Overtime

Tip Sharing and 80/20 Violations Will Cost Red Robin Restaurants in New York $900,000

red robin store front

New York State Red Robin Restaurants have agreed to pay $900,000 to current and former servers to settle claims for tip splitting violations and violating the 80/20 rule.  The $900,000 settlement was preliminarily approved by Gary R. Brown, a federal magistrate judge in New York.  The settlement includes all 16 Red Robin Restaurants located throughout New York State and covers 2,153 servers who worked at any New York Red Robin from January 20, 2010 to December 31, 2016.  A fairness hearing in the case is scheduled for June 2017.

The Red Robin Restaurants required their servers to share tips with expediters, even though expediters had little to no direct interaction with customers. Expediters do not customarily and regularly receive tips.  The restaurants took a tip credit to pay the waitresses, waiters, and bussers a tipped minimum wage.  Under the Fair Labor Standards Act (“FLSA”) and New York Labor Law (“NYLL”), however, employers lose the privilege of paying workers a tipped minimum wage when they require tip sharing with workers who are not entitled to tips, such as expediters or other back of house workers.

The servers also allege they spent more than twenty (20) percent of their shifts performing side work, including cleaning, preparing food, refilling condiments, and stocking and replenishing the bar and food stations.  Under the FLSA and NYLL, employers are allowed to take a “tip credit” and pay waiters, bussers, and bartenders below the federal minimum wage.  The United States Department of Labor regulations provide, however, that a restaurant will not qualify for the “tip credit” for employees that spend more than 20% of their time performing non-tipped work.

The $900,000 settlement fund will be distributed among current and former New York State Red Robin servers based on the number of tipped hours they worked during the period January 20, 2010 to December 31, 2016.  Red Robin settled a similar wage theft lawsuit with Pennsylvania restaurant workers in 2016 for $1.3 Million.

Jue Lan Club, Hamptons Hot Spot, Sued for Wage Theft

Jue Lan Restaurant Front

The Jue Lan Club, the trendy Hamptons restaurant, nightclub and art gallery that made headlines for offering a $27,000 bottle of Dom Perignon Rose*, cheated workers out of the minimum wage, overtime pay and tips according to a class action lawsuit filed in New York federal court.

Attorneys for the workers claim that the Jue Lan Club and Stratis Morfogen, its principal owner, failed to pay its servers overtime pay of one-and-one-half times their hourly rate for all weekly hours worked over forty, even though waiters worked 60+ hours a week.  The lawsuit further alleges that Jue Lan unlawfully required its waiters, bussers, and bartenders to give a portion of their tips to managers and back of the house staff, including dishwashers.

Restaurant workers in Long Island are reminded that beginning in 2017, their employers must pay them at least $10.00 per hour worked.  An exception to this rule exists for tipped food service employees in restaurants, such as bartenders, servers, and bussers, who can be paid $7.50 per hour as long as the restaurant gives them proper notice of the “tip credit” laws.  To do so, the restaurant must provide them with a written notice explaining, among other things, that tipped employees make at least $2.50 per hour in tips.  The notice must also state that if the tipped employees failed to make at least $2.50 in tips per hour worked in a workweek, the restaurant will pay them the difference between the amounts that they actually made in tips per hour and the required minimum of $2.50.  Moreover, all restaurant employees who work over forty hours per workweek must be paid one and one-half times their regularly hourly wage rates per hour worked over forty.  The minimum overtime wage rate in Long Island is $15.00.  Once again, tipped employees’ rates can be lower as long as the restaurant complied with the notice requirements explained above.  Tipped employees who work more than forty hours per workweek must be paid at least $12.50 per hour worked over forty.

Kitchen Workers Accuse Serafina Restaurant of Wage Theft

serafina round logo

Serafina, an Italian restaurant chain operating eleven restaurants in New York State, allegedly failed to pay kitchen workers overtime pay for all weekly hours worked over forty, spread-of-hours pay, and other wages.  The kitchen workers, including cooks, non-executive chefs, sous-chefs, porters, and dishwashers, claim that Serafina required them to regularly work more than forty hours each week but did not pay them time-and-a-half for all of their hours over forty.  The kitchen workers say that the restaurant paid some workers a fixed salary regardless of the number of hours they actually worked.  For example, one sous-chef was paid $1,100 per week for working up to eighty-four hours a week.

