The city of San Francisco and a car wash in the city’s South of Market neighborhood today settled a lawsuit filed last year over alleged unfair labor practices that deprived workers from hours’ worth of pay.

The city attorney’s office filed a lawsuit on Aug. 17 against Tower Car Wash, located at 1601 Mission St., which was allegedly cheating workers of their hourly wages–up to 4 or 6 hours of minimum hourly wage per week.

Today a $500,000 settlement was reached, in which Tower owners agreed to pay employees’ back wages and interest. An additional $70,00 will be paid to plaintiffs for attorney fees and investigation costs, according to the city attorney’s office.

The suit, filed by the city in partnership with La Raza Centro Legal, initially sought $3 million in lost wages; however shortly after filing, company policies changed, which showed good faith, according to the city attorney’s office.

The suit listed Vladigor Investments, Inc., as the company running the car wash, which is a company owned by Igor Paskhover and operated by Vladimir and Lisa Syelsky and Steve Matijevich.

Plaintiffs claimed company policy required workers to wait in a small, windowless room until business was busy enough for them to “clock in” and start working–a violation of state and city minimum wage and overtime laws, according to city attorney’s officials.

City Attorney Dennis Herrera commended Tower Car Wash for quickly amending its policies shortly after the August lawsuit was filed and cooperating during the investigation.

“Though Tower Car Wash was wrong to require workers to wait for hours without pay, its owners deserve credit for promptly fixing their scheduling policies, and working cooperatively with us to fully and fairly compensate their employees,” Herrera said in a statement.

Furthermore, owners voluntarily agreed to modify their Health Reimbursement Arrangement as part of the settlement, which was not listed as a violation in the original complaint.

Tower will now reimburse its workers for qualifying medical expenses, including dental.

“I applaud their owners and managers for taking responsibility,” Herrera said. “I am now fully comfortable getting my car washed at Tower.”

The car wash owners acknowledge the city’s commitment to enforce of fair pay and compliance with minimum wage laws, especially for low-income workers, said Ronald Richard, Tower’s attorney in a statement.

“We are glad the city attorney recognized my clients’ efforts and was willing to come up with a quick and creative solution that benefits everyone involved,” Richard said.

A 30-month payment plan under the settlement requires a $100,000 upfront payment, followed by $12,000 per month and a final payment of $110,000, city attorney officials said.

San Francisco’s minimum wage rate, as of Jan 1., 2012, is $10.24 per hour.

Sasha Lekach, Bay City News

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