The United State Department of Labor said in a news release that owners of Rancho Loco Grill and Bar in Red Wing and Rancho Loco Mexican Grill and Bar in Cannon Falls must pay 36 workers after it was found they had underpaid them. 

Investigators determined most workers received only about half the pay they had earned. 

The ruling was passed down on June 29 in U.S. District Court in Minneapolis. 

Ramon Ruelas, Jorge Arcos, Nancy Arcos and Medardo Arcos are ordered to pay a total of $435,785 in unpaid overtime and minimum wages. 

The division found the restaurant paid servers and other front-of-the-house workers for 60 hours biweekly, regardless of the number of hours they actually worked. The employer also frequently required servers to report early for prep work but only allowed them to “punch in” when the first customer arrived. These practices led to the employer paying for far fewer hours than employees worked, triggering minimum wage violations.

By misclassifying cooks and dishwashers as independent contractors instead of employees, and paying them a flat rate without regard to the number of hours they worked, Ruelas and the Arcoses denied workers legally required overtime when they worked more than 40 hours in a workweek. The restaurants also failed to maintain accurate records of employee wages and the number of hours employees worked.

“Our investigation found this employer broke the law deliberately. Employers who misclassify employees as independent contractors cheat those workers out of wages and deny them other workplace protections,” said Wage and Hour Division Assistant District Director Kristin Tout in Minneapolis. “Restaurant employees are among the nation’s lowest paid essential workers and they are often unaware of their rights to minimum wage and overtime. The U.S. Department of Labor is committed to using every enforcement tool available, including litigation, to ensure they are paid every penny they have legally earned for their hard work.”

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