The lawsuit claims that while Serafina did pay some kitchen workers hourly wages, the restaurant shaved their overtime hours.  For example, a cook alleges that Serafina only paid him for forty-eight hours of work each week, despite actually working sixty hours a week.  The workers claim that Serafina paid all kitchen workers for fewer overtime hours than they actually worked each week due to time shaving.  The workers further allege they were never given wage notices required under the New York Labor Law and that their paystubs contained inaccurate information concerning their hours worked.

Serafina previously agreed to settle another wage theft lawsuit with former servers, runners, bartenders, bussers, and baristas for $1.275 million.

10 Domino’s Franchise Locations Will Pay $480K For Violating Workers’ Rights

dominos pizza logo

New York Attorney General Eric T. Schneiderman announced settlements with three Domino’s Pizza franchisees, totaling $480,000 in restitution to hundreds of workers subject to wage and labor violations at ten different franchise locations.  The Attorney General filed a lawsuit in May 2016 against these three franchisees and their franchisor Domino’s Pizza, Inc., Domino’s Pizza LLC, and Domino’s Pizza Franchising LLC (collectively, “Domino’s”) seeking restitution from Domino’s and its franchisees for a number of alleged violations, including violations against minimum wage, overtime, and other basic labor law protections.

As part of the settlement agreements for the wage theft violations, the three franchisees will be dismissed from the lawsuit, and only the franchise Domino’s remains as a defendant.  The Attorney General has now settled investigations into labor law violations at 71 Domino’s franchise locations in New York State, owned by fifteen individual franchisees.  These locations comprise more than half of the franchise stores and over a third of the total number of Domino’s stores in New York.  The Attorney General’s office has secured nearly $2 million in total restitution for Domino’s workers statewide through these settlements.

“In the past three years, my office’s investigations have revealed a consistent and outrageous record of disregard for workers’ rights by franchisees, and as we allege, with the full knowledge of Domino’s Pizza,” Attorney General Schneiderman said. “My office will continue with our lawsuit against Domino’s Pizza to end the systemic violations of workers’ rights that have occurred in franchises across the State.  We will not allow businesses to turn a blind eye to blatant violations that are cheating hard working New Yorkers out of a fair day’s pay.”

Eight of the stores involved in the settlements announced today were owned jointly by Shueb Ahmed and Anthony Maestri, with locations in New York, Nassau and Westchester Counties.  Two of the stores were owned by Matthew Denman and located in Montgomery County.  Shueb Ahmed will pay $150,000 in restitution to workers, Matthew Denman will pay $90,000 and Anthony Maestri will pay $240,000.

In the continuing lawsuit against Domino’s, the Attorney General has asserted that Domino’s was heavily involved in the employment practices of the three franchisees and, as a result, is a joint employer of the workers at the franchisees’ stores and is responsible for underpaid wages to these workers.  The Attorney General has also alleged that Domino’s encouraged franchisees to use payroll reports from the company’s computer system (called “PULSE”), even though Domino’s knew for years that PULSE under-calculated gross wages.  Domino’s typically made multiple updates to PULSE each year, but decided not to fix the flaws that caused underpayments to workers or tell franchisees about the flaws, deeming it a “low priority.”

Opening A Restaurant in New York: Legal Issue Boot Camp

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The New York City Bar Association will hold the CLE program “Opening A Restaurant in New York: Legal Issue Boot Camp” on March 24. The program will focus on the corporate, real estate, liquor license, and labor/employment issues involved in opening a restaurant in New York City. Speakers on the panel include Jack Gordon, partner at Kent, Beatty & Gordon LLP; Carolyn Richmond, partner at Fox Rothschild LLP; Sonal Shah, General Counsel of Ark Restaurant Group; Alex Victor, partner at Davidoff, Hutcher & Citron LLP; and Larry A. Welch, Associate at Golenbock Eiseman Assor Bell & Peskoe LLP.  Lou Pechman will be chairing the event. For more information on the program please visit the event page.

