Court orders San Antonio Dairy Queen operator to pay $358,000 in back wages to its managers

Under a federal court order, the operator of 19 San Antonio-area Dairy Queen franchises must cough up $358,200 in wages and interest it failed to pay to 31 of its managers, the U.S. Department of Labor said Monday.

The Labor Department’s Wage and Hour Division recovered the money from R&S Dairy Queens Inc. for managers who received less than the required minimum salary set by the Fair Labor Standards Act, agency officials said. Under that law, the workers were entitled to the minimum wage for every hour worked plus overtime when they put in more than 40 hours a week.

In a statement provided to the Current, R&S said Labor Department officials told the company that it was in compliance with all federal laws during a routine audit. However, during a later examination, the regulator identified a “technical violation that was in conflict with prior guidance.” R&S has since fixed its compensation structure, according to the statement.

“Our managers are extremely well compensated, many making in excess of $80,000 per year. Most have been with us a very long time, and we value their skills and expertise to provide exceptional service to our customers,” R&S said in the emailed statement. “We would never knowingly deny them due compensation.”

The company’s Dairy Queen franchises employ 350 people, according to the Labor Department.

The U.S. District Court for the Western District of Texas in San Antonio affirmed regulators’ findings in a consent judgment and issued an injunction prohibiting R&S from future violations of wage provisions, according to the Labor Department.

“Employers cannot avoid overtime requirements by simply giving an employee a title and paying them a salary,” DOL Wage and Hour District Director Cynthia Ramos said in a written statement. “Most employees — even those paid a fixed salary or flat amount per day or shift — are entitled to overtime unless specific FLSA requirements are met. We encourage other employers to review their pay practices, and to contact us with questions to avoid similar violations.”

Stay on top of San Antonio news and views. Sign up for our Weekly Headlines Newsletter.

This article appears in Oct 20 – Nov 2, 2021.