New York – Last Thursday in New York, Chinese worker Jian Chen filed a lawsuit against New King’s Wok Kitchen Inc., the restaurant where he worked as a deliveryman. On average, he worked for 92 hours a week, but was only paid a flat salary of $2,080 a month—about $5.65 an hour with no overtime, far below minimum wage. In each grueling, 12-hour day of his 7-day workweek, he only received breaks of five to ten minutes to eat meals. On top of this, for online delivery orders, he only received $1 – $2 of each tip customers gave, while the restaurant kept the rest—roughly 70% of his tips. Unfortunately, Mr. Chen’s situation is far too common in the Chinese restaurant industry and other low-wage industries. Many workers do not know that their employers are improperly classifying them as salaried workers to evade labor laws that provide specific rights to hourly employees, such as overtime.
Under the law, all employees are classified as either “exempt” or “non-exempt.” “Exempt” employees receive a fixed salary regardless of hours worked, and are not entitled to overtime, meal and rest breaks, or other regulations under the law.
Often, when business owners hire new employees, they say things like, “I will pay you $2,500 each month. You will usually work 8 hours a day, 40 hours a week, but sometimes you will have to work longer. If you work longer, I will not pay you overtime.” They assume, so long as both sides – the employer and the new hire – agreed to these conditions, there is nothing wrong with this arrangement. However, this arrangement is often unlawful. Under the law, an employee is only exempt if certain requirements are satisfied. First, “exempt” employees must be paid at least two times minimum wage. Currently, in California, this is equivalent to $21 per hour or about $3,360 a month. Minimum wage will rise with each coming year. Second, “exempt” employees need to perform specific duties, such as hiring, firing, or supervising other employees, or have special skills, such as computer technicians, engineers, accountants, or other professions often requiring licenses.
Therefore there are usually few truly “exempt” employees working at a restaurant – probably only a general manager or services supervisor who manages line staff. Other employees are more likely “non-exempt” employees. Non-exempt employees are entitled to minimum wage, overtime, and meal and rest breaks.
Mr. Chen’s story reminds us that wage theft happens in subtle ways. For business owners, this means correctly classifying workers as hourly or salaried and paying them at the appropriate rate for all the time that they work, or risk facing steep penalties and expensive lawsuits. For salaried workers, this means thinking about whether or not your salary is high enough to make you “exempt.” If you are misclassified, you are likely losing tens of thousands of dollars that you are entitled to receive.
If you are a salaried worker who thinks they may be misclassified and would like more information about getting your unpaid wages and penalties, please contact our Chinese hotline at 1-800-520-2356.
Asian Americans Advancing Justice – Los Angeles is a nonprofit legal aid and civil rights organization serving Asian American and Pacific Islander communities. Our Impact Litigation unit has successfully fought misclassification in cases such as Talavera v. QTS, Inc., where we secured a $5 million settlement for a class of over 400 misclassified port truck drivers.