Head Chefs May Be Entitled to Overtime Pay, says New York Federal Court

back of house cooks

A Head Chef may be entitled to overtime pay, according to a New York federal court.  A recent decision by Judge George Daniels, held that a “Head Chef” at Rare Bar and Grill Chelsea in New York was not necessarily “exempt” from overtime pay under the Fair Labor Standards Act (FLSA) and the New York Labor Law.

Francisco Garcia Tamayo, the Head Chef at Rare Chelsea, was responsible for organizing the refrigerator and usually prepared ingredients and cooked from 6 a.m. to 4 p.m. each workday.  Garcia worked 80 hours per week and received a fixed weekly salary of $1,086 without any overtime pay of time and a half for hours worked over 40 each week.  Garcia’s salary as a Head Chef equaled an hourly rate of $13.00, while the three non-exempt line cooks at Rare Chelsea earned between $14.00 and $17.50 per hour.

This case turned on the issue of whether Garcia was an “executive” who was exempt from the overtime provisions of the FLSA and New York Labor Law. Employees employed in an executive capacity are exempt from overtime pay under U.S. Department of Labor Regulations.  An “executive” employee is:

  • compensated on a salary basis at a rate of not less than $455 per week (in New York City, $825 per week);
  • has a primary duty of management of the enterprise in which the employee is employed;
  • customarily and regularly directs the work or two or more other employees; and
  • has the authority to hire, fire, or promote other employees.

Garcia admitted to engaging in some managerial functions, including managing ingredient inventory and quality, overseeing the preparation of those ingredients before the kitchen opened each day, and serving as quality control for the restaurant’s cooking.  However, the court found that these managerial functions were not clearly “more important” than the non-managerial functions Garcia performed, i.e. cooking for ten hours a day, and that Garcia may be a non-exempt employee as a result.

Garcia noted that part of his job was to make sure “the restaurant was clean” and that “things go well.”  However, he also testified that the line cooks working under him supervised their own stations, that new employees often received most of their training from other employees, and that he had to run decisions by the Executive Chef via phone whenever the Executive Chef was not present in the restaurant.  As a result, Garcia’s supervisory and management responsibilities were his primary responsibility only when the Executive Chef was not present.  Garcia also stated that many of his day-to-day decisions involved the Executive Chef’s direction and that the Executive Chef set kitchen employees’ schedules and developed the food preparation procedures that Head Chefs had to follow.

This case may have an important impact on for cooks, chefs, and sous-chefs who are misclassified as “exempt” and unlawfully deprived of overtime pay because they are paid on a salary rather than on an hourly rate.

Hooters Hit with Lawsuit Claiming Intentional Misclassification to Avoid Paying Overtime

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Over 460 Hooters restaurants across the country purposefully misclassified its Assistant Store Managers (“ASM”) as supervisors to avoid paying them overtime wages, according to a class action lawsuit.   The lawsuit claims Hooters paid ASMs a set weekly salary regardless of the number of hours they actually worked without any overtime wages, despite their lack of managerial responsibility necessary to be exempt from overtime pay under the Fair Labor Standards Act. For example, the ASMs claim that their primary duty was non-managerial functions, including running the cash register, stocking merchandise, and janitorial duties, and not managerial tasks like managing and directing the work of other workers at the restaurant. Further, they contend that they did not have the authority to hire or fire other employees, or make suggestions as to the hiring, firing, advancement, or any other change of status of other employees. The ASMs noted that if they did create schedules for other restaurant workers, Hooters almost always changed those schedules, and that they could not control merchandise pricing or how goods in the store were displayed.

