One of my favorite authors and artists as a kid was Shel Silverstein, and I have loved rediscovering his books and poems with my daughter (“The Giving Tree” is much sadder than I remember as a kid—something about having kids of your own, I imagine). Another thing you might not know, unless you follow classic rock and country music, is that Shel Silverstein was a successful songwriter, too. One of the many songs he wrote became a hit for Bobby Bare back in 1976, and the title of Bare’s album that appears in the headline of this post. “The Winner” tells the story about a man who “won” every fight he had ever fought—with the broken bones, glass eye, arthritis, dislocated knees and more to show for it. Just as in the world of Shel Silverstein’s lyrics, being “The Winner” in a wage and hour lawsuit isn’t always that great.
Before the Labor Day holiday, I read on Twitter (by the way—are you following @WageHourInsight yet?) about the supposed “success” a restaurant had in defending its wage and hour practices at trial. I did a double-take. After reading the Southern District of New York’s opinion in Mendez v. International Food House, I would bet that, like the “Tiger Man McCool” in Shel’s hit song, the restaurant isn’t feeling much like “The Winner” now. Litigating a wage and hour case through trial is rarely going to be a victory by any definition after you consider the costs and time expended (even assuming you prevail).
After a bench trial, the court did reject the two plaintiffs’ claims and grant judgment to the restaurant. However, the win was not by knockout. The court disposed of a few ancillary claims, such as the plaintiffs’ claims that restaurant management unlawfully forced them to share tips with “the bartenders, hostess, hookah preparers, and management.” The court observed that some of the tip sharing was clearly voluntary and that other positions added to the tip pool were tipped positions eligible to participate. The Court also rejected the plaintiffs’ claims that they did not receive appropriate wage notices and statements, as well as their allegations that they were not paid for all hours worked.
However, the restaurant simply escaped on the central claim of the lawsuit. The plaintiffs claimed that they spent too much time during their shifts performing non-tipped duties and therefore the restaurant should not have paid them at the tip-credit rate for those hours. Under the FLSA, the Department of Labor has opined that tipped employees who spend a substantial amount of time, or more than 20% of their workweeks, engaged in related, but non-tip-producing, work must be paid the full minimum wage for the time spent performing the non-tipped work. Under the New York Labor Law, the time period is “2 hours or more or for more than 20 percent of her or his shift, whichever is less.”
The plaintiffs relied on their own testimony buttressed by daily sales reports, which frequently showed a period of one or two hours between when they would clock in and when they would process their first order, or between when they processed their last order and clocked out. They testified that these gaps reflected times when they were moving and organizing tables and chairs, mopping, and cleaning. The restaurant presented their own witnesses to suggest that the plaintiffs had exaggerated the time they spent performing these duties, if they did them at all. The court found the restaurant’s witnesses more credible “based on the demeanor of the witnesses as well as the consistency and substance of their testimony.” The court was clearly swayed by the fact that the plaintiffs had been “building a case by making recordings” of various alleged violations yet had still failed to produce enough documentary proof on certain claims.
In other words, the restaurant appears to have been more fortunate than correct with its wage and hour practices. The plaintiffs just could not muster enough documentary evidence to support their claims, and the judge found them less credible than the restaurant’s witnesses. When your best evidence is a roll of the credibility dice, you should scarcely rejoice in the outcome.
But, back to my original point: was the restaurant really “The Winner” here? The two plaintiffs were paid $5.00 per hour for their work over a few years each. Even if you overestimate the costs of paying those two employees an extra $10-$20 per day for their 1-2 hours of non-tipped work, the “savings” for the restaurant likely amounted to less than $40,000 for these two employees during their entire employment. Sure, there’s no broken back or scars, but after seven months of discovery, a failed settlement conference, pre-trial motions and filings, and a three-day bench trial, I think it is a safe bet that whatever the restaurant spent to be “The Winner” far outstripped whatever money it might have “saved” on compensation.
Win or lose, good wage and hour compliance is almost always less expensive than litigating those issues to the bitter end. So, do you still want to be a winner?