Wage Violations By Krispy Kreme Lead To $1.2 Million Settlement

The food service industry is notoriously high-demanding and low-paying, but it's been a particularly eventful year for workers. Take, for instance, when Starbucks corporate representatives allegedly left union reps at the bargaining table, as reported by Starbucks Workers United. Now, it looks like the beloved doughnut brand Krispy Kreme is next on the non-employee-friendly business chopping block.

Earlier this year, the donut giant appeared to be emerging as a fledgling champion of prosocial causes. In April, Krispy Kreme rolled out a "Beat The Pump" promotion that would price-match every box of a dozen glazed doughnuts to the current price of gasoline in response to rising U.S. gas prices, per a press release. In May, Krispy Kreme released a limited-edition collection of honeybee-themed doughnuts as part of a campaign to restore depleted bee habitats.

But in this latest story, the company's actions took a very different route. On Krispy Kreme's website, it lists "Our Community" as one of its pillar values, writing "Giving back to our communities through fundraising and philanthropic work is at our core," a statement many employees might take issue with. Why? Wage violations by Krispy Kreme have led to a $1.2 million settlement for workers. Here's the story.

This week, the U.S. Department of Labor announced that Krispy Kreme would be forking over $1.2 million in back pay and damages to 516 employees who were denied wage bonuses, per USA Today. The employees' overtime pay fell below legally mandated rates. Now, their individual reparations could be as low as several hundred dollars or exceed $13,000 in some cases.

The investigation began at a Louisville, Kentucky Krispy Kreme store, but the Department of Labor's Wage and Hour Division said it decided to open the case after suspecting that the "violations found there were widespread and systemic." After investigating all 242 locations nationwide, it was found that some employees were denied adequate overtime pay, negligence that legally violated minimum wage requirements dictated by the Fair Labor Standards Act. Per the Act, the federal minimum wage for full-time workers is $7.25 as of July 24, 2009, and minimum overtime pay is 1.5 times that, or about $10.88. 

The fact that this figure hasn't changed since 2009 (in spite of record-high inflation) caused wages to reach their lowest real value (when accounting for inflation) in 66 years, according to the Economic Policy Institute. But, per the investigation, Krispy Kreme failed to meet this less-than-$11 compensation for 516 employees working overtime. (Yikes.)

In August, Krispy Kreme's CEO Michael J. Tattersfield announced a series of nationwide store closings due to dwindling profits, via Food Business News. Only time will tell what happens next for the company.