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New restaurant owner finds predecessor cooked the books

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in Human Resources,Overtime Labor Laws

Three lessons from a pending lawsuit in Dallas:

  1. If your employees work overtime, pay them for it.
  2. Don’t falsify records to cover your tracks.
  3. Don’t sell your business to some­­one who is suing you for stiffing them out of overtime.

Marlene had worked as a cook at Mr. Chopsticks in Dallas for 12 years before saving enough to buy the restaurant. As she settled into her new role as owner, Marlene had two reasons to review old payroll records. She wanted to familiarize herself with the restaurant’s books—and she was looking for evidence to use in an on­­going wage-and-hour lawsuit against the former owner.

During the entire time Marlene worked in Mr. Chopstick’s kitchen, she had never received overtime pay, despite working as many as 60 hours a week. That prompted her to complain to the U.S. Department of Labor and file her lawsuit. Then she bought the restaurant.

­­Poring over the payroll records, she discovered that the previous owner had engaged in creative payroll accounting after Marlene filed her complaint, lowering employees’ hourly rates of pay and making up the difference with purported overtime pay.

Of course, Marlene knew exactly how much her hourly pay rate had been, and has the pay stubs to prove it.

Needless to say, the former owner’s legal prospects do not look good. He’s likely liable for not just back overtime pay, but also for stiff penalties for falsifying records to evade compliance with the Fair Labor Standards Act.

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