Marker.

Pres­i­dent Trump had nom­i­nated Puzder to be La­bor sec­re­tary. But Puzder with­drew his name in Fe­bru­ary in the face of stiff op­po­si­tion from con­gres­sional mem­bers, unions and work­ers’ rights ad­vo­cates.

Puzder not only came un­der fire for hav­ing hired a house­keeper who was in the United States il­le­gally, he also was crit­i­cized for com­ments op­pos­ing a min­i­mum-wage hike — he had writ­ten op-ed pieces say­ing it would curb em­ploy­ment op­por­tu­ni­ties — and for ex­tolling the ad­van­tages of in­creased au­to­ma­tion at restau­rants.

In an in­ter­view last year with the Busi­ness In­sider web­site, he noted that ma­chines are “al­ways po­lite, they al­ways up­sell, they never take a va­ca­tion, they never show up late, there’s never a slip-and-fall, or an age, sex, or race dis­crim­i­na­tion case.”

Al Seib Los An­ge­les Times

CARL’S JR’S PAR­ENT, CKE Restau­rants Hold­ings Inc., said the 37 em­ploy­ees af­fected by a short­fall in pay “were swiftly made whole” al­ready in the to­tal amount of $5,400. Above, a restau­rant in Los An­ge­les.

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