U.S. Labor Department probing wage dispute

U.S. Labor Department probing wage dispute

November 23rd, 2010 by Yolanda Putman in News

Staff Photo by Dan Henry/Chattanooga Times Free Press The Town and Country Inn is located at 2000 E.23rd St. in Chattanooga.

Staff Photo by Dan Henry/Chattanooga Times Free Press The...

The U.S. Department of Labor is investigating complaints filed against Town & Country Inn & Restaurant by two former employees who claim the company is not paying workers at least minimum wage, federal investigators said.

Willie Allen filed the most recent complaint this week, alleging that Town & Country laid off about 14 employees, including him, on Nov. 12, then asked them to sign papers stating that, instead of being Town & Country employees, they are volunteers in a residency program with the Town & Country Foundation.

Until then, Allen said he had been receiving room and board plus minimum wage pay of $7.25 an hour. Under the Town & Country Foundation, he was told that he would receive only room and board, Allen said.

"That's slave labor," he said. "I'm exposing this nonsense that they are doing."

Town & Country co-owner David Bernstein said he wasn't aware of a federal investigation into the business and could not comment on it.

He said Town & Country officials recently established a nonprofit association to provide housing and assistance for families in need.

"We've started a foundation and [the former employees have] been invited to be residents there," said Bernstein. "The understanding is that they would be given some chores to do."

Department of Labor Investigator Hubert Bend Jr. said Allen's information will be added to an ongoing investigation into a minimum-wage complaint filed against Town & Country about six months ago. Bend referred further questions to the public affairs section of the Labor Department.

Town & Country Inn is a 164-room motel on East 23rd Street. About 120 of the rooms are functional, while the others are used for offices and other administrative needs, officials said.

Bernstein said the business always has helped house homeless people, and some local shelters contact the inn when they have families they'd like to keep together.

Kimberly George, the Salvation Army's community relations director, acknowledged that the agency sometimes refers homeless people to Town & Country.

Bernstein said business has been so slow at the restaurant and inn, he was using his own money to make payroll. Starting a nonprofit foundation was a way to keep the business operating and provide shelter for people who might be homeless, he said.

"I was being hit with all kinds of taxes," Bernstein said. "The place wasn't making enough to support the payroll. And the [homeless] folks who were there, I talked to them and they didn't want it to shut down. They didn't want to be put out.

"So after their consent, at least 90 percent of them were willing to work for the foundation in order to stay there, understanding that, if there was any money after paying the bills, that they would be offered grants."

The foundation, started about 10 days ago, is operated by a five-member board of directors that includes some of the business' former employees, Bernstein said. He declined to name the board chairman, but said he wasn't an owner of the business.

The foundation receives funding from the Town & Country Inn & Restaurant and Bourbon Street Music Bar, but it will seek funding available to other nonprofits, as well, Bernstein said.

So far the business hasn't received any grants, so it is necessary for the live-in residents to help with the upkeep of the restaurant and hotel, Bernstein said.Tennessee is one of five states with no minimum-wage law, according to the U.S. Department of Labor website. As a result, as long as two parties agree to a wage, it's not illegal to pay less than the federal minimum, said Jeff Hentschel, state communications director for the Tennessee Department of Labor and Workforce Development.

Even so, wage complaints must have some degree of credibility before they are investigated, said Hentschel.

Of the 40,000 complaints the state received in the past year, only 530 wage complaints were investigated, Hentschel said.

Town & Country is in a very unusual situation, said Allen McCallie, a corporate law attorney with Miller & Martin.

"To one day be a commercial restaurant and the next day say that you are a nonprofit providing room and board for homeless folks and nothing else changes, that's a very difficult transition," McCallie said.

The Internal Revenue Service is the reviewing body for applications for tax-exempt nonprofit status. McCallie said one question on the IRS form asks whether the new entity is the successor of an old entity and, if it is, the business must explain that.

Meanwhile, Allen said Town & Country officials took action yesterday to try to remove him from their property.

He said officers with the Hamilton County Sheriff's Office came to his hotel room to escort him off the property. However, he said the officers left after he explained the matter.

"I said they're doing this because I went to the newspaper to expose their illegal activity here," said Allen. "(The officer) called the sheriff's department and they told him that was a civil matter and that I wasn't causing any trouble so there was no reason to have me escorted off the property and they drove off."