EEOC Conciliates Discriminatory Wage Theft Case

Steamboat Springs Restaurant to Pay $50,000 for Failing to Pay Proper Wages to Latino Workers Because of Race or National Origin

DENVER - A Steamboat Springs, Colo., restaurant has agreed to pay $50,000 to resolve race and national origin discrimination charges, including charges of wage theft, by the U.S. Equal Employment Opportunity Commission (EEOC), the federal agency announced today.

EEOC issued a cause finding concluding that there was reasonable cause to believe the employer had violated Title VII of the Civil Rights Act of 1964 by engaging in a pattern or practice of unlawful terms and conditions. EEOC said these included, but were not limited to, failure to pay appropriate regular and overtime wages, failure to provide legally required benefits, and fostering a hostile work environment, because its employees are Mexican nationals or nationals from other countries in Latin America, and/or because they are Hispanic.

The restaurant generally hired only immigrants from Mexico and other countries in Latin America. Although employees were allowed to keep tips (and were told not to record or document these), they were otherwise paid only sporadically, and the restaurant's owners failed to pay minimum wages in compliance with Colorado's and the federal government's minimum wage and hour laws for tipped employees, EEOC found.

Employees interviewed by EEOC reported frequently having to ask first in order to get paid, and receiving paychecks as infrequently as once every six or seven weeks. Sometimes, they reported, they even had to wait three months to get paid, despite having been promised biweekly pay periods. One employee reported not being paid for over a year. When employees were finally paid, the restaurant greatly reduced pay by deducting unsubstantiated amounts for tips, in violation of Colorado state and federal law that requires employers to pay certain minimum wages even after accounting for tip deductions. The restaurant further misled employees by telling them it was withholding money because of tax deductions when frequently that was not the case, EEOC said. Furthermore, EEOC found that employees were never paid for overtime work, in violation of state and federal laws.

EEOC also found that the restaurant had no employment discrimination policy or employee handbook. Employees had never received training on equal employment opportunity (EEO) law. The restaurant also routinely destroyed or did not maintain employment applications, records of overtime, or any records documenting actual tips earned, EEOC said. Along with violating other state and federal wage and hour record keeping obligations, this is also a violation of the record-keeping requirements of Title VII, 29 CFR 1602.14.

To resolve EEOC's discrimination findings, the restaurant entered into a five-year conciliation agreement, which requires the restaurant to pay $50,000 in back pay, compensatory, and punitive damages to eight current and former employees. The restaurant confirmed that from now on it will pay its employees, both current and future, in a timely fashion the full amount owed them (including regular pay, overtime pay and any other monies and benefits they are entitled to), regardless of immigration or documentation status.

The agreement also requires the employer to confirm that "wage theft is a form of discrimination when such theft is based on national origin and/or race." The restaurant agreed to hire an outside consultant to draft an EEO policy and translate it into Spanish, establish a record keeping system, and to provide eight hours of EEO training annually (in both English and Spanish) to the restaurant's owners, managers and employees.

Courts have begun to recognize that financial exploitation may be an indication or proof of race and national origin discrimination. Research has shown that the prevalence of wage theft strongly correlates with racial, ethnic, and immigrant status. In an investigation coordinated by the University of California, Santa Cruz, researchers found that the strongest predictor of wage theft is immigrant status. (Santa Clara County: Wage Theft Reports [2014]).Another study, in which a dozen universities interviewed over 4,300 low-wage workers in Chicago, Los Angeles and New York City, found that Latino workers were almost 13% more likely than any other racial/ethnic group to report wage theft, and reported wage theft nearly five times more frequently than white workers. Latino immigrants suffered the most wage theft of any racial/ethnic group at 35%. (National Employment Law Project, Broken Laws, Unprotected Workers: Violations of Employment and Labor Laws in America's Cities, at 42 [2009]). Gender and documentation status further compound the problem - 47% of female immigrants report having suffered wage theft.

"Workers tend to think of wage theft as strictly a wage and hour issue," said EEOC Phoenix District Regional Attorney Mary Jo O'Neill. "But EEOC wants to let all workers know: If you and your coworkers are being paid less than you are entitled to, or are being paid irregularly, because of your race, national origin or immigration status, then contact us. EEOC protects all workers in this country from discriminatory abuses. It is illegal for an employer to steal wages from you for any reason."

Acting Phoenix District Director Elizabeth Cadle added, "Immigrant workers are more vulnerable to wage theft because they tend to have less information about their rights, and some employers are more likely to try to exploit their lack of knowledge and fear in order to pay them less. EEOC will not tolerate this type of discrimination."

Protecting immigrant and other particularly vulnerable workers is an EEOC priority and is included in EEOC's Strategic Enforcement Plan. EEOC's Phoenix District Office has jurisdiction over Arizona, Colorado, New Mexico, Utah, and Wyoming. EEOC enforces federal laws prohibiting employment discrimination. Further information about EEOC is available on its website at www.eeoc.gov.