Where two companies and an individual violated the terms of a contempt order by continuing to employ underage employees, failing to pay overtime, failing to keep records and failing to cooperate with government investigators, they were held in contempt and sanctioned.

Background

Lori Chavez-Deremer, Secretary of the United States Department of Labor, moved to hold Plaza Azteca Yorktown, Plaza Azteca Hampton and Ruben Leon in contempt of the court’s Sept. 26, 2023, consent judgment and order.

Standard

To establish civil contempt, plaintiff must show each of the following elements by clear and convincing evidence: (1) the existence of a valid decree of which the alleged contemnor had actual or constructive knowledge; (2) that the decree was in the movant’s “favor”; (3) that the alleged contemnor by its conduct violated the terms of the decree, and had knowledge (at least constructive) of such violations and (4) that [the] movant suffered harm as a result.

Contempt

The first two elements of the contempt analysis are satisfied. These issues are uncontested. Therefore, the court will only discuss the parties’ arguments on the remaining two elements. Defendants argue they are not in contempt because they did not know of the alleged violations and made reasonable efforts to comply with the consent judgment.

The court concludes that defendants did not exercise reasonable diligence to acquire knowledge about B.C.’s unlawful employment. There is nothing in the record to suggest that defendants did anything more than take B.C.’s false documents at face value. Reasonable diligence, in the form of using E-Verify for example, would have revealed B.C.’s age (or at the very least revealed that the documents were not real). But defendants did not need to use E-Verify to determine they were unlawfully employing B.C.

Defendants also argue that because they relied on B.C.’s false identification, and hired him before the consent judgment, there was no knowing violation because the order was not yet in effect. This argument fails because the Act is focused on employment rather than hiring. B.C.’s unlawful employment was ongoing: Defendants cannot skirt a violation by claiming they hired B.C. before the consent judgment.

The record is also clear that defendants had payroll documents that show D.A.’s date of birth and confirm that she was 15 when she was hired. Defendants knew that D.A. was 15 years old, yet D.A. “worked two 12-hour shifts.” And this is not “a single minor working three improper shifts, without evidence of ongoing noncompliance” as defendants suggest. This is a pattern.

The Secretary argues that defendants violated the consent judgment regarding payment of minimum wages and overtime by: (1) permitting tipped employees to work off-the-clock without compensation in violation of minimum wage provisions; (2) permitting tipped employees to perform off-the-clock work without compensation for time worked over 40 hours; (3) failing to issue checks for net pay balances that remained after the tip credit was deducted, resulting in failure to pay minimum wage and (4) failing to pay overtime to their first cooks. The court concludes that the Secretary has proven each violation.

Defendants also failed to adequately “make, keep, and preserve records of employment” related to the “wages, hours, and other conditions and practices of employment,” and failed to cooperate with the Wage and Hour Division, or WHD, investigators, as required by the consent judgment.

The Secretary has an interest in protecting employees from their employer’s misconduct. Defendants’ conduct after the consent judgment “seriously threatens [the Secretary’s] ability to monitor employers and protect workers.” Therefore, the Secretary has established that she suffered harm.

Remedy

The Secretary first proposes that Plaza Yorktown, Plaza Hampton and Mr. Leon be required to hire a new third-party auditor. The court concludes that this proposed sanction is unnecessary. The court will simply require the current auditor to compute the back wages defendants owe. Mr. Leon must to hire an independent monitor to ensure minors are not working at Plaza Hampton and Plaza Yorktown in violation of the Act. Mr. Leon, Plaza Yorktown and Plaza Hampton must provide any records WHO requests to determine whether those records reflect additional violations, which WHD shall report to the auditor for evaluation and remedy.

The court will award attorney’s fees for expenses related to defendants’ disobedient conduct, and daily coercive fines for each restaurant that the auditor or child labor monitor reports have violated the Act and consent judgment. Further the Secretary may conduct unannounced visits to Plaza restaurants. Lastly, these sanctions should also apply to Mr. Leon.

Plaintiff’s motion for contempt granted.

Chavez-Deremer v. Plaza Azteca Yorktown, Case No. 2:21-cv-531, May 21, 2025. EDVA at Norfolk (Jackson). VLW 025-3-215. 27 pp.