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DOL wage claim found plausible against televangelist on behalf of restaurant ‘volunteers’

By Lisa Milam-Perez, J.D.

A church-owned buffet restaurant and its televangelist owner must defend against the Department of Labor’s allegations that they violated the FLSA by using unpaid church volunteers to operate the Cuyahoga Falls, Ohio, restaurant. A federal district court denied a motion to dismiss the DOL’s wage suit, one of several brought by the agency of late challenging the use of unpaid volunteers by for-profit entities. The defendants challenge the DOL’s stance that the practice is unlawful. Whether the court ultimately adopts that position “is for another day,” it said (Perez v. Cathedral Buffet, Inc., November 13, 2015, Pearson, B.).

After a Wage and Hour Division investigation, the labor secretary filed a complaint in August contending that 239 current and former “volunteers” working for the buffet restaurant were in fact statutory employees under the FLSA and should have been compensated accordingly for cooking, cleaning, waiting tables, stocking the buffet line, and cashiering. The agency also found the defendants incorrectly classified four managers as exempt, paid them weekly salaries that were too low to meet the federal minimum wage, and failed to pay them overtime; and that two dining room attendants, aged 14 and 15, worked in violation of the FLSA’s restricted hours for minors.

Well-pled complaint. The district court found the DOL adequately satisfied the threshold pleading requirements of Twombly and provided fair notice to the defendants of the allegations at hand: namely, violations of the FLSA’s minimum wage, overtime, recordkeeping, and child labor provisions. Specifically, the complaint asserted that the defendants were collectively a covered enterprise, were engaged in commerce of more than $500,000 annually, repeatedly violated the FLSA’s minimum wage provisions by classifying workers as “volunteers,” and breached the Act’s minimum wage and overtime provisions by paying “excessively low” salaries to nonexempt managers. The complaint also alleged that the defendants failed to maintain accurate records of hours worked and employee information, and allowed minors to work more than three hours on a school day, beyond 7:00 pm during the school year, and more than eight hours on a non-school day. Moreover, the DOL presented a 40-page exhibit naming the specific employees who it alleges are owed back wages. While the complaint could have contained more detailed supporting facts, the court noted, the facts that it did allege were sufficient to state a claim under the FLSA.

Jurisdiction over child labor claims. The defendants also moved to dismiss the DOL’s oppressive child labor allegations on jurisdictional grounds. The DOL has dual roles in enforcing the FLSA’s child labor provisions: recovering prospective injunctive relief for employees and assessing civil monetary penalties for violations—funds that are deposited in the U.S. Treasury general fund and are not remitted to employees subjected to child labor violations. But there is nothing in the FLSA or the statute’s enabling regulations that forecloses the DOL’s ability to continue to obtain injunctive relief for child labor violations (as well as civil monetary penalties) if it remains appropriate to do so, the court said, denying the motion to dismiss based on a lack of subject matter jurisdiction.