An operator of unisex hair salons in 15 states, including 47 salons in New Jersey, has been ordered to pay $1,149,965 in back wages to more than 7,500 employees by the U.S. Bankruptcy Court for the District of Maryland.
The court’s action comes after investigators from the U.S. Department of Labor’s Wage and Hour Division found Creative Hairdressers Inc., doing business as Hair Cuttery, BUBBLES The Color Salon, Salon Cielo and Salon Plaza, closed all of its 750 salon locations nationwide on March 21 amid the COVID-19 public health crisis and failed to pay their employees’ final paychecks.
In doing so the employer, which then filed for Chapter 11 bankruptcy and was purchased by another company, violated the minimum wage and overtime provisions of the Fair Labor Standards Act.
The DOL sought to be included in the bankruptcy proceedings upon learning of Creative Hairdressers Inc.’s failure to pay their employees and of the subsequent bankruptcy filing. The DOL secured back wages for employees in New Jersey as well as Connecticut, Delaware, Florida, Illinois, Indiana, Maryland, Massachusetts, New Hampshire, North Carolina, Pennsylvania, Rhode Island, Virginia, Washington, D.C., West Virginia and Wisconsin.
“While the employer’s violations were not found to be willful, its employees are among the thousands of personal service workers in America whose livelihoods have been dramatically affected by the coronavirus pandemic,” said Wage and Hour Division Administrator Cheryl Stanton in a statement. “Like many workers, these employees depend on their paychecks to meet their basic living expenses. Even in these unprecedented times, the U.S. Department of Labor’s Wage and Hour Division is committed to ensuring that workers receive their hard-earned wages.”
The court also ordered Creative Hairdressers Inc. to pay an approximate total of $3.1 million to satisfy state minimum wages, 401(k) contributions, bonus program payments and applicable employment-related taxes.
“The U.S. Department of Labor’s Wage and Hour Division and Office of the Solicitor intervened during bankruptcy proceedings to hold the employer legally accountable for paying owed wages,” said Regional Solicitor Oscar Hampton, Region III’s Office of the Regional Solicitor in a prepared statement.
Region III addresses Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, Tennessee. New Jersey is in Region I.
“This case serves as a strong signal that the department is working to protect the rights of employees significantly impacted during the coronavirus pandemic,” Hampton said.
Though the DOL doesn’t have back wages broken down by state, a DOL spokesperson told NJBIZ that salon workers are getting between $22 up to $4,800 in back wages.