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The Cheesecake Factory Pays $750,000 in Connection to Wage Theft Case

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An exterior shot of a red Cheesecake Factory sign.
Exterior view of Cheesecake Factory signage is seen on May 22, 2021 in Pasadena, Los Angeles County. (RBL/Bauer-Griffin/GC Images)

The Cheesecake Factory and two janitorial contractors have paid $1 million in connection to a state wage theft investigation involving hundreds of workers who cleaned the company’s restaurants in San Diego and Orange counties, KQED has learned.

California’s Labor Commissioner Lilia García-Brower is expected to announce the settlement, deemed groundbreaking in the janitorial industry, Tuesday morning in San Diego.

The agency cited (PDF) the popular restaurant chain, as well as Magic Touch Commercial Cleaning and Americlean Janitorial Services, for more than $4.5 million in 2018. State investigators uncovered minimum wage, overtime and other employment violations involving more than 550 janitors during a period from 2014 to 2017.

“There was so much wage theft,” said Rafael Ventura, field director with the nonprofit Maintenance Cooperation Trust Fund, which worked with dozens of victims to assist state regulators in pursuing the case. “This ensures that workers can recover the wages owed.”

Most businesses with a workforce of 25 or more must share with their labor contractors civil liability for the payment of wages under a California law that went into effect in 2015. The Cheesecake Factory case marks the first time a company pays money in connection to violations by a janitorial contractor in an industry where contracting and subcontracting are common, Ventura said.

“This sends a message to companies that they must ensure their contractors are operating legally and pay their workers properly,” he said. “Otherwise, they are also going to be responsible for those violations.”

The Labor Commissioner’s Office found janitors were told to stay at restaurants after their eight-hour night shift until Cheesecake Factory kitchen managers reviewed their work, which generally added more tasks and accrued unpaid overtime hours.

Under the settlement, The Cheesecake Factory’s share of the total amount was $750,000. Contractor Americlean, which subcontracted work to Magic Touch, agreed to pay $200,000. Magic Touch managed the janitors directly and settled for $50,000, according to a copy of the deal obtained by KQED.

Naxhili Perez, who worked polishing floors at a location in San Diego’s Seaport District, said she was paid $70 a day but often worked longer than 10 hours. To make ends meet, the 41-year-old mom of four worked a second job cleaning homes.

Perez, a Mexican immigrant, admitted she didn’t initially realize her employer, Zulma Villegas of Magic Touch, was shorting her paychecks.

More than five years after the wage theft citation, Perez said she wished more money had been recovered, given the large number of affected janitors. But she said she also understood the companies fought the charges, and regulators agreed to reduce the amount owed to finally resolve the case.

“That’s what they [regulators] were able to achieve because this was going to drag on,” said Perez in Spanish as she picked up her youngest child from school. “I am thankful to all the people that have helped us. If the Labor Commissioner hadn’t gotten involved, we’d all be in the same situation.”

The Cheesecake Factory did not return requests for comment.

None of the three defendants admitted they had engaged in any unlawful conduct in the settlement agreement. However, the two contractors apologized to the affected janitors through handwritten notes.

“Your rights as employees were violated when you worked for my company while cleaning the Cheesecake Factory Restaurants,” read the note from Villegas. “I am sorry that I did not fulfill all of my obligations under the law as an employer, some of which were out of my control and for any negative impact to your lives and families.”

Americlean, a company with headquarters in Minneapolis doing business as Allied National Services, said it “could have overseen Magic Touch better.”

“In the future, we will take the necessary steps to comply with California law,” read the company’s statement.

The settlement includes additional obligations for Cheesecake, such as training restaurant managers and corporate officers in California to oversee janitorial contracts and requiring future and renewed janitorial contractors to be subject to audits by the company on wage issues.

Bill Gould, a professor at Stanford Law School described the settlement as a “modest one,” in part because it failed to include an independent monitor or another mechanism to ensure the company followed through on its promises.

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This omission was concerning, he said, because the Labor Commissioner’s Office is severely understaffed and has limited enforcement capacity.

“The most important part of the law is enforcement, following up,” said Gould, a former chairman of the National Labor Relations Board. “You’ve got to actually go to the facilities and talk to the workers to see whether the statements made by the company jive with what is happening to the workers in the workplace.”

The defendants agreed to send checks to the Labor Commissioner’s Office within five days of the execution of the settlement, which was signed by company representatives last fall. The agency plans to distribute the funds to the affected janitors. But it will be difficult to locate many of the victims since seven to 10 years have elapsed since the date of the wage violations, said workers’ rights advocates.

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