Federal court orders Washington restaurants to pay $750,000 in back wages

A federal court in Eastern Washington ordered four restaurant operations tied to Rancho Chico to pay $750,000 in back wages and damages to 42 workers after investigators found a string of Fair Labor Standards Act violations. For Taco Bell crew members and managers, the case is a blunt reminder that payroll mistakes, bad classifications and sloppy records can turn into a court judgment fast.

The employers were Blanco Inc. and Mi Rancho Chico Inc., owned by Nolberto Rodríguez and Guillermina Rodríguez, and doing business as Rancho Chico in Spokane, Colville and Omak. The Labor Department said investigators found the restaurants failed to pay overtime at time and one-half for hours over 40 in a workweek, paid some nonexempt employees on a salaried basis that pushed pay below the federal minimum wage of $7.25 an hour, retaliated after firing an employee who complained about wages, and violated child labor rules by letting minors use hazardous equipment.

That mix of violations is the part Taco Bell operators should pay attention to. Wage-and-hour cases in restaurants usually do not start with one giant fraud scheme; they start with familiar problems like late clock-outs, missed meal periods, punch edits, or a manager title that does not match the actual job. The Labor Department’s restaurant compliance guidance says owners should check whether managers and assistant managers really meet the salary basis, duties and supervision tests before treating them as exempt. A 2022 Labor Department case at six Taco Bell franchise locations in North Carolina, which recovered $56,900 for 31 assistant general managers, showed that job title alone does not settle overtime status.

The state wage map makes the risk even sharper for Taco Bell’s multi-unit world. The federal minimum wage remains $7.25 an hour, but California’s minimum wage is $16.90 as of January 1, 2026, and Washington’s is $17.13. Alaska’s minimum wage is set to rise to $14.00 on July 1, 2026. Washington also requires exempt workers to be paid at least 2.25 times the minimum wage in 2026, which works out to $1,541.70 a week or $80,168.40 a year. A payroll setup that works in one market can be illegal in the next county over.

The Labor Department said the owners had previously agreed to pay back wages but defaulted, which pushed the Office of the Solicitor and the U.S. Attorney’s Office for the Eastern District of Washington back into court. Wage and Hour Division chief Andrew Rogers said employers should regularly review pay practices and seek compliance help, while Regional Solicitor Marc Pilotin said the owners had broken their promises to workers. For restaurant managers, the warning is simple: audit exempt status, overtime calculations, youth employment, and wage complaint handling now, before a scheduling shortcut becomes a liability.