Minimum Wage Cheats Ordered to Pay $1.065 Million in Back Wages and Penalties to Workers

Chinatown’s Golden Dragon Restaurant Could Also Be Assessed As Much As $871,300 in Costs, Fees to City Following Investigation

SAN FRANCISCO (Oct. 6, 2006)-An administrative hearing officer charged with adjudicating alleged violations of San Francisco’s Minimum Wage Ordinance found Chinatown-based Golden Dragon Restaurant in violation of the voter-approved law, ordering the restaurant to pay its under-compensated employees $1,065,000 in back wages and penalties. Under terms of the order issued by Hearing Officer Peter Kearns on October 2nd, Golden Dragon must also pay the City a yet-to-be-determined amount equal to the costs to the Office of Labor Standards Enforcement for investigating and remedying the violations that is not to exceed $871,300.

The case brought by City Attorney Dennis Herrera and investigated by San Francisco’s Office of Labor Standards Enforcement under the direction of Division Manager Donna Levitt alleged that Golden Dragon violated City law by failing to pay 37 employees the local minimum wage in 2004 and 2005. After Golden Dragon Restaurant was closed by the Department of Public Health on January 17, 2006, 21 claimants came forward who hadn’t received any pay-or had been issued checks employees were unable to cash-for numerous pay periods. In one case, a claimant had gone unpaid for ten months. The hearing officer found $129,030 in unpaid wages were due to these claimants, who hadn’t been paid at all. The hearing officer also found $64,645 was owed by Golden Dragon for minimum wage violations in 2004 and 2005. The case also alleged that the restaurant had failed to provide payroll records to labor investigators in the course of the City’s investigation.

“Cheating employees of their rightful wages doesn’t merely exploit working families, it also corrupts the marketplace by unfairly competing with the vast majority of honest businesses that abide by the law,” said Herrera. “Today’s administrative order sends an important message about our seriousness in protecting the rights of working men and women of San Francisco. I applaud Donna Levitt and the Office of Labor Standards Enforcement for their investigation of this case, and I look forward to continuing to work with them to ensure that there is no profit motive for flouting the Minimum Wage Ordinance in San Francisco.”

“The City argued for penalties against the Golden Dragon because the owners flagrantly violated the law,” Levitt said. “Last year the workers had to picket the business to get paid months of overdue wages. The City found that the long delayed pay was less than minimum wage. Then the owners continued to cheat workers out of their pay and shut their doors, owing workers thousands of dollars. This order makes it clear that a business cannot escape their responsibility to pay their workers by closing. We are also very grateful to the Chinese Progressive Association, which offered invaluable assistance to the workers in filing their complaints, and also assisted OLSE staff with translations.”

According to Lai Chun Lian, who had worked as a janitor at the Golden Dragon Restaurant for three years: “I worked 7 nights per week and was paid $2500 per month, but not including the cleaning supplies and tools I had to pay for. The employer owed me 10 months pay. I had kept asking for my paychecks every month. The employer kept promising to pay me by next month. Therefore, I kept working in the vain hope that I would someday be paid. During the difficult time without pay, I was very stressed, upset about paying living expenses and bills. I replied on my wife’s income and my daytime job to support my family. One time, I was very sick and had no money for buying medicines. I had to borrow money from my friends. I am so glad that the City help us to fight for our wages. I hope I will receive my back wages soon.”

The investigation into Golden Dragon Restaurant at 822 Washington Street originated in March 2005 with complaints from nine employees alleging that the restaurant paid less than San Francisco’s local minimum wage for work performed there. The investigation covered the nine original claimants but later expanded to include additional Golden Dragon employees following an audit of the restaurant’s records from February 2004 through March 2005. Subsequent efforts to conduct further audits were stymied by the restaurant’s refusal to cooperate with investigators. During the audit period, the OLSE issued two interim orders in an attempt to mitigate ongoing violations as the audit proceeded. In August 2005, Golden Dragon agreed to pay $59,849.43 in back wages to the 37 employees, only to later break that promise. In February 2006, another 21 employees of Golden Dragon filed claims with OLSE totaling $130,309 because of checks they were unable to cash or never received.

Passed by voters in November 2003, the San Francisco Minimum Wage Ordinance calls for annual rate adjustments based on the previous year’s Consumer Price Index for urban wage earners in the San Francisco-Oakland-San Jose metropolitan area. The ordinance took effect on February 23, 2004, and originally included a separate rate for non-profit organizations and small businesses with fewer than ten employees. Since the beginning of 2006, all employers-including small businesses and nonprofits-have been subject to the same minimum wage rate. According to the City’s pre-hearing statement, Golden Dragon was required to pay its employees at least $8.50 per hour in 2004, $8.62 per hour in 2005, and $8.82 per hour in 2006.

For more information about San Francisco’s Minimum Wage Ordinance, members of the public may call the City’s multi-lingual hotline at (415) 554-6292.