Two local Carl’s Jr.’s restaurants are among seven that have been told by Los Angeles City Attorney Mike Feuer and the city’s Office of Wage Standards that they must pay $1.45 million to the city and restaurant workers for allegedly not paying minimum wage, or face further potential action. The restaurant chain shot back that the fine is “simply unreasonable” and may be unconstitutional. The company implied that it is up for a fight. Carl’s Jr.’s restaurants at 8401 Laurel Canyon Blvd., Sun Valley and 3770 Cahuenga Blvd. in Studio City are two of seven eateries that allegedly did not pay 37 workers the legal $10.50 minimum an hour wage from July 1 through Dec. 31, 2016, according to an investigation by the Office of Wage Standards and Feuer’s office. The investigation was triggered by a report from an employee, according to the attorney’s office, which also claims the restaurants did not post the legally required notice of current minimum wage rates and other mandates. The city has demanded Carl’s Jr. Restaurants pay $910,010 in penalties to the employees through the Office of Wage Standards no later than July 24, and an additional $541,423 in alleged penalties and fines. While the notice served is administrative, Feuer’s office could potentially pursue a civil action to enforce the notice and recover the penalties and fines if the amounts aren’t paid on time, the office said. CKE Restaurants, which moved to Franklin, Tenn. from Carpinteria in March, said that it learned in April through an external audit with the two city agencies that some employees were not paid the minimum wage and sick leave due to a payroll error, and that the employees were compensated the $5,400 in total they were owed. It also added that the $1.45 million is more than 268 times the total wages paid to the employees. “This demand is, on its face, simply unreasonable,” the company said in an email to the Business Journal. “It is also unconstitutional in that it disregards the Excessive Fines Clause of the Constitution to obtain money that will not go to our employees and will have no connection to the matter at hand.” “Our employees have been made whole and we are willing to pay a reasonable fine for our mistake. However, given the excessive demands of the OWS, we have no choice but to defend against any OWS actions,” CKE said. Parent company CKE Restaurants Holdings Inc. and subsidiaries Carl’s Jr. Restaurants and Hardee’s Restaurants own, operate and franchise the Carl’s Jr., Hardee’s, Green Burrito and Red Burrito brands with over 3,800 franchised or company-operated restaurants in 44 states and 40 foreign countries and U.S. territories.
