Labor & Employment Law Daily DOL secures over $1.1M in back wages for workers whose hair salon worksites closed without paying final paychecks
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Friday, May 15, 2020

DOL secures over $1.1M in back wages for workers whose hair salon worksites closed without paying final paychecks

By WK Editorial Staff

The 750 salons were closed amid the COVID-19 crisis, and the company subsequently declared bankruptcy.

After an investigation by the Labor Department’s Wage and Hour Division (WHD), the U.S. Bankruptcy Court for the District of Maryland has ordered Creative Hairdressers Inc., an operator of unisex hair salons in 15 states and the District of Columbia, to pay $1,149,965 in back wages to more than 7,500 employees.

WHD investigators found Creative Hairdressers Inc.—doing business as Hair Cuttery, BUBBLES The Color Salon, Salon Cielo, and Salon Plaza—closed all of its 750 salon locations on March 21, 2020, amid the coronavirus health crisis and failed to pay employees’ final paychecks. By doing so, the employer violated the minimum wage and overtime provisions of the FLSA and affected more than 7,500 employees.

Bankruptcy proceedings. Creative Hairdressers Inc. later filed Chapter 11 bankruptcy and was purchased by another company. Once it learned of Creative Hairdressers Inc.’s failure to pay its employees and of the employer’s bankruptcy filing, the department sought to intervene in the bankruptcy proceedings. As a result, the department secured back wages for employees in Connecticut, Delaware, Florida, Illinois, Indiana, Maryland, Massachusetts, New Hampshire, New Jersey, North Carolina, Pennsylvania, Rhode Island, Virginia, Washington, D.C., West Virginia, and Wisconsin.

Another $3M. In addition to the back wages, the court ordered Creative Hairdressers Inc. to pay an approximate total of $3,100,000 to satisfy state minimum wages, 401(k) contributions, bonus program payments, and applicable employment-related taxes.

“While the employer’s violations were not found to be willful, its employees are among the thousands of personal service workers in America whose livelihoods have been dramatically affected by the coronavirus pandemic,” said Cheryl Stanton, Wage and Hour Division Administrator. “Like many workers, these employees depend on their paychecks to meet their basic living expenses. Even in these unprecedented times, the U.S. Department of Labor’s Wage and Hour Division is committed to ensuring that workers receive their hard-earned wages.”

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