A well-known Mexican restaurant chain has agreed to pay $3.75 million to settle a class action lawsuit that accused it of underpaying and overworking its employees for seven years.
The lawsuit, which involved a large number of current and former workers, was filed in early 2023 by Gladis Castañeda, a former server at one of the restaurants, who claimed that the company failed to pay employees the minimum wage, denied overtime pay, improperly shared tips, and did not provide rest breaks.
The restaurant chain, Los Dos Potrillos, is set to pay a significant settlement to 1,350 former employees who worked for the company between 2017 and 2024.
The settlement awaits formal approval from a federal judge before the payments can be distributed. According to the settlement agreement, the workers will receive a total of $2.1 million, with the remaining funds going to the attorneys and other associated costs.
Payouts for the affected workers are based on the number of hours they worked and their individual salaries, with amounts ranging from $25,677 to $65. The attorney representing the workers, Brandt Milstein, expressed satisfaction with the settlement.
“We’re pleased that we got a good settlement for these folks,” Milstein said in a statement following the announcement of the settlement.
Los Dos Potrillos is a chain of Mexican restaurants that was founded by Jose Ramirez in Centennial, Colorado, in 2002. Over the years, the business expanded into several other south metro cities, eventually becoming a popular name in the area.
In 2019, the ownership of the restaurant chain was passed to Jose’s sons, Daniel and Luis Ramirez, who have continued to operate the business, opening a new location in Denver earlier this year. The family’s business, known as Ramirez Hospitality Group, operates Los Dos Potrillos and other ventures.
However, the legal battle started in early 2023 when former server Gladis Castañeda filed the lawsuit against the company, accusing it of several violations of labor laws.
Castañeda claimed that the company failed to pay its employees the minimum wage as required by law, did not pay overtime for extra hours worked, and improperly split tips among staff members. Additionally, she alleged that employees were not given mandatory rest breaks during their shifts.
The lawsuit quickly gained attention, and it was later expanded into a class action lawsuit that included all hourly workers employed by Los Dos Potrillos over the past seven years. This class action accused the restaurant chain of wage theft and other labor violations.
Jose, Daniel, and Luis Ramirez were all named as defendants in the case, as they were in charge of the company during the time the alleged violations occurred.
The case was resolved through months of negotiations, including two formal mediation sessions and several informal discussions between the legal teams representing the restaurant chain and the affected workers. These talks were not always smooth, with both sides expressing frustration at times.
“This was a contested negotiation and contentious at times,” Milstein explained during a hearing on whether the settlement should be approved by a federal judge.
Despite the contentious nature of the negotiations, Milstein argued that the settlement was a better option for his clients than continuing with protracted litigation.
He emphasized that the settlement provided a substantial amount of compensation to the workers, many of whom had experienced significant financial hardship due to the wage violations.
Christian Gunneson, an attorney representing Los Dos Potrillos, pointed out during the hearing that the allegations of wage theft were still unproven.
Gunneson, who is based in Florida and works for Freeman Mathis & Gary, a national law firm, noted that the restaurant chain had not admitted any wrongdoing and that the case had not yet gone to trial. While Gunneson acknowledged the settlement, he stressed that the claims were only allegations, not confirmed facts.
Milstein and Gunneson were both present during a hearing before U.S. District Judge Daniel Domenico, who is responsible for deciding whether the settlement should be formally approved.
The settlement was proposed as a way to avoid a lengthy legal battle that could have taken years to resolve. Milstein noted that it was in the best interests of the workers to accept the settlement rather than risk a long and expensive trial.
The settlement is a significant development for Los Dos Potrillos, which has become a fixture in the Denver-area dining scene. The restaurant chain has enjoyed success in recent years, with its popular Mexican dishes and family-friendly atmosphere.
However, the wage theft allegations have cast a shadow over the company’s reputation, as many employees felt exploited and underpaid during their time working there.
Despite the legal troubles, the Ramirez family, which still owns and operates the business, has defended its practices. In an email statement provided to BusinessDen, the family’s business said, “While we are limited in what we can share due to the ongoing legal process, we remain committed to our core values: respect, integrity, safety, and excellence in all we do.”
They also pointed out that the company has maintained a high employee retention rate, which they claim reflects their commitment to their team. “Our 70 percent employee retention rate demonstrates our commitment to our team,” the statement said.
For the workers who were involved in the lawsuit, the settlement provides an opportunity to receive compensation for the wages they were owed.
Many of the affected employees worked long hours and were often subject to the physical demands of working in a restaurant environment, including standing for extended periods, handling heavy dishes, and dealing with customer complaints. For some, the compensation from the settlement will provide much-needed financial relief.
The lawsuit and its settlement highlight a growing issue in the restaurant industry, where wage theft and other labor violations are common.
Many workers in the service industry are often paid low wages and face long hours with little support from their employers.
As the legal battle over wage theft continues to make headlines, it is important for workers to be aware of their rights and to seek legal support if they feel their wages are being stolen or if they are being mistreated in the workplace.
While the settlement of this class action lawsuit is a victory for the affected employees, it also serves as a reminder to employers in the restaurant industry and beyond that they must adhere to labor laws and treat their workers fairly.
Wage theft is a serious issue that can lead to significant financial hardship for employees, and businesses must ensure they are compliant with wage laws to avoid costly legal battles and damage to their reputation.
As for Los Dos Potrillos, the settlement marks the end of a challenging chapter for the restaurant chain. It remains to be seen how the company will recover from the reputational damage caused by the wage theft allegations.
However, the settlement provides a measure of closure for the workers who were affected and ensures that they will receive the compensation they are owed.