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Arooga's pays $750K to settle back-pay investigationProbe covered 2010 to 2013

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Growing restaurant franchise Arooga's Grille House & Sports Bar has agreed to a settlement with the U.S. Department of Labor over back wages owed to current and former employees at several of its midstate restaurants.

The department's wage and hour division said Thursday that Dauphin County-based Arooga's agreed to pay more than 1,000 servers, cooks and assistant kitchen managers at six locations in Cumberland, Dauphin and York counties after allegedly violating the Fair Labor Standards Act between 2010 and 2013.

The $750,006 settlement includes $375,003 in back wages and an equal amount in liquidated damages paid to employees.

The department alleged that Arooga's failed to pay tipped employees the federal minimum wage when deductions for cash-drawer shortages, walk outs and order mistakes reduced their wages to below $7.25 per hour. The chain also allegedly failed to pay servers overtime when they worked an estimated 65 to 70 hours per week, while cooks who worked overtime were paid only straight time.

In addition, the government said, Arooga's allegedly failed to pay assistant kitchen managers overtime after categorizing them as exempt from overtime. The investigation covered the period between August 2010 and February 2013.

Arooga's president and co-founder Gary Huether Jr. said the investigation concerning pay practices at the chain wrapped up more than five years ago and that the company quickly took steps at the time to resolve the agency's concerns.

"Arooga's fully cooperated with the Department of Labor in its investigation," he said in a statement. "Immediately upon learning of the agency's concerns in 2013, more than five years ago, Arooga's took steps to ensure its compliance with applicable wage and hour laws. Arooga's disagrees with many of the findings of the investigation yet in good faith entered into a settlement with the agency that resulted in payments to certain of its former and current employees."

Huether called the violations "unfortunate" and a "misunderstanding of the law." He said there was no malicious intent by Arooga's, which opened its first restaurant in 2008.

"We learned from it and implemented changes immediately," he said. "We want to make sure we take care of our employees."

He said he questioned the timing of the news release.

A settlement agreement provided by the Department of Labor was signed in early 2017. The news release was issued now, labor officials said, because Arooga's recently finished making all of the payments it agreed to make in the settlement agreement.

The FSLA requires that employers pay covered, nonexempt employees at least the federal minimum wage for each hour worked, plus time and a half for hours worked beyond 40 per week.

Tipped employees must be paid no less than $2.13 per hour in direct wages, provided that amount plus the tips received equals at least the federal minimum wage. If an employee's tips combined with the employer's direct wages do not equal at least the minimum wage, the employer must make up the difference.

Arooga's has 10 corporate-owned restaurants in Central Pennsylvania and has been growing through new franchise locations. It will open franchise restaurants in the Lehigh Valley and in Florida in May. In 2016, the company moved to a larger headquarters in Swatara Township to support its growth.

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Jason Scott

Jason Scott

Jason Scott covers state government, real estate and construction, media and marketing, and Dauphin and Cumberland counties. Have a tip or question for him? Email him at jscott@cpbj.com. Follow him on Twitter, @JScottJournal.

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