Pacific Ohana Hostel Corp. has been ordered to pay $125,000 in back wages and liquidated damages to 86 employees following an investigation by the Wage and Hour Division of the U.S. Department of Labor.

The company operates a hostel on Lemon Road in Waikiki.

The employer predominantly compensated workers with free lodging in exchange for labor, however, investigators determined the value of the lodging was insufficient to equate to the minimum wage rate of $7.25 per hour, according to a division finding.

"An employer must clearly document the actual cost incurred to the business for providing lodging in lieu of cash wages to its workers," said Terence Trotter, Hawaii district director. "The lodging must also be compliant with federal and state housing occupancy standards."

Officials at Pacific Ohana Hostel Corp. could not be immediately reached for comment.