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Operators of 17 Houlihan's, including two on LI,  agree to pay $5M to settle wage violations 

The Houlihan's Restaurant in Westbury, above, and another

The Houlihan's Restaurant in Westbury, above, and another in Farmingdale are part of the settlement regarding workers' back wages. Credit: Howard Schnapp

Two companies that operate 17 metro area Houlihan’s franchise restaurants, including the only two on Long Island, and their owner have agreed to pay $5 million to settle federal claims that they cheated nearly 1,500 employees out of overtime and illegally handled their tips, the U.S. Labor Department announced Monday.

Arnold Runestad and his companies, Saddle Brook, N.J.-based A.C.E. Restaurant Group Inc. and A.C.E. Restaurant Group of New York, agreed to pay back wages and damages in a consent decree filed Monday in U.S. District Court in New Jersey, the Labor Department said.

The department sued the parties in 2015.

In a settlement a company neither admits nor denies guilt. Neither Runestad nor his attorney could be reached for comment. Previously, a lawyer for the companies denied the charges.

The Long Island locations are in Farmingdale and Westbury. In Farmingdale 135 employees, mostly servers and bartenders, are owed $79,672 in back wages and an equal amount in damages. In Westbury 80 employees, also mostly servers and bartenders, are owed $54,337 in back wages and an equal amount in damages.

The violations cover the period from February 2013 to May 2015, the department said.  

When the Labor Department sued in 2015, it alleged that the companies and Runestad failed to pay overtime to the employees when they worked more than 40 hours a week. The employers also illegally included nontipped employees,  such as kitchen staff and custodians, in the tip pool; retained portions of the tipped-employees’ tips and “routinely” deducted from employees’ paychecks for meals while also requiring them to pay for meals, the department said.

“The Wage and Hour Division works to ensure that employees receive the wages they have rightfully earned, and that employers who fail to comply with the law do not gain an unfair competitive advantage,” said regional administrator Mark Watson Jr. in Philadelphia.

The department’s Long Island office, in Westbury, helped in the investigation that led to the lawsuit.

The agreement is pending review and approval by the New Jersey court, the department said.

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