The U.S. Department of Labor has sued three companies doing business as “Regal Nails” salons located in Carolina, Canovanas and Ponce, Puerto Rico, and three officers of the common corporations. The department’s lawsuit was filed following an investigation by its Wage and Hour Division, which disclosed, among other violations, that the defendants had misclassified more than 100 employees as “independent contractors,” thereby illegally depriving workers of the minimum wage and overtime to which they are entitled under the federal Fair Labor Standards Act. All three companies are independently owned and operated franchises of Regal Nails LLC.

“This department will not tolerate the exploitation of vulnerable employees in the nail salon industry, many of whom are unaware of wage and hour laws. Employers like Regal Nails cannot avoid paying fair wages to workers simply by misclassifying them as independent contractors,” said Jose R. Vazquez, director of the Wage and Hour Division district office in Guaynabo, which oversaw the investigation. “Misclassification causes hard working Americans to lose out on the wages they rightfully earned and places law-abiding employers at a competitive disadvantage that they cannot afford.”  The Wage and Hour Division’s investigation focused on the employment practices of Nikkie Nail Inc., located at Wal-Mart Plaza Escorial, Carr #3, Carolina; Cannovana Nail Inc., located at Wal-Mart Carr #3 Int Ruta 66, Canovanas; and Top Nails Inc., located at Wal-Mart Super Center, Ave. Baramaya, Ponce. In each location, investigators found that workers were paid on a commission basis – earning less than the federal minimum wage of $7.25 per hour. In addition, where employees worked more than 40 hours in a week, they were not adequately compensated for overtime hours. Moreover, defendants unlawfully deducted from workers’ commissions the costs of uniforms, nail machines and other materials required to provide manicures and pedicures.

After conducting employee interviews and reviewing time and payroll records, the Wage and Hour Division determined that more than 100 employees are owed substantial amounts of back wages for minimum wage and overtime violations. The defendants were also found to have willfully and repeatedly violated the FLSA’s recordkeeping provisions by failing to accurately record the hours worked and monies paid to misclassified workers.  (click on link to read full story)