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.

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

New York City Bar Association Logo

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.

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

El Tequila Logo

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.

Maine Fish Market to Pay $750,000 in Back Wage to Employees

Maine Fish Market Restaurante Logo

Maine Fish Market, a popular seafood restaurant in East Windsor, Connecticut, paid $750,000 in back wages to approximately 70 employees for unpaid wages and tip theft violations. The class action lawsuit alleged that Maine Fish Market neglected to pay the federal minimum wage to its servers and bartenders and failed to pay overtime wages to the restaurant’s kitchen workers. In addition, servers claim they were unlawfully required to pay for breakages, customer walkouts, and uniforms. The restaurant also took ten to fifteen percent of each servers’ tips on a daily basis and allegedly used this money to pay other employees’ wages. As per the Fair Labor Standards Act and the Connecticut Minimum Wage Act, employers are not entitled to any of the tips earned by servers.

The employees were represented by Louis Pechman and Laura Rodriguez of Pechman Law Group PLLC, as well as by William Madsen of Madsen, Prestley & Parenteau LLC.

Bistro owners mocked workers and stiffed them on pay according to lawsuit

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The New York Post has reported that Le Rivage, an iconic French restaurant in midtown Manhattan, is being sued by its servers for age discrimination and minimum wage, overtime, and tip violations.  The servers in this case are represented by Laura Rodriguez and Louis Pechman, founder of

Golden Corral Sued By Assistant Managers For Overtime Pay

Golden Corral logo

Golden Corral restaurants throughout the United States misclassified “Kitchen Associate Managers,” and “Hospitality Managers,” as employees exempt from overtime, failing to pay them any overtime wages for hours they worked over forty in a given workweek. According to the restaurant workers, Golden Corral refused to pay them overtime in spite of the fact that they spent the majority of their time performing the same duties that non-exempt restaurant employees performed, including cooking and preparing food, taking out trash, washing dishware and glassware, refilling food on the buffet line, unpacking products and supplies, cleaning the restaurant, and serving customers. The lawsuit claims that Golden Corral applied the same compensation and employment policies to Assistant Managers at 94 restaurants across the country.

The workers also claim that Golden Corral willfully misclassified them as exempt workers ineligible for overtime pay, and was aware that Associate Managers across the country worked more than 40 hours a week without overtime compensation. The lawsuit alleges that Golden Corral failed to record all of the time that its employees worked and purposefully did not require workers to clock in or out or otherwise record their time in any way. Further, the Assistant Managers’ work hours were not recorded on their paystubs.

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