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Carl's Jr. Fined $1.45 Million Over Alleged Minimum-Wage Violations

The fast-food giant isn't taking the news lying down.

by Alex Swerdloff
Jun 28 2017, 4:00pm

Photo via Flickr user luna715

This week, the City of Los Angeles set up a wage theft hotline for workers to call if they are not being paid at least the minimum wage. Why did the city feel the need to do that? Well, because a major fast food chain—Carl's Jr.—is alleged to have paid 37 workers below-minimum-wage rates for a six-month period starting July 1, 2016. That's the date upon which an ordinance raising the minimum wage to $15 came into effect in Los Angeles, an ordinance with Carl's Jr. has allegedly failed to meet—and the city is now seeking $1.45 million from Carl's Jr. in fines and restitution.

An investigation was launched after a Carl's Jr. employee reported the company last summer; LA's Office of Wage Standards looked into all 13 Carl's Jr. establishments in the city, and seven locations were found to be in violation. The $1.45 million that the city says Carl's Jr. must pay is composed of three parts: penalties of $85 per worker per day, which would go to the underpaid employees; around half a million dollars in penalties and fines payable to the City of Los Angeles; and payment of the actual lost wages—which total roughly $5,400.

CKE Restaurants, the parent company of Carl's Jr., is none too pleased. A spokesperson provided MUNCHIES with a statement that reads in part: "The OWS believes that the fine for this violation should be $1.45 million—more than 268 times the total of the wages that were paid to our employees. This demand is, on its face simply, unreasonable. It is also unconstitutional in that it disregards the Excessive Fines Clause of the Constitution to obtain money that will not go to our employees and will have no connection to the matter at hand."

READ MORE: Which Restaurants Will Suffer the Most Under a Higher Minimum Wage?

At the time of the violations, CKE Restaurants was run by none other than Andrew Puzder, who was President Trump's original nominee for US Labor Secretary. He withdrew his name as nominee back in February amidst fears that he wouldn't gain confirmation of the Senate.

Puzder was a controversial pick from the start, given that his views were generally anti-labor, he championed sexist advertising, and his wife had once appeared on Oprah alleging spousal abuse (she later retracted the claims). Puzder retired as CEO of CKE Restaurants last month.

It's likely that CKE is not going to happily pay the $1.45 million without a fight. The company told MUNCHIES, "We have a long-standing tradition in California and are proud of our presence in the City of Los Angeles, as well as the positive relationship we have with our restaurant teammates, who are the most important people in our business. Our employees have been made whole and we are willing to pay a reasonable fine for our mistake. However, given the excessive demands of the OWS, we have no choice but to defend against any OWS actions."

Meanwhile, Mike Feuer, the LA City Attorney, wants workers in LA to know that he isn't fooling around. He tweeted yesterday:

The LA Wage Theft Hotline is officially open. Just don't call them with Drake jokes.

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