United States District Court, S.D. New York
OPINION AND ORDER
GABRIEL W. GORENSTEIN, UNITED STATES MAGISTRATE JUDGE.
Alejandro Valle and Edgar Cid brought this action against
Gordon Chen's Kitchen, LLC, Mac-War Restaurant
Corporation, and Allan Wartski (collectively,
“defendants”) to recover unpaid wages and other
damages arising out of defendants' alleged violations of
the Fair Labor Standards Act, 29 U.S.C. § 201 et seq.
(“FLSA”), and the New York Labor Law, N.Y. Labor
Law § 1 et seq. (“NYLL”). The Court held a
bench trial on November 3, 2016, and has considered the
parties' submissions. This Opinion and Order contains the
findings of fact and conclusions of law required by Federal
Rule of Civil Procedure 52(a)(1).
brief, plaintiffs contend that they worked for
defendants' restaurant as delivery workers and were not
properly paid under federal and state labor laws. They
contend that defendants improperly used a “tip
credit” to calculate plaintiffs' hourly wage
instead of paying them at minimum wage; that the hourly
overtime rate paid by defendants was too low; that plaintiffs
worked more hours than were reflected on defendants'
records; that defendants failed to provide plaintiffs with
the notices required by the NYLL; and that defendants failed
to pay them “spread of hours” pay as required by
the NYLL. Pls. Pre-trial Mem. at 7-12, 15.
Court has subject matter jurisdiction over plaintiffs'
federal claims under 28 U.S.C. § 1331 and supplemental
jurisdiction over their state law claims under 28 U.S.C.
Chen's Kitchen LLC operates and controls a Japanese
restaurant called “Hakata Grill” at 232 East 53rd
Street in New York, New York. (Cid: Tr. 8; Garzon: Tr.
Mac-War Restaurant Corporation previously did business as
Hakata Grill at 230 West 48th Street in New York, but ceased
operations on December 14, 2008. (Cid: Tr. 29; Garzon: Tr.
60-61). Allan Wartski is the managing member of Gordon
Chen's Kitchen LLC, was the president of Mac-War
Restaurant Corporation, and has been doing business through
these entities as “Hakata” for over 30 years.
(Wartski: Tr. 111-112). Hakata hired Cid in September 2008,
and Valle in October 2010, to make deliveries of food orders.
(Cid: Tr. 8; Valle: Tr. 37-38). Cid worked under the name
“Balverde ‘Daniel' Lopez.” (Cid: Tr.
33; Garzon: Tr. 77). Both plaintiffs stopped working at
Hakata in 2014. (Cid: Tr. 8; Valle: Tr. 37).
testified that before October 2011 he worked Monday to
Saturday, 10:30 a.m. to 4:00 p.m. and 6:00 p.m. to 10:30 p.m.
(Cid: Tr. 9-10). He said that he began working only five days
a week after October 2011, when the restaurant began closing
on Saturdays. (Cid: Tr. 11-13).Cid testified that, when he
started working at Hakata, he did not have to record when he
came to work and when he left. (Cid: Tr. 14). That changed in
2012, at which point he had to punch numbers into a computer
system to enter and to leave. (Cid: Tr. 14-15). Cid said that
this was “just for a month.” (Cid: Tr. 14).
testified that he was told he was paid $4.65 per hour when he
first started at Hakata. (Cid: Tr. 15-16). He was not paid
any supplementary pay if he worked more than 40 hours in a
week. (Cid: Tr. 16). His pay increased to $5 per hour
beginning in October 2010, then to $5.65 “approximately
from 2012 to 2014.” (Id.). He received tips,
but was never told how those tips would affect his
compensation from the restaurant. (Cid: Tr. 17).
testified that he was paid by check each week, which came
with a slip of paper that Cid “never paid very much
attention to.” (Cid: Tr. 29-30). The slip of paper
could have included his number of hours worked, his hourly
rate, and notations of tips and what was withheld from wages.
(Cid: Tr. 31). He said that the check covered 40 hours of
work, but he was regularly paid in cash for an extra 10 hours
of work per week not listed on these slips of paper. (Cid:
Tr. 33-34). He testified that the extra time was paid
“in a different check written, payable to a different
person, and then that person would cash the check and pay
[him] cash, but at the regular hours.” (Cid: Tr. 33).
