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Hilda L. Solis, Secretary of Labor, United States Department of Labor v. Cindy's Total Care

January 5, 2012

HILDA L. SOLIS, SECRETARY OF LABOR, UNITED STATES DEPARTMENT OF LABOR,
PLAINTIFFS,
v.
CINDY'S TOTAL CARE, INC., D/B/A CINDY'S NAM SAENG SIM, NAM SAENG SIM, INDIVIDUALLY, AND BYUNG SOOK KIM, INDIVIDUALLY,
DEFENDANTS.



The opinion of the court was delivered by: Paul A. Engelmayer, District Judge:

OPINION AND ORDER

This opinion sets forth the Court's findings of fact and conclusions of law pursuant to Federal Rule of Civil Procedure 52, following a three-day non-jury trial in this case, brought under the Fair Labor Standards Act, 29 U.S.C. § 201, et seq. ("FLSA" or the "Act").

The Secretary of Labor ("the Secretary") brought this action following an investigation of Cindy's Total Care, Inc. ("Cindy's"), a nail-care salon operating in New York City. The Department of Labor initiated its investigation after receiving complaints from employees, who alleged that Cindy's was failing to pay overtime wages, and failing to maintain complete and accurate records as to employee hours and compensation.

The Secretary alleges that Cindy's violated the FLSA between September 20, 2007 and February 28, 2010, in two respects. First, she alleges that Cindy's willfully failed to pay its employees the statutorily-required overtime rate (one and one-half times the employee's base rate) for all hours worked in excess of 40 per week, and instead paid employees a daily wage rate regardless of the total number of hours worked, in violation of regulations implementing the FLSA. See 29 C.F.R. § 778.114. As a remedy for these violations, the Secretary seeks an award of back wages and liquidated damages. Second, the Secretary alleges that Cindy's failed to maintain complete and accurate wage and hour records. The defendants-Cindy's, its owner Nam Saeng Sim, and her husband Byung Sook Kim-dispute these claims. They assert that Cindy's employees were paid an hourly wage rate, and that all overtime hours were compensated at the required overtime rate. They further assert that Cindy's kept compliant records as to wages and hours.

The parties tried the case before the Court between November 29 and December 1, 2011. Each witness's direct testimony was received in the form of a sworn declaration; cross-examination was live. The Secretary called nine witnesses: three Department of Labor investigators and six employees of Cindy's. The employee witnesses, none of whom speaks English, each testified with the assistance of a translator. Defendants called Ms. Sim and Cindy's accountant David Shin; Ms. Sim testified with the assistance of a translator. Mr. Kim did not testify.

For the reasons set forth below, the Court finds that Cindy's and Ms. Sim violated the recordkeeping and overtime pay obligations of the FLSA and regulations promulgated thereunder. On the basis of these violations, the Court awards back wages to 32 current and former employees of Cindy's, as well as statutory liquidated damages. The Court also enjoins Cindy's and Ms. Sim from further violating the FLSA. The Court does not, however, find Mr. Kim liable.

FINDINGS OF FACT

I.Background

A.The Parties

1. Plaintiff Hilda Solis is the Secretary of Labor. She filed this action pursuant to the FLSA, alleging that the defendants violated the Act from at least September 20, 2007 to February 28, 2010 ("the relevant period"), and owe back wages and liquidated damages accruing from that period.*fn1

2. The Secretary commenced this action after conducting an investigation of Cindy's, a nail salon business located in New York City, operating under the corporate name Cindy's Total Care, Inc. and doing business as Cindy's. See Joint Pretrial Order, Stipulations of Fact ¶¶ 2--4 ("Joint Stip. of Fact").

3. Cindy's is operated by defendant Nam Saeng Sim (also known as Cindy). Ms. Sim is the sole owner, sole officer, and president of Cindy's Total Care, Inc. See Joint Stip. of Fact ¶¶ 1, 6--8.

4. Ms. Sim has operated multiple nail salons. In recent years, Ms. Sim's nail salons have been operated under a variety of corporate names, including: Cindy's Nail and Plus, Inc., SunYoung's Nail and Plus, Inc., Amsterdam Nail Services, LLC, and Cindy's Total Care, Inc. See Second Amended Declaration of Debbie Lau, Pl. Ex. 2 ¶ 7 ("Lau Decl."). The entities relevant to this decision are Cindy's Total Care, Inc., which came into existence in October 2007, and Cindy's Nail and Plus, Inc., which existed from approximately August 2002 until October 2007. See Defs.' Proposed Findings of Fact ¶ 7. Unless stated otherwise, references to Cindy's will refer to defendant Cindy's Total Care, Inc.

5. Cindy's is currently located at 491 Amsterdam Avenue, New York, NY. See Joint Stip. of Fact ¶ 4. Prior to operating in the present location, Cindy's was located at 170 West 83rd Street, New York, N.Y., where it maintained the same business. See Deposition of Nam Saeng Sim 15:25--16:8. Ms. Sim owned and operated Cindy's at 170 West 83rd Street, and she currently owns and operates Cindy's at 491 Amsterdam Avenue. During the relevant time period, Cindy's employees-nail salon technicians-have worked at both locations.

6. During the relevant period, Cindy's Total Care, Inc. has procured some materials and supplies used by its employees from beauty supply distributors located outside of the state of New York. Joint Stip. of Facts ¶¶ 15--16.

7. During the relevant period, Cindy's has been a business or enterprise engaged in interstate commerce with annual gross sales over $500,000. See Cmpl. at 3; Defs.' Letter, Nov. 1, 2011 (Dkt. 43).*fn2

8. During the relevant period, Ms. Sim actively controlled and managed Cindy's. Ms. Sim hired and fired employees, directed their work activities and work hours, and set their rates of compensation. Joint Stip. of Fact ¶¶ 9--12.

