Investigators say business owner owed employees tips and overtime
PORTLAND, Ore. (KOIN) – Employees at Menchie’s Frozen Yogurt stores in Oregon and Washington have received late payments after a federal investigation found store managers were illegally taking some of workers‘ tips and not did not pay some employees overtime when they worked more than 40 hours in a week.
Investigators have recovered $96,973 in back wages and damages from the owners of 11 frozen yogurt stores in Washington and Oregon, the US Department of Labor announced Tuesday.
In addition to taking tips and not paying overtime, the owners also failed to keep accurate records of hours worked and violated child labor regulations by allowing minors under the age of 18 years of using trash compactors at four Washington sites, the US Labor Department and Hourly Division found.
Investigators say BroYo LLC, which operates nine Menchie’s Frozen Yogurt franchises in Washington and two in Oregon, has repeatedly violated the Fair Labor Standards Act. Investigators recovered back wages and damages for 330 workers.
Mark Sandwith is co-owner of the stores involved in the investigation. He told KOIN 6 News that stores allow store managers to share tips because there are only eight employees in each store and owners want managers to get a share of tips.
He said their mentality was that since store managers engage with customers like any other employee, they should be tipped.
Sandwith said he was told the Department of Labor was doing random checks on businesses within the agency and that’s how his violations were discovered. He did not deny that his stores violated the laws and said the stores implemented changes to comply with the laws in June 2021.
He said the overtime problem was his fault. He said he allowed his employees to have flexible hours to do things like take time off when their children were sick or pick up their children from daycare. If they had less than 40 hours one week, he allowed them to catch up the following week, but sometimes it required them to work more than 40 hours in one week.
The problem with miners using the trash compactor also occurred due to limited staff, he said.
Sandwith said it paid its employees the wages they were owed in the summer of 2021 through direct deposits. He said there were seven employees he could not locate, but he shared their information with the Department of Labor so the department could help track them down.
“Food service workers often receive low wages and few benefits. BroYo LLC has made the jobs of hundreds of restaurant workers less paying by allowing managers to illegally take tips from employees who earned them and by denying some workers overtime pay,” said the district manager of the wage and hour division, Thomas Silva, in a statement.
The Department of Labor encourages other employers in the restaurant industry to review their wage practices to ensure they are not violating federal law.
The division assessed $19,736 in civil monetary penalties against BroYo LLC. Sandwith said he paid the penalties in 2021.
He said things have been extremely difficult as a business owner. It is difficult to retain employees and to offer competitive wages. He said the cost of frozen yogurt materials and ingredients has also added a challenge during the pandemic. He said he knew the sentence could have been higher, but it was still another blow to his business.
Sandwith said BroYo LLC wants to follow the rules and see its employees succeed.
The following Menchie locations were included in the survey:
- 14865 Main Street Bellevue, WA
- 21210 WA-410 Bonney Lake, WA
- 1409 S 348th St. Federal Way, WA
- 2902 164th Street Lynnwood, WA
- 10306 156th Street Puyallup, WA
- 830 N 10th St. Renton, WA
- 14024 SE Petrovitsky Road Renton, WA
- 4502 S Steele St Tacoma, WA
- 7902 NE 6th Ave Vancouver, WA
- 12325 SW Horizon Blvd. Beaverton, OR
- 8950 SE Sunnyside Road Clackamas, OR
Menchie’s Frozen Yogurt is the world’s largest self-serve frozen yogurt franchise with approximately 540 locations in the United States and abroad.