The lawsuit also claims that the ASMs routinely worked 70-80 hours a week without any overtime pay of time and a half their regular hourly rate for all hours worked over forty per week. The ASMs allege that Hooters intentionally hid the classification status of its workers from the government and the ASMs themselves for at least 10 years in order to avoid suspicion and inquiry by employees regarding their entitlement to monies owed to them. The lawsuit asked the court to permit the ASMs to notify current and former ASMs who worked at a Hooters restaurant anywhere in the country within the last three years to allow them to opt-into the action.

Matteo’s Restaurant in Bellmore, New York Sued for Wage Theft

Matteo's Bellmore Logo

Matteo’s Restaurant in Long Island cheated workers out of the minimum wage, overtime pay, and spread-of-hours pay, according to a class action lawsuit filed in New York federal court. The lawsuit, filed by two former dishwashers, claims that Matteo’s failed to pay non-exempt restaurant workers overtime pay of one-and-one-half times their hourly rate for all weekly hours worked over forty, despite the fact that they regularly worked over 60 hours per week. Instead, they say the restaurant paid them a set salary each week regardless of the number of hours they actually worked and also shaved some of their hours.

One restaurant worker alleges he was paid $420 per week, partially in cash, which resulted in an hourly rate below the minimum wage. Another worker says the restaurant only paid him for 42.5 to 48.5 hours of work per week, despite working as many as 69 hours per week. The workers further claim Matteo’s violated their rights by not paying them a spread-of-hours premium of an additional hour’s pay whenever their workday exceeded 10 hours.

The lawsuit alleges that back of the house workers typically worked more than 10 hours a day without any breaks or meal periods. For example, one dishwasher alleges working a regular schedule from 12:00 pm to around 11:30 pm, six days a week (69 hours) straight through without any rest. The dishwashers also claim that Matteo’s failed to provide them with proper notice of their wages at their time of hiring and accurate pay statements with each payment.

 

Joe Allen, Broadway Restaurant Hit with Class Action Wage Theft Lawsuit

Joe Allen Restaurante Front

A class action lawsuit claims that Joe Allen Restaurant (“Joe Allen”), a popular Broadway pre-show eatery located in Manhattan, failed to pay its restaurant workers minimum and overtime wages. The employee who brought the lawsuit alleges that Joe Allen did not keep track of the hours its employees actually worked, instead paying them only for their scheduled hours. The same employee alleges Joe Allen paid workers the tipped minimum wage without giving employees proper notice of the tip credit, and also forced tipped workers to share their tips with employees not entitled to tips, such as a porter.

The named employee, who worked as a server and bartender, claims that Joe Allen sometimes required him to arrive at 10:30 a.m. for lunch shifts, complete his non-tipped work, and then purposefully sent him home at about 12:00 p.m. before his scheduled lunch shift started, without paying him a penny. He also adds that he often “picked up” dinner shifts from other employees, which brought his weekly hours over 40, but never received overtime while employed at Joe Allen.

Oklahoma Restaurants Ordered to Pay Workers $2.1 Million in Wage Theft Case

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The owner of four El Tequila Mexican restaurants in Tulsa, Oklahoma paid more than 300 current and former restaurant workers a salary that cheated them out of the minimum wage and overtime pay. The restaurants’ violations add up to $2.1 million in back wages and damages owed to the workers. According to U.S. Department of Labor (“DOL”) investigators, the workers, including kitchen staff, hosts and bussers, were paid a fixed weekly salary for as many as 72 hours a week and did not receive any overtime pay when they worked over 40 hours in a given workweek. The DOL also claims that waiters and waitresses at the restaurants were required to hand over their tips to management at the end of every shift, which brought their pay below the minimum wage.

Additionally, the owner did not keep accurate records of workers’ tips and hours worked and lied to a federal investigator about how workers at his restaurants were paid. The owner admitted to systematically sending fake hourly time records to his accountants, who would then generate pay records that made it look as if the restaurants paid their employees the proper minimum wage and overtime pay. He also instructed his managers to create time sheets with inaccurate hours and to withhold documents showing employees’ actual hours worked.

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