Labor Dept. launches probe into Encanto Restaurants layoffs
By THE STAR STAFF
The island Department of Labor and Human Resources (DTRH by its initials in Spanish) has opened an investigation into the mass layoffs at Encanto Restaurants, seeking to determine whether the company failed to provide legally required advance notice to employees and whether workers are owed unpaid wages or accrued benefits, Labor and Human Resources Secretary María del Pilar Vélez Casanova announced Thursday.
The investigation comes as the government scrambles to respond to the sudden closure of multiple restaurant locations operated by Encanto Restaurants, the franchisee behind KFC, Taco Bell, Pizza Hut and IHOP on the island.
Speaking at a press conference at La Fortaleza, Vélez Casanova said labor officials will examine allegations that employees were not notified in advance about the shutdowns and may still be owed compensation for work already performed, as well as payments related to accrued leave balances.
“The Department of Labor has the authority to investigate through its labor standards bureau,” Vélez Casanova said. “We need to determine why employees were not notified, whether wages are still owed, and whether there are outstanding payments related to vacation or other leave balances.”
The labor secretary said government officials learned of the closures through media reports and social media postings rather than through direct notification from the employer.
Officials are also evaluating whether Encanto Restaurants was required to provide 60 days’ notice before implementing the layoffs. Vélez Casanova said investigators must determine what company executives knew about the circumstances leading to the closures and when they became aware of the operational challenges facing the business.
According to DTRH payroll records, Encanto Restaurants employs some 2,600 to 2,700 workers across its various restaurant brands. Officials cautioned that the figure does not necessarily represent the final number of layoffs because some establishments experienced only partial closures.
About 500 former employees had already applied for unemployment benefits as of Thursday.
Labor officials urged affected workers to seek assistance even if they have not received formal termination documents from the company. Weekly unemployment benefits in Puerto Rico currently range from $88 to $240, depending on an individual’s wage history and eligibility requirements.
Vélez Casanova said the department will represent workers in pursuing claims if the investigation finds the company violated labor laws or failed to meet its obligations to employees.
At the same press conference, Economic Development and Commerce Secretary Carlos Ríos Pierluisi announced a series of four job fairs and service events aimed at helping displaced workers find new employment opportunities.
The recruitment events are scheduled for Nov. 10 in Mayagüez, Nov. 12 in San Juan, Nov. 17 in Ponce and Nov. 23 in Fajardo.
More than 50 employers have already registered to participate, representing industries including food service, manufacturing, services and defense, Ríos Pierluisi said.
The events will also provide unemployment assistance, financial guidance, psychological support, job training resources and access to services from various government agencies.
Ríos Pierluisi noted that the job fairs will be open not only to former Encanto Restaurants employees but also to anyone seeking employment or career advancement opportunities.
Several major restaurant chains, including Burger King, Wendy’s, Church’s Chicken, Popeyes, Denny’s and McDonald’s, have expressed interest in hiring displaced workers. Burger King alone is seeking to fill more than 500 positions, he said.
Despite the widespread closures, Ríos Pierluisi said discussions with Encanto Restaurants remain ongoing and that the company has indicated it hopes to continue operating while addressing legal and business issues stemming from its franchise agreements.
“Their expectation is to remain in operation,” Ríos Pierluisi said. “This is a matter involving a franchisor and an operator with legal implications, so we are giving the company space to address that situation.”
The layoffs follow the abrupt disruption of operations at restaurants managed by Encanto Restaurants, leaving thousands of workers uncertain about their employment status while government agencies work to assess the full scope of the impact.
