Ray Marshall, Secretary of Labor, United States Department of Labor v. Chala Enterprises, Inc., Dba Chala Tire Co.

The Secretary of Labor commenced this action under section 17 of the Fair Labor Standards Act, 29 U.S.C. sections 201-219 , seeking restitutionary and prospective in-junctive relief against Chala Enterprises, Inc., on behalf of ten of Chala’s employees. The Secretary alleged that Chala had violated the record keeping and overtime provisions of the Act by failing to pay those employees a regular hourly rate for the first forty hours of work, and one and one-half times the regular rate for each hour in excess of forty per week. Chala admitted the record keeping violations, but denied that its compensation scheme violated the overtime provisions.

Although the faulty record keeping made it rather difficult to determine the method by which the employees’ compensation was calculated, the district court found that Chala had not violated the overtime provision. The court then declined to issue either a prospective or restitutionary injunction, partly for the reason that, in the court’s opinion, “the compensation paid by the defendants to their employees was reasonable.”

The dispute centers on ten employees of the defendant who worked as attendants at various gasoline service stations…