The U.S. Department of Labor recently brought an action against a group of 3 restaurants in Westchester and Rockland County, New York, for violating the Fair Labor Standards Act. An investigation revealed that the restaurants failed to pay minimum wage and overtime pay, did not keep proper recordkeeping requirements and discriminated against employees who tried to exercise their legal rights.
The lawsuit names as defendants Tomnick Food Services Inc., which does business as New City “American Beauty” Diner in New City, Rockland County, Tomnick Food Services South which operates as New City “American Dream” Diner in Orangeburg, Rockland County, and Tomnick Food Services North, Inc., as New City “American Classic” Diner in Yorktown Heights, Westchester. The suit also names Tom Nikitas Voutsas, the owner and president of the 3 companies, and James Vinieris and Artemesia Vinieris, managers of the companies.
Sonia Rybak, assistant district director of the Wage and Hour Division’s White Plains Area Office stated that “cooks, kitchen staff, busboys and wait staff in these restaurants provided their employer with honest labor and should have received at least the federal minimum wage and overtime pay.” The lawsuit seeks to prohibit future FLSA violations, payment of minimum wages and back pay to March 2008, and compensation equal to liquidated damages or prejudgment interest.
The FLSA requires restaurant owners to pay non-exempt employees at least their federal minimum wage of $7.25 an hour plus time and one half their regular rate of pay for every hour worked in excess of 40 hours per week. For example, for every hour worked in excess of 40 hours in one week, you must pay your cook, busboy, and waitress $10.88 per hour for overtime.
Effective May 5, 2011, the Department of Labor recently updated its tip credit regulations. The new regulation provides that you must provide your employees with proper notice in order to use the tip credit. You must pay your tip employees wages of at least $2.13 per hour. However, the amount of tip credit you are using against actual tips plus the actual cash wage you are paying your employee must equal the minimum wage of $7.25. For example, if you are paying your waitress $2.13 an hour and combined with her tips, she is only making $6.00 an hour, you cannot claim a tip credit of $5.12. You must pay her wages of $3.38 and claim a maximum tip credit of $3.87.
Federal law also requires restaurant owners to maintain accurate employee records and prohibits retaliation against employees for exercising their legal rights. According to New York Labor Law, an employee has a 6 year statute of limitations to start an action to recover back wages and benefits. Under the revised New York Labor law, specifically the New York Wage Theft Prevention Act, which went into effect April 9, 2011, an employee in New York can now recover liquidated damages equal to the amount of unpaid wages. The FLSA also allows an employee to recover liquidated damages equal to the amount of lost or unpaid wages. Not only is it legally required to maintain accurate employee records but it is imperative in order to defend against any wage and hour lawsuits.
Failure to pay minimum wages and overtime pay in the restaurant industry is a major problem across the country affecting many workers who only make minimum wage. Most restaurant workers hesitate to complain about wage and hour as well as health and safety violations because they are fearful of losing their jobs and need the money. A study conducted in 2009 by the National Employment Law Project around the country, called Broken Laws, Unprotected Workers, showed that about 2/3 of low wage workers are denied full pay and on average lose about $2,600 in pay every year. The study also found that about 26% of workers are paid below minimum wage in a given work week and that 76% of workers who should receive overtime were not paid their required time and a half. It also showed that about 30% of workers relying on tips were not paid the tipped worker minimum wage.
If you are a restaurant owner, this lawsuit is a wake up call to get your business in compliance with state and federal wage and hour laws before the Department of Labor catches up to you. Call our experienced Labor Attorneys at Villanueva & Sanchala at (800) 893-9645 to help you make sure you are wage compliant as well as set up proper payroll and recordkeeping in accordance with the FLSA.
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