A number of wage theft lawsuits and settlements have been occurring during the past five years. However, they haven’t received as much media attention as restaurant workers’ fight for higher minimum wages.
As a restaurant owner, you should be aware of what wage theft is and the ways it can occur. Ensure your restaurant managers aren’t engaging in wage theft activities.
Examples of Wage Theft and Related Lawsuits
Large chain restaurants have been subject to lawsuits for reducing hours, not paying proper wages for side work and for misappropriating tips.
Requiring workers to work off the clock is not legal but some chain restaurants have been settling claims that allege they’ve been doing this. The Huffington Post reported about several well-known restaurant chains that settled or paid huge sums in wage theft lawsuits.
Ruby Tuesday settled a case for $3 million in 2014. The restaurant avoided paying bartenders and servers overtime by having them do checklists before or after clocking in for work. They also shaved hour totals down to 40 hours/week when workers went over 40 hours.
Outback Steakhouses settled a $3 million lawsuit to workers claiming that the restaurant required workers to complete pre-shift work before clocking in.
A Papa John’s New York franchise had to pay more than $2 million in overtime rates under the order of New York State Attorney General Eric Schneiderman for rounding down hours worked to the whole number to avoid paying overtime, and for paying workers the “tipped minimum wage” when they mainly did un-tipped work and for not reimbursing employees for the purchase and maintenance costs of bicycles used in deliveries.
Red Robin Restaurants in Pennsylvania paid $1.3 million for requiring tipped workers to share tips with kitchen expeditors when the restaurant was taking tip credits and not paying servers a full minimum wage. Kitchen expeditors had no contact with customers and did not qualify to be paid as tipped workers.
Johnny Rockets had to pay 55 servers more than $570,000 under order of the Department of Labor (DOL) because they required servers to share tips with cooks and dishwashers.
Fourteen TGI Fridays servers received $485,000 to settle claims for having to spend more than 20 percent of their work time doing side work instead of directly relating to customers, which violates the 80/20 rule for tipped employees. Part of this settlement amount was also due to being forced to work off the clock.
Are You Concerned About Wage Theft?
If so, get legal advice as soon as possible. Stephen Hans & Associates is an employment law defense firm and can advise the best course of action for you to take as an employer
Published by Leeds Brown Law at December 3, 2015
As a restaurant worker, what can you do when your boss doesn’t pay you overtime wages?
Are you afraid to complain because of possible retaliation, such as getting fired, demoted or being harassed on the job?
Despite these risks, there are laws that protect your rights, even for undocumented workers. In fact, a recent wage violations case set a precedent in New York for not only recovering workers’ overtime pay, but also landing the franchise owner in jail.
Papa John’s Franchise Wage and Hour Dispute
As reported in the New York Post, this is the first time that a franchise owner of a national chain has been sentenced to jail for failing to pay overtime wages. Read More
Last July, the Papa John’s franchise owners didn’t fair well in the civil case brought against them for wage and hour violations. Despite reaching a settlement with the U.S. Department of Labor, Khokhar and BMY must pay the following penalties:
- $230,000 in liquidated damages
- $50,000 in civil monetary penalties
- $230,000 in restitution for unpaid overtime wages
In addition, the company is subject to independent auditing of the franchise’s actions.
The civil case wasn’t the restaurant owners’ only setback. Subsequent to the civil case, Attorney General Schneiderman prosecuted Abdul Khokhar and BMY Foods on misdemeanor and felony charges. Both defendants pled guilty, and the judge sentenced Khokhar to 60 days in jail.
Stand Up for Your Rights
While every situation is unique, the legal action taken against Khokhar and BMY Foods should become a benchmark case for holding franchise owners personally liable. The NYS Attorney General’s Office showed it is willing to prosecute wage and hour violations in both civil and criminal courts, thereby giving employees a powerful tool in their battle against wage and hour injustices.
Has your employer denied you wages or overtime? Discuss your concerns with our experienced employment lawyers at Leeds Brown Law in a free and confidential consultation.
Wage and Hour Regulation Pitfalls
Business owners can get themselves into trouble when not understanding wage and hours laws. What appears to be a bright idea that cuts corners and saves money is sometimes a violation that leads to costly consequences.
The Fair Labor Standards Act (FLSA) establishes minimum wages and standards for overtime pay, and federal enforcement falls under the United States Department of Labor’s Wage and Hour Division.
Some common wage and hour pitfalls that a NY employment litigation lawyer can help you avoid include:
- Voluntary work hours. Even though employees work off the clock voluntarily past their scheduled work hours, they must receive overtime compensation for that work done. Documenting all employee work is necessary to protect your rights as an employer, and any work exceeding 40 hours, even though not at the employer’s request, must be paid.
- Travel time. When your employees travel as part of the job, calculating work time and overtime pay can be challenging. By consulting with an experienced employment litigation lawyer, you can receive legal advice about travel policies that comply with wage and hours law.
- Employee misclassification. Business owners must classify employees based on their job duties and hourly wages or salaries. Salaried employees generally do not receive overtime pay, whereas hourly employees do. The types of duties the employees perform are the basis for classifying an employee and in particular whether the duties include management. Classifying an hourly employee as a manager when the employee has no management responsibilities is misclassification, which can be subject to disputes and claims or lawsuits. Our attorneys can help you ensure your employees’ classifications fall within the letter of the law.
Stephan Hans & Associates can help you comply with wage and hour laws for your business in the New York City area, including Manhattan, Brooklyn, the Bronx, Long Island and Westchester.