In one of the state’s largest fast food enforcement actions in recent years, the California Labor Commissioner cited a Bakersfield Wingstop franchise for almost $3.2 million in stolen wages and penalties.
Wingstop owner Clinton Lewis is alleged to have deprived 551 workers of minimum wage, overtime pay, and missed meal break premium pay between 2019 and 2022. Lewis has appealed the citation and is entitled to a hearing before deputy labor commissioners. Reached by phone, he declined to comment.
Lewis is accused of circumventing the minimum wage required of larger employers by masquerading as a small employer. He allegedly treated each of his five Wingstop restaurants as a separate entity. (Up until 2023, California’s small employers were able to offer a lower minimum wage than larger employers.)
According to a statement from the Labor Commissioner’s office released today, Lewis created separate corporate entities for each of his restaurants, making it appear that each one was a different employer.
“This case highlights abuses that take place in low-wage industries such as franchised fast-food restaurants where separate corporate entities are created by the same employer to improperly lower labor costs,” said Labor Commissioner Lilia García-Brower in the statement. “The law is clear that such corporate schemes undercut law-abiding employers and circumvent worker protections.”
Managing restaurants through various corporate entities is a strategy commonly employed by businesses to minimize legal risk and potentially gain tax benefits. Nevertheless, there are allegations that Lewis misused this corporate structure to engage in unlawful activities.
Those who suffer from these schemes are some of the state’s most vulnerable workers, said Scott Jones, a staff attorney with the Labor Commissioner’s office. “The people most affected, of course, are low-wage workers, those making the minimum wage, and they’re the least able to afford having their wages stolen from them,” Jones said.
The investigation was initiated in November 2020 after a state wage and hour investigator received a report of a violation at one of Lewis’ five Wingstop restaurants. What followed was an investigation that involved pouring through “thousands of pages of documents and countless entries of figures,” Jones said.
Employees at Lewis’ Wingstop restaurants were denied overtime compensation for exceeding eight hours in a single workday or 40 hours in a workweek. He allegedly failed to provide workers with the required compensation for missed meal breaks when they were scheduled to work at multiple locations. Lastly, employees were allegedly not compensated for off-the-clock work for time spent traveling between the different restaurants.
Wingstop is not the only fast-food restaurant charged with exploiting a complex corporate structure to skirt labor law. Capital & Main reported on two fast-food workers who brought claims in recent years against fast-food franchise owners who used their corporate structure to avoid paying overtime and minimum wage.
Jones described such practices as “quite common in the fast-food industry.” He added, “Anytime I’m working with one of the investigators in fast food or any industry with multiple locations for the same employer, that’s one of the first things I discuss,” he said. The practice has also surfaced in the restaurant industry more broadly and in the residential-care industry and the trucking industry, Jones said.
The Labor Commissioner’s office cited five Bakersfield franchises in July: Hot Wings Holdings Group, The Northwest Bakersfield Wing Company Inc., The East Bakersfield Wing Company Inc., The Bakersfield Wing Company Inc., and The Southeast Bakersfield Wing Company Inc. Lewis, as an individual, was also cited.
Many of the employees involved in the case no longer work at the Wingstop restaurants in Bakersfield. Like many restaurants in the fast-food industry, Lewis’ Wingstop restaurants have high turnover, according to Jones. Still, Jones said they are due back wages. “We think they’ve got money coming to them,” he said. “We want them to participate in the prosecution and act as a witness to what happened to them.”
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