PORTLAND, Ore. (KOIN) – Employees at Menchie’s Frozen Yogurt shops in Oregon and Washington received overdue payments after a federal investigation revealed store managers took a portion of workers’ tips illegally and did not pay some employees overtime when they worked more than 40 hours in a week.
Investigators recovered $96,973 in back wages and liquidated damages from the owners of 11 frozen yogurt shops in Washington and Oregon, the U.S. Department of Labor said Tuesday.
In addition to taking tips and not paying overtime, the owners also did not keep an accurate record of hours worked and violated child labor regulations by allowing minors under the age of 18 to operate trash compactors at four Washington locations, the U.S. Department of Labor’s Wage and Hour Division found.
Investigators say BroYo LLC, which operates nine Menchie’s Frozen Yogurt franchises in Washington and two in Oregon, violated the Fair Labor Standards Act several times. Investigators recovered back wages and damages for 330 workers.
Mark Sandwith is a co-owner of the shops involved in the investigation. He told KOIN 6 News that the stores were allowing store leaders a share of the tips because there are only eight employees at each store and the owners wanted managers to receive a share of the tips.
He said their mentality was that since the store leaders engage with guests like any other employee, they should be tipped.
Sandwith said he was told the Department of Labor was doing random checks on businesses within the agency and that’s how his violations were discovered. He did not deny his stores violated the laws and said the stores implemented changes to adhere to the laws back in June 2021.
He said the issue with overtime wages was his fault. He said he was allowing his employees flexible schedules to do things like take time off when their kids were sick or pick their kids up from daycare. If they had under 40 hours one week, he’d allow them to make it up the next, but sometimes that resulted in them working more than 40 hours in one week.
The problem with minors operating the trash compactor also occurred as a result of limited staffing, he said.
Sandwith said he paid his employees the wages they were owed in the summer of 2021 through direct deposits. He said there were seven employees he couldn’t locate, but he shared their information with the Department of Labor so the department could help find them.
“Food service workers frequently receive low wages and few benefits. BroYo LLC made the jobs of hundreds of food service workers less gainful when they allowed managers to illegally take tips from employees who earned them and denied some workers their overtime pay,” Wage and Hour Division District Director Thomas Silva said in a statement.
The Department of Labor is encouraging other food service employers to review their pay practices to ensure they aren’t violating federal law.
The division assessed $19,736 in civil money penalties against BroYo LLC. Sandwith said he paid the penalties in 2021.
He said things have been extremely difficult as a business owner. It’s hard to keep employees and offer competitive wages. He said the cost of materials and frozen yogurt ingredients has also added a challenge during the pandemic. He said he knows the penalty could have been higher, but still, it was another blow to his business.
Sandwith said BroYo LLC wants to follow the rules and see its employees succeed.
The following Menchie’s locations were included in the investigation:
- 14865 Main St. Bellevue, WA
- 21210 WA-410 Bonney Lake, WA
- 1409 S 348th St. Federal Way, WA
- 2902 164th St. Lynnwood, WA
- 10306 156th St. Puyallup, WA
- 830 N 10th St. Renton, WA
- 14024 SE Petrovitsky Road Renton, WA
- 4502 S Steele St. Tacoma, WA
- 7902 NE 6th Ave. Vancouver, WA
- 12325 SW Horizon Blvd. Beaverton, OR
- 8950 SE Sunnyside Road Clackamas, OR
Menchie’s Frozen Yogurt is the world’s largest self-serve, frozen yogurt franchise and has approximately 540 locations in the U.S. and abroad.