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Subway Restaurant pays punitive damages for terminating an employee during Department of Labor investigation

On Behalf of | Sep 28, 2023 | Firm News


NPK Foods Inc., the operator of a Subway restaurant franchise in Manhattan’s Lower East Side, fired an employee during an investigation by the U.S. Department of Labor’s Wage and Hour Division.  This restaurant learned a hard lesson by first failing to properly compensate its employees, and then for retaliating against an employee who partook in the investigation.

The franchise restaurant, located at 334 Grand Street, violated the anti-retaliation provisions of the Fair Labor Standards Act, causing it to pay $10,000 in punitive damages to the former employee.  What happened?  The restaurant pressured one employee to sign a document falsely claiming there were no violations of law, they had been paid in full, and there had been no threats or poor treatment.  Notably, the employer also told the employee to return any back wage payment to the employer, then later fired the employee.

The initial investigation centered on the restaurant failing to pay federal minimum wage, overtime and recordkeeping requirements by not compensating employees for training time, paying some employees straight time for all hours worked and failing to keep accurate records of the total hours worked by employees.  This resulted in about $3,907 in back wages and liquidated damages to eighteen employees whose rights were violated.

As for the terminated employee, as noted above, he was awarded $10,000 in punitive damages.

As stated by Wage and Hour Division District Director Jorge R. Alvarez in New York, “Requiring employees to lie to federal investigators isn’t and should never be a condition of employment. This investigation reminds employers that the U.S. Department of Labor will not tolerate such behavior and will seek to recover wages owed to employees.  We take allegations of retaliation very seriously and urge workers to contact their nearest Wage and Hour Division office with any questions or concerns.”

The FLSA requires that most employees in the U.S. be paid at least the federal minimum wage for all hours worked and overtime pay at not less than time and one-half the required rate of pay for all hours worked over 40 in a workweek. It also prohibits employers from firing or taking adverse action against employees for exercising their rights. Learn more about how the Wage and Hour Division protects workers against retaliation.