slides: Oregon Restaurant Industry Plagued By Labor Violations

Thursday, February 05, 2015

GoLocal News Team

Over the last five years, the U.S. Department of Labor has investigated over 400 Oregon restaurants for fair labor violations, more than any other industry in the state.

That’s more than 10 times the amount of investigations the department launched against the hotel and motel industry, the industry with the second highest number of investigation, according to data from the U.S. Department of Labor.

Restaurant industry experts say restaurant culture is partially to blame, but that in the end, only the owners can fix the problem.

Slides Below: The Ten Oregon Restaurants The Most Backwages Owed

“I’m not surprised,” said Karen Clark, Community Outreach and Resource Specialist for US Dept. Labor. “There are a lot of restaurants out there. It’s a lower-wage industry where we have historically seen a lot of issues from wages not being paid for all hours worked.”

Enforcement Issues

The USDL enforces the Fair Labor Standards Act, which cover four areas: the Federal minimum wage of $7.25 an hours, overtime pay, recordkeeping and standards for youth employment.

The vast majority of investigations launched by the USDL against Oregon restaurants include back pay restitution. Altogether Oregon restaurants investigated by USDL agreed to pay a total of $1,874,393.75 in backwages since 2009.

According to US Department of Labor data, Cha Cha Cha Taqueria, on Northeast Fremont Street in Portland, agreed to pay $109,000 in backwages for a cases that dated back to 2009.

Habbi in Southwest Portland agreed to pay $12,200 in back wages for cases that closed in 2013. And Kowloon Restaurant in Eugene agreed to pay over $52,000 in backwages for cases extending to 2012.

Kurt Huffman is the manager partner for Chefs Table Group, a business that manages logistics for 15 Portland area restaurants.

“In my experience, 90 percent of the complaints are from non-tip earning employees,” said Huffman. “Wage hours complaints have to do with employers not respecting rules about federally-mandated breaks. A lot have to do with kitchen workers claiming that they have to work off the clock.”

According to Oregon’s Bureau of Labor and Industries, which handles labor complaints statewide, the restaurant industry consistently ranks high in wage theft complaints.

“It is a big issue, we think more can be done on enforcement side,” said BOLI spokesman Charlie Burr.

BOLI does not have the authority to shut a business down, regardless of the amount of unpaid wages owed. Several bills before the Oregon legislature would give BOLI more muscle in preventing wage theft.

House Bill 2386 enlists the power to issue cease and desist orders; HB 2387 requires employers who fail to pay back wages to post a bond; and SB 468 would allow BOLI to issue garnishment orders to businesses who fail to pay or commit civil rights or workplace violations.

One particularly egregious example of late is the case of Typhoon, a Thai restaurant alleged of human rights violations and exploiting Thai staff through foreign workers’ visas, Burr said.

Burr explained that when the U.S. Department of Labor investigates unpaid wage complaints, the back wages owed are determined based on the federal minimum wage owed. Investigations inside Oregon, by BOLI, calculate back-pay based on Oregon’s minimum wage.

Still, at least one manager said the process is unfair to restaurants.

Lavaro Villa Señor is the manager at Si Señor’s Beaverton location, on SW Hall Boulevard. His brother owns the Si Senor location in Cedar Mill

"The labor department at the time, maybe they were just short of money, they were going through everybody. One of the Mazatlan’s [restaurants] got hit too,” Villa Senor said. He claims that the wage complaints were baseless. "When the labor department came in and talked to the employees, everyone said whatever they wanted to say.”

Clash of Cultures

Huffman said that many of the wage complaints arise out of a culture in restaurants which is no longer tolerated in the modern regulatory environment.

He said it’s typical for chefs and restaurant owners to expect that workers will put in extra time in order to get ahead.

“When I was growing up the way you show that you were a hard worker is you show up early and stay late,” said Huffman, who started as a dishwasher. “That’s how you moved up.”

But now, the rules have changed.

“You can’t do that now, even though it flies in the face of cooking tradition,” Huffman said. “We don’t let any of our restaurants do that.”

Huffman said, since he’s managed restaurants with Chef’s table the group has only had one wage complaint, which was decided in the restaurants’ favor.

Lawsuits and Tip of the Iceberg

Andrew Lewinter, an employee rights attorney, said he was not surprised the restaurant industry led the way in complaints and he sees a many cases of labor law abuse by restaurants. However, he said the complaints are not a realistic representation of the problem.

“It’s just the tip of the iceberg. You’re not seeing the 90 percent of people who don’t come forward,” Lewinter said.

Lewinter said the type of employees who work in restaurants contribute to the high number of complaints.

“You see a lot of poor people, young people, and immigrants, who are less likely to assert their rights and more likely to go with the flow and respect their authority,” Lewinter said. “It’s a vulnerable population.”

Lewinter said many restaurants will put forth a “team attitude,” guilting employees to make sacrifices for the good of the establishment and other employees.

Lewinter said the proper regulations and laws are in place to properly punish restaurants who get caught. Most cases end up getting settled out of court. Employees can sue for back wages, as well as punitive damages.

“It’s more expensive for restaurants not to pay their employees,” Lewinter said.

Private lawsuits over wage disputes are not represented in the USDL data.

But Huffman said that a wave of wage lawsuits have swept into Oregon over the last few years.

“About two years ago, we started hearing that there were a lot of wage lawsuits against restaurants in California,” Huffman said. “It happens in California and then it comes up here. There’s a lot of money in it for lawyers. There are a lot of lawyers out there that are trawling around looking for lawsuits.”

Huffman said that restaurant owner he knew take out employment practices liability insurance to protect themselves.

“You need that,” Huffman said. “Even if you do everything right you will still get sued.”

Still, Huffman see an upside for restaurants.

“From a legal perspective it’s a good thing. It’s getting us all to play by the rules.”