Court Orders Employer to Pay $750K in Back Wages and Damages in FLSA Dispute
When an employer walks away from a wage and hour settlement, the Department of Labor doesn't simply let the matter drop — its next move is to take the case to court. That's exactly what happened to Rancho Chico, a Washington employer operating four restaurants, after it allegedly failed to follow through on an agreement to pay back wages owed to its workers. A federal court has now ordered the business and its owners to pay $750,000 in back wages and damages.
An investigation by the DOL's Wage and Hour Division found that the employer violated the Fair Labor Standards Act (FLSA) in multiple ways. Workers were denied the required time-and-a-half overtime premium for hours worked beyond 40 in a single workweek. On top of that, some nonexempt employees were paid a flat salary covering all hours worked — an arrangement that effectively dropped their earnings below the federal minimum wage.
The violations didn't stop at pay practices. Investigators also determined the business retaliated against an employee who filed a wage complaint and broke federal child labor rules by allowing minors to operate hazardous equipment.
What began as unpaid overtime for 42 workers snowballed into minimum wage failures, retaliation claims and child labor violations — a six-figure lesson in compounding risk.
— Key finding, DOL Wage and Hour Division investigationOwners Defaulted on the FLSA Settlement Agreement
After the investigation concluded, owners Nolberto and Guillermina Rodríguez agreed to make the affected 42 employees whole by paying the back wages owed. But the payments never came. With the settlement in default, the DOL escalated the matter and sought a court order to enforce compliance.
A federal court in Washington sided with the agency, ordering the Rodríguezes and the restaurant business to pay $750,000 in back wages and damages to the affected workers. The order goes beyond the money: the employer must comply with the FLSA going forward — paying employees properly for every hour worked, keeping accurate time and pay records, and refraining from any retaliation against workers who exercise their rights under the law.
Backing out of a DOL settlement doesn't make the obligation disappear — it invites a federal court order with damages attached.
— Compliance lesson for employersWhy Payroll Violations Rarely Stay Contained
This case is a reminder that wage and hour problems tend to multiply. What may start as a miscalculated overtime rate can cascade across an entire workforce — here, pay failures affecting 42 workers compounded into overtime violations, minimum wage shortfalls, a retaliation claim and child labor infractions, ultimately producing a high six-figure obligation.
For HR and payroll teams, the takeaway is clear: classify workers correctly, pay the overtime premium on all hours over 40, never let a salary arrangement push nonexempt pay below minimum wage, and treat wage complaints as protected activity. And if a settlement is ever reached with the DOL, honor it — the alternative is a courtroom.
$750K court order. A federal court in Washington ordered Rancho Chico and its owners to pay $750,000 in back wages and damages to 42 affected restaurant workers.
Multiple FLSA violations. The employer failed to pay the time-and-a-half overtime premium for hours over 40, and flat salaries paid to some nonexempt employees pushed their pay below the federal minimum wage.
Retaliation and child labor findings. Investigators also found the business retaliated against an employee who filed a wage complaint and allowed minors to work on hazardous equipment.
Defaulting on a DOL settlement backfires. The owners initially agreed to pay back wages but never did — prompting the DOL to seek and win a binding court order.
Violations compound quickly. Pay calculation failures across a workforce rarely stay isolated — they can spiral into overtime, minimum wage, retaliation and child labor liability all at once.