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Garcia v. Bad Horse Pizza, Inc.

United States District Court, S.D. New York

January 18, 2017


          OPINION & ORDER

          WILLIAM H. PAULEY III, District Judge

         Plaintiff Antonio Bautista Garcia brings this action against Defendants Bad Horse Pizza, Inc. and its owner John Kandel for unpaid overtime under the Fair Labor Standards Act (“FLSA”) and New York Labor Law (“NYLL”) and failure to provide wage notices and wage statements under NYLL. Following a one-day bench trial, this Court makes the following findings of fact and conclusions of law pursuant to Federal Rule of Civil Procedure 52.


         Between April 1, 2011 and February 29, 2016, Kandel owned and operated Bad Horse, a Manhattan pizzeria that grossed more than $500, 000 in revenue each year. (Trial Transcript dated July 14, 2016 (“Tr.”), at 4, 5, 31, 37.) It operated from 5:00 p.m. to 10:00 p.m. Sunday through Wednesday and from 5:00 p.m. to 11:00 p.m. Thursday through Saturday. (Tr. at 46.) Kandel had the authority to hire and fire employees and set their work schedules. (Tr. at 5.)

         Kandel's management style could be characterized as informal. He described his staff “as a little family, ” regularly had after-work beers with them and did not require employees to punch a time clock. (Tr. at 8, 11, 28.) At trial, he could not verify the actual numbers of hours any employee worked. (Tr. at 11, 24-25, 27, 42.) If kitchen staff came in late, he “never took it off their pay” because, in his words, “those guys worked really hard.” (Tr. at 33.) While Bad Horse used ADP to process payroll, Kandel employed a practice of reporting only the first 40 hours of work and paid any overtime in cash off-the-books. (See Tr. at 15; Plaintiff's Proposed Findings of Fact and Conclusions of Law, ECF No. 102, at ¶ 33.)

         Garcia began working six days per week at Bad Horse in June 2012.[1] (Tr. at 11, 55.) Kandel initially employed him as a deliveryman at a rate of $9 per hour. (Tr. at 39.) During his first month of employment, he regularly arrived twenty minutes late, but thereafter, quit his other job so that he could begin work at 3:00 p.m. (Tr. at 37-38.) In addition to deliveries, Garcia performed some prep work and helped clean up at the end of the day, causing his shift to end approximately fifteen minutes after the restaurant closed. (Tr. at 29.) With this schedule, Garcia worked approximately 45 hours per week for 7-8 months. (Tr. at 38-39.)

         In February 2013, Garcia began working in the kitchen and Kandel increased his hourly wage to $12. (Tr. at 40, 76.) For the next 9 months, he continued to work approximately 45 hours per week. (Tr. at 11, 44.)

         In November 2013, Kandel asked Garcia to work longer hours and take on additional work in the kitchen. (Tr. at 44.) Kandel increased his hourly wage to $12.69.[2] (Tr. at 15, 45.) Over the next 5 months, Garcia worked approximately 55 hours per week. (Tr. at 40.)

         In April 2014, Kandel again asked Garcia to work additional hours as a dough maker. (Tr. at 15.) Kandel increased Garcia's hourly pay to $14. (Tr. at 45.) Over the next 6 months, until his termination in October 2014, Garcia worked approximately 65 hours per week. (Tr. at 5, 15, 37, 45.)

         During the course of Garcia's employment, Kandel provided him with additional financial benefits. Beginning at the end of 2012, Kandel paid Garcia's cell phone bill amounting to approximately $120 per month for six months. (Tr. at 14, 82-83.) At some point in 2013, Kandel started paying Garcia regular weekly bonuses ranging between $50 and $100 in cash. (Tr. at 13, 75.)

         It is uncontroverted that Kandel displayed a labor law poster in Bad Horse, stating, among other things, that employees are entitled to overtime at time and a half after working 40 hours. (Tr. at 32.) It is also undisputed that Kandel did not pay Garcia time and a half for work performed after 40 hours. (Tr. at 16-17.) And Garcia never received a wage notice during his employment at Bad Horse. (Tr. at 32.)


          A. Threshold Issues

         Bad Horse is subject to the FLSA's wage-and-hour provision because it was “an enterprise engaged in commerce” and, at all relevant times, its annual gross volume of sales and business exceeded $500, 000. See 29 U.S.C. §§ 203(s)(1), 207(a)(1). This Court has subject matter jurisdiction over Garcia's FLSA claims pursuant to 28 U.S.C. §§ 1331 and 1337 and supplemental jurisdiction over Garcia's NYLL claims pursuant to 28 U.S.C. § 1367 because they form part of the same case or controversy. Venue is proper pursuant to 28 U.S.C. § 1391 because Bad Horse is a New York corporation located within the Southern District of New York.

         B. Statute of Limitations

         FLSA claims have a two-year statute of limitations, unless the violation was willful, which extends the limitations period to three years. 29 U.S.C. § 255(a). “An employer willfully violates the FLSA when it either knew or showed reckless disregard for the matter of whether its conduct was prohibited by the Act.” Young v. Cooper Cameron Corp., 586 F.3d 201, 207 (2d Cir. 2009) (internal quotation marks omitted). “To show that an employer acted with reckless disregard, a plaintiff must only show that the employer knew or had reason to know that it was or might have been subject to the FLSA. . . . Neither an employer's good-faith but incorrect assumption regarding its FLSA obligations, nor an employer's lack of reasonable basis for believing that it was complying with the FLSA, is by itself sufficient to demonstrate an employer's willfulness.” Padilla v. Sheldon Rabin, M.D., P.C., 176 F.Supp.3d 290, 299-300 (E.D.N.Y. 2016) (internal citation and quotation marks omitted).

         While some evidence supports the conclusion that Kandel willfully violated FLSA's overtime requirements-Kandel himself received overtime pay when he worked at an aviation maintenance facility; Kandel displayed a labor law poster at Bad Horse; and Kandel reported no more than 40 hours each week to ADP-other evidence suggests that Kandel's violations were not willful. (Tr. at 15, 20, 32.) Each time he asked Garcia to take on additional hours, he gave him a wage increase. (See Tr. at 11, 15, 44.) Kandel argues that it would make little economic sense for an employer to circumvent FLSA by increasing wages when it might have been cheaper to simply pay time and a half. (Tr. at 32-33.) Additionally, when Garcia began taking on extra hours, he regularly received cash bonuses, in addition to his regular salary, at the end of each week. (Tr. at 13, 75.) Further, the evidence suggests that Garcia never raised the issue of overtime pay with Kandel prior to the filing of this law suit. (Tr. at 84.) After this lawsuit was filed, Kandel changed Bad Horse's wage practices to comply with FLSA. (Tr. at 16.) Hearing and observing Kandel on the witness stand, this Court finds his testimony credible and sincere. Accordingly, this Court finds that Kandel's violations of the FLSA were not willful.

         Unlike FLSA, NYLL claims are subject to a six-year statute of limitations. N.Y. Lab. Law § 198(3). This limitations period does not shorten for non-willful violations. Thus, notwithstanding FLSA, Garcia may recover ...

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