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Former Middletown McDonald's franchisee to pay $211,000 after Labor investigation

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A former McDonald's franchisee based in Middletown has agreed to pay $205,977 in back wages and liquidated damages to 291 employees, including 178 foreign student workers hired under the U.S. State Department's J-1 visa program.

Cheung Enterprises LLC and its president, Andrew Cheung, violated minimum wage and overtime provisions of the Fair Labor Standards Act at the company's six locations across Central Pennsylvania, according to a news release from the U.S. Department of Labor's Wage and Hour Division.

"Cheung Enterprises not only failed to properly pay its employees, it willfully took advantage of vulnerable student workers living and working in our country under the J-1 visa program," said Al Gristina, director of the division's Wilkes-Barre District Office, which conducted the investigation. "This agreement will ensure that the rights and wages of both U.S. workers and student guest workers are protected."

In addition to paying back wages and liquidated damages, Cheung agreed to pay a $5,000 civil penalty for the willful nature of the violations and will comply with the FLSA overtime and record-keeping provisions in the future, according to the news release. Cheung no longer operates any McDonald's franchises, the division added.

Investigators from the Wilkes-Barre office found Cheung Enterprises made improper deductions from employee paychecks, bringing the rate of pay for some employees below the federal minimum wage of $7.25 per hour, the news release stated. The firm failed to pay student workers properly. Other employees did not receive the overtime premium required by the FLSA. Investigators determined that the company charged the student workers excessive rent that was deducted from their paychecks for substandard, employer-owned housing.

McDonald'sissued the following statement: "Mr. Cheung is no longer a McDonald’s franchisee, and we have no knowledge of the settlement. We take the well-being of employees working in McDonald’s restaurants, including foreign student workers, seriously. We immediately addressed the allegations in Harrisburg upon learning of the situation last year, and Mr. Cheung then agreed to leave the system."

A number listed for Cheung Enterprises was disconnected.

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