Restaurants With Common Managers Caught Cheating at Overtime

Three restaurants with common managers are caught cheating at overtime. These violations were hidden by: (1) ignoring the total hours of employees working at multiple restaurants, (2) miscalculating the overtime rate for tipped employees, and (3) paying kitchen staff with only a flat salary no matter how many hours are worked.

Frank Marchetti and Michael Marchetti manage all three restaurants – Osteria Applausi; Columbus Park Trattoria; and Tarantino Restaurant.

These restaurants in Connecticut, paid $180,007 in back wages and liquidated damages to 49 employees for violations of the overtime and record keeping provisions of the Fair Labor Standards Act (FLSA).

I.  Restaurants With Common Managers: Total Hours for Overtime.

Many restaurants, with common mangers or owners, share staff between restaurants. It is hard to find good and reliable workers given the low wages of the restaurant industry. Often, workers fail to show, or miss their shift, with little or no notice. Restaurant managers know who can work on short notice. They may know who needs extra hours. These are all good reasons for sharing staff among several restaurants and making the best use of reliable workers.

However, some of these employees also work more than 40 hours in a week.  Their time is split among two or more restaurants. Each restaurant issues its own paycheck or pays in cash. The employers claim no overtime is owed by either restaurant; because not more than 40 hours was worked at a single restaurant. This is not correct.

Do you work at more than one restaurant with common owners or managers? The total hours worked at both restaurants determines whether overtime must be paid. A manager or owner cannot cheat an employee out of overtime by working him/her a combined 50 hours at two restaurants; but not more than 40 hours at a single restaurant. This type of scheme is illegal.  It cheats the employee out of overtime.

The managers at these three restaurants must pay overtime when the combined total weekly work hours for individuals who worked at multiple locations exceeds 40 hours.

II.  Overtime Rate for Tipped Employees.

The restaurants here also incorrectly calculated overtime pay for “front of the house” tipped, wait staff. Under the FLSA, a restaurant can take a “tip credit” and pay a lower minimum wage to employees who receive a certain level of tips.

The managers here base the overtime rates only on the workers’ direct cash wages, instead of the employees’ regular rates of pay.  The overtime rate for a tipped employee includes 1 ½ times the “regular rate” of pay. The “regular rate” of pay is not just the hourly wage; but must include the amount of the tip credit taken by the employer to justify a lower hourly wage for the tipped employee. The Tip Credit is a complicated Regulation and the overtime rate includes more than just the lower hourly wage.

III.  Back of the House Employees on Flat Salary.

The above restaurants also failed to pay the required overtime rate to “back of the house” kitchen employees.

The kitchen staff earned flat salaries. This can sound like a high wage if the number of total hours is not considered. This may help retain staff and provides predictable pay for kitchen staff whose hours may vary with peak busy times for the restaurants. There is nothing wrong with paying a flat salary to kitchen staff.

However, if a kitchen staffer works more than 40 hours in a week, overtime pay is owed even if he/she is paid a salary.

To calculate overtime for a salaried employee, the hourly rate is determined. For example, a salary of $600 per week covers the first 40 hours. This creates an hourly rate of $600 divided by 40 hours or $15.00 per hour. The next hour worked over 40 hours is an overtime hour. Each overtime hour is paid at 1 ½ times $15.00 for an overtime hourly rate of $22.50 per hour.

IV.  Restaurant Workers: Check Your Pay Stub.

If you are a restaurant employee, check your pay stub to make sure that you are paid overtime for all of the hours worked at several restaurants with common ownership or management. Maybe your job is exempt from overtime if you are the head cook supervising two or more employees. However, just because you are paid a salary does not mean that you are not owed overtime pay. Similarly, if you are a tipped employee, check with a lawyer if necessary to see if your overtime rate is calculated correctly. Overtime paid at just your lower hourly wage is not legal if it ignores the Tip Credit taken by the employer.

The Ken S. Nugent, P.C. Overtime Team of attorneys can help employees collect (1) back wages for all “Hours Worked” and any unpaid overtime, plus (2) liquidated damages in an additional amount of the same back wages and overtime, and (3) attorney’s fees and costs.

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