9. Defendant Byung Sook Kim assisted Ms. Sim in some aspects of her work. Mr. Kim occasionally wrote out paychecks to Cindy's employees. He occasionally, at the direction of Ms. Sim, handed checks to Cindy's employees, and asked employees to sign a receipt indicating that they had received their wages. On at least one occasion, Mr. Kim affixed a schedule of employee breaks to the wall in Cindy's. Mr. Kim on occasion sat at various locations in the nail salon, including by the cash register. Joint Stip. of Fact ¶¶ 18--20. Mr. Kim did not receive compensation from Cindy's during the relevant period. Joint Stip. of Fact ¶ 6; Sim Decl. ¶ 6.*fn3

B.The Employees

10. The Secretary brings this action on behalf of 32 persons that were employed by Cindy's Total Care, Inc. between September 20, 2007 through February 28, 2010.*fn4

11. Casta Rosalia Arias (also known as Katty) was employed by Cindy's from on or about August 11, 2008 through February 28, 2010.

12. Jia Jin Chen (also known as Jenny) was employed by Cindy's from on or about May 18, 2009 through February 28, 2010.

13. Lili Chiu was employed by Cindy's during the period September 20, 2007 through March 25, 2008.

14. Vicky Doe was employed by Cindy's from on or about February 21, 2009 through February 28, 2010.

15. Chun Hua Fu was employed by Cindy's during the period September 20, 2007 through December 29, 2007.

16. Yi L. Gao was employed by Cindy's during the period September 20, 2007 through December 8, 2007.

17. Mei Zi He (also known as Henna) was employed by Cindy's from on or about April 14, 2008 through February 14, 2009.

18. Ambika Kayastha was employed by Cindy's during the period September 20, 2007 through February 28, 2010.

19. Ok Young Ko was employed by Cindy's during the period September 20, 2007 through October 5, 2007.

20. Guo Hua Li (also known as Jessica) was employed by Cindy's during the period September 20, 2007 through April 10, 2009.

21. Hou P. Li (also known as Lily) was employed by Cindy's during the period September 20, 2007 through December 29, 2007.

22. Jin Li (also known as Michelle) was employed by Cindy's from on or about April 14, 2009 through February 28, 2010.

23. Jin Chai Li (also known as Jennifer) was employed by Cindy's from on or about April 1, 2009 through February 28, 2010.

24. Xiao Ying Li (also known as Sharon) was employed by Cindy's during the period September 20, 2007 through February 28, 2010.

25. Yu Zhen Li (also known as Julie) was employed by Cindy's during the period September 20, 2007 through February 28, 2010.

26. Mei Fang Lin (also known as Jackie) was employed by Cindy's from on or about May 6, 2009 through February 28, 2010.

27. Ai Zhu Liu (also known as Amy) was employed by Cindy's during the period September 20, 2007 through February 28, 2010.

28. Hui Fang Liu (also known as Linda) was employed by Cindy's during the period September 20, 2007 through February 28, 2010.

29. Xiang Hua Liu (also known as Mary) was employed by Cindy's during the period September 20, 2007 through February 28, 2010.

30. Xiao Qing Liu (also known as Sally) was employed by Cindy's from on or about May 19, 2009 through February 28, 2010.

31. Xiang Mei Meng (also known as Lucy) was employed by Cindy's during the period September 20, 2007 through February 17, 2009. Ms. Meng testified at trial regarding her employment at Cindy's. See Declaration of Xiang Mei Meng, Pl. Ex. 8 ("Meng Decl.").

32. Chun Li Peng was employed by Cindy's during the period September 20, 2007 through December 29, 2007.

33. Ai H. Wang was employed by Cindy's during the period September 20, 2007 through December 29, 2007.

34. Jun Wang was employed by Cindy's from on or about October 6, 2007 through December 29, 2007.

35. Jing Qiu Wu was employed by Cindy's from on or about December 1, 2007 through December 29, 2007.

36. Qi Wu (also known as Susan) was employed by Cindy's during the period September 20, 2007 through March 19, 2009. Ms. Wu testified at trial regarding her employment at Cindy's. See Declaration of Qi Wu, Pl. Ex. 7 ("Wu Decl.").

37. Feng Ying Yeng (also known as Lulu) was employed by Cindy's during the period September 20, 2007 through September 1, 2008. Ms. Yang testified at trial regarding her employment at Cindy's. See Declaration of Feng Ying Yeng, Pl. Ex. 9 ("Yeng Decl.").

38. Hong Yang (also known as Lulu) was employed by Cindy's during the period September 20, 2007 through August 31, 2008.

39. Yu Feng Ye (also known as Lisa) was employed by Cindy's during the period September 20, 2007 through June 28, 2008.

40. Ge Zhang (also known as Angie) was employed by Cindy's during the period September 20, 2007 through August 31, 2009. Ms. Zhang testified at trial regarding her employment at Cindy's. See Declaration of Ge Zhang, Pl. Ex. 10 ("Ge Zhang Decl.").

41. Jie Hua Zhang (also known as Judy) was employed by Cindy's during the period September 20, 2007 through February 1, 2009. Ms. Zhang testified at trial regarding her employment at Cindy's. See Declaration of Jie Hua Zhang, Pl. Ex. 6 ("Zhang Decl.").

42. Hua Zhu (also known as Maria) was employed by Cindy's during the period September 20, 2007 through February 28, 2010. Ms. Zhu testified at trial regarding her employment at Cindy's. See Declaration of Hua Zhu,Pl. Ex. 5 ("Zhu Decl.").

II.The Department of Labor's Investigations

43. The Department's Wage & Hour Division investigated Cindy's (or its predecessor entities) three times between 2006 and the ...


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