MINNEAPOLIS, MN – August 9, 2026 (STL.News) The U.S. Department of Labor has recovered $613,037 in back wages for 46 employees after a federal investigation found that multiple Minnesota restaurants operating under the NY Gyro brand violated federal wage and hour laws by failing to pay required overtime, maintain accurate time records, and, in one instance, pay an employee less than the federal minimum wage required under the Fair Labor Standards Act (FLSA).
The enforcement action, announced by the Department of Labor on July 28, 2026, followed an investigation by the agency’s Wage and Hour Division into four of NY Gyro’s nine Minnesota locations. According to the department, the violations involved four companies operating as NY Gyro: Rehman LLC, IN LLC, IQ LLC, and MOON LLC.
Federal investigators found the employers failed to maintain legally required records of employees’ hours worked and paid workers their regular hourly rate for all hours worked, including those exceeding 40 hours in a workweek. Under the Fair Labor Standards Act, most nonexempt employees must receive overtime compensation at one and one-half times their regular rate of pay for all hours worked over 40 in a workweek.
NY Gyro – Investigation Covered Four Minnesota Restaurants
NY Gyro operates nine restaurant locations across Minnesota, serving customers in communities that include Minneapolis, Columbia Heights, Willmar, Waite Park and St. Cloud. While the Department of Labor investigated four of those locations, the agency did not identify which specific restaurants were included in the investigation.
Subsequent reporting by Minnesota media provided additional context. According to KNSI Radio, a local owner said the violations cited by the Department of Labor involved restaurants in Minneapolis and Willmar, while the company’s three St. Cloud locations were not cited. The owner also said the company chose to resolve the matter after incurring significant legal expenses and stated that the settlement should not be interpreted as an admission of wrongdoing by the St. Cloud restaurants. The owner made those statements, and they were not included in the Department of Labor’s official findings.
The Department of Labor’s announcement did not indicate whether civil money penalties were assessed in addition to the recovered back wages, nor did it identify the affected employees or provide a breakdown of the wages attributed to each restaurant.
NY Gyro – Recordkeeping Played a Central Role
One of the primary findings involved employee time records.
The Fair Labor Standards Act requires employers to maintain accurate records documenting the hours employees work and the wages they are paid. Those records are essential for demonstrating compliance with federal wage laws and for verifying that employees receive all wages they have earned.
According to the Wage and Hour Division, NY Gyro failed to maintain the records required under federal law. Inadequate recordkeeping makes it difficult for employers, employees, and investigators to verify hours worked and wages paid, which is why recordkeeping violations are frequently identified during wage investigations.
The investigation also found that one employee received less than the federal minimum wage required under the Fair Labor Standards Act.
NY Gyro – Overtime Violations Can Become Costly
Federal investigators determined that employees were paid straight-time wages for every hour worked, including hours that qualified for overtime compensation.
For many employers, overtime mistakes are among the most expensive payroll errors because unpaid overtime can accumulate over months or years across multiple employees. Once violations are identified, employers may be required to compensate workers for unpaid wages and, depending on the circumstances, may also face additional penalties or legal action.
The recovery of more than $613,000 for 46 workers illustrates how quickly wage liabilities can grow when overtime requirements are not followed.
NY Gyro – Restaurant Payroll Compliance Requires Careful Oversight
Restaurants often face unique payroll challenges because employees work varying schedules, multiple shifts, weekends, holidays and, in many cases, earn tips in addition to hourly wages. Those factors can increase payroll complexity, but they do not reduce an employer’s obligation to comply with federal and state labor laws.
Whether payroll is processed in-house or by an outside provider, responsibility for compliance remains with the employer.
Restaurant operators should periodically review payroll systems, timekeeping procedures, and overtime calculations to ensure they accurately reflect employees’ hours worked. Regular internal audits and manager training can help identify compliance issues before they become the subject of a government investigation.
A Reminder for Restaurant Owners
For restaurant owners across the country, Department of Labor enforcement actions provide valuable insight into how federal investigators evaluate wage-and-hour compliance.
Reading these cases can help operators compare their own payroll and recordkeeping practices against federal requirements. Employers should ensure employees accurately record all hours worked, overtime is calculated each workweek correctly, payroll records are retained as required by law, and supervisors understand both federal and applicable state wage-and-hour regulations.
Learning from another employer’s experience is considerably less expensive than responding to a federal investigation after violations have occurred.
Wage Enforcement Remains a Priority
The Wage and Hour Division conducts investigations across a wide range of industries to enforce the Fair Labor Standards Act. Although restaurants are frequently investigated because of the nature of hourly employment and scheduling practices, similar enforcement actions occur in retail, construction, manufacturing, healthcare, hospitality and numerous other industries.
The agency also provides educational resources to help employers understand their responsibilities under federal labor laws and encourages workers who believe they have not been properly compensated to contact the Wage and Hour Division.
The NY Gyro investigation demonstrates how overtime violations and inadequate recordkeeping can result in substantial financial liability. Recovering more than $613,000 for 46 employees underscores the importance of maintaining compliant payroll practices and accurate employment records.
The Department of Labor’s findings are administrative findings resulting from a Wage and Hour Division investigation. The announcement does not allege criminal conduct or criminal charges against the companies involved.
