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US fines Salem pizzeria $80,000

Labor: Upper Crust broke overtime laws

By Jenn Abelson
Globe Staff / June 24, 2011

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The Department of Labor has fined an Upper Crust restaurant in Salem more than $80,000 for violating federal overtime and record-keeping laws.

The pizza shop, operated by franchisee Michael Buchhalter, failed to pay 11 kitchen employees overtime when they worked more than 40 hours a week, according to the agency. It also concluded Buchhalter did not maintain accurate records of employees’ hours between January 2009 and April 2011 — the time period examined by the department.

“The Labor Department will not allow employers like The Upper Crust Pizzeria to violate the law and deprive vulnerable, low-wage restaurant workers of their rightful wages,’’ said Carlos Matos, assistant director of the Wage and Hour Division’s Boston office, which investigated the case.

Buchhalter said he cooperated with federal investigators “and we have agreed to fully follow their recommendations.’’ He also noted the Salem restaurant is “distinct’’ from the Upper Crust corporate structure. Buchhalter is the first Upper Crust franchisee to pay fines for labor violations.

The Upper Crust LLC, which runs more than a dozen corporate-owned shops in the Boston area, is under scrutiny by the Labor Department and other state and federal agencies for its employment practices.

The company was ordered to pay more than $341,000 to 121 employees after a 2009 Labor Department investigation determined it failed to pay overtime hours to delivery drivers and hourly employees, such as cooks, counter help, and managers.

George Regan, a company spokesman, said yesterday that the Salem operator is “a franchisee and its own separate entity.’’

New allegations surfaced last year that the upscale chain forced some workers, mainly illegal Brazilian immigrants, to give back overtime payments by deducting money from their weekly paychecks. Other employees have accused the company of firing them after they refused to turn over their settlement checks.

Upper Crust has denied all of the allegations.

Two former employees who claim Upper Crust took back their overtime payments filed a lawsuit last summer against the company and founder Jordan Tobins. Depositions are now being taken in that case. Several former workers are being added as plaintiffs, said Shannon Liss-Riordan — one of the attorneys representing the former employees — and they hope the suit will be granted class-action status.

John M. Chavez, a spokesman for the Labor Department, said the agency is still examining the Upper Crust chain, but he is not aware of any other individual franchisees currently under investigation.

When officials told Buchhalter of the violations uncovered at his Salem shop, they said, he signed an agreement to comply with federal requirements in the future, and to pay 11 of his employees back wages totaling $40,277, plus an equal amount in liquidated damages. Liquidated damages compensate the workers for the time they did not have use of their unpaid wages.

The law requires that covered employees be paid at least the federal minimum wage of $7.25 per hour, as well as time-and-one-half their regular rates for every hour they work beyond 40 in a given week.

The law also says employers must maintain accurate records and prohibits them from retaliating against employees who exercise their rights.

Jenn Abelson can be reached at abelson@globe.com.