He said that he was paid either in cash or by check at the
regular hourly rate for all 50 hours. (Cid: Tr. 33-34).
testified that he made approximately 22 deliveries per day.
(Cid: Tr. 20). When he was not making deliveries, he
performed other activities, such as purchasing and organizing
food items, cleaning, and preparing soy sauce and ginger
dressing. (Cid: Tr. 17-18). He spent a half-hour preparing
soy sauce every day, washed utensils for half an hour per
day, cleaned the floor for half an hour per day, prepared
ginger sauce two times a week for a half-hour, and stocked
soda for 15 minutes once per week. (Cid: Tr. 18-19).
testified that his starting schedule was from 10:30 a.m. to
2:00 p.m., then 4:00 p.m. to 10:30 p.m., five days per week.
(Valle: Tr. 38-39). His schedule changed in 2012, when he
started working from 9:30 a.m. to 2:00 p.m. and from 4:00
p.m. to 10:30 p.m. (Valle: Tr. 39). At first, he did not have
to record the time he came to work in the morning and left in
the evening. (Valle: Tr. 38-39). “[F]or two
months” in 2012, however, he had to put his arrival and
departure times into a computer system. (Valle: Tr. 40).
was told he would be paid $4.65 per hour when he first
started, which was paid by check. (Valle: Tr. 40-41). He
received checks for 40 hours of work, both delivery and
nondelivery. (Valle: Tr. 50-51). He also received additional
money that was “changed” for him by a coworker.
(Id.). He did not remember if anything was attached
to the check. (Valle: Tr. 52). His pay increased to $5 per
hour in January 2011, then to $5.65 per hour in October 2012.
(Valle: Tr. 41-42). He also received tips, but was never told
how receiving those tips would affect his wages. (Valle: Tr.
made between 18 and 25 deliveries each day. (Valle: Tr.
46-47). When he was not making deliveries, he prepared salad
every day for 30-40 minutes, cleaned the floor for about 45
minutes, prepared delivery bags for about 20 minutes, put
deliveries from suppliers away about twice a week for about
20 minutes, and twice a week washed dishes for 30 minutes or
more. (Valle: Tr. 44-45). Additionally, in 2014, Valle bought
soda twice a week for a half-hour, made ginger dressing twice
a week for a half-hour, and made soy sauce every day for
20-25 minutes. (Valle: Tr. 46).
testified that he is a manager at Gordon Chen's Kitchen,
and had worked there and at Mac-War Restaurant for 22 years,
becoming the manager in 2004. (Garzon: Tr. 60-61). His most
“important” job is to keep the records and hours
for the restaurant's employees, including recording the
time they come in and the time they leave work. (Garzon: Tr.
61-62). He remembered Valle and Cid (whom he knew as Daniel
Lopez) from when they worked there, and he gave them their
work assignments beginning in January 2010. (Garzon: Tr.
62-64). He was on the premises at all times when plaintiffs
were there, and neither one was there for more than 10 hours
a day. (Garzon: Tr. 64-65, 67). Also, plaintiffs would
normally leave in the middle of the day, then return.
(Garzon: Tr. 93-94).
described the method by which Hakata kept track of work hours
from 2008 to 2014. Originally there was only a time clock
that required a “punch in” and “punch
out” using a card. (Garzon: Tr. 92). Garzon was
responsible for maintaining the system, which indicated the
date and time, with places on the punch cards for four time
entries per day, five days per week. (Garzon: Tr. 92-94).
Garzon would take these cards and record the hours listed,
rounding up to the nearest 15-minute increment, to calculate
the number of hours each employee worked.
Tr. 94-98). The total hours for each employee was then
transferred to the payroll department. (Garzon: Tr. 98-99).
The restaurant switched from this system to a computerized
POS system he set up in 2013. (Garzon: Tr. 62, 66). He
testified that every time there was overtime he would
memorialize it and put it into the payment system. (Garzon:
Tr. 84-86). This overtime would be paid at “time and a
half.” (Garzon: Tr. 81). The time cards were kept for
about four years but were lost during a move. (Garzon: Tr.
testified that the delivery workers were always paid their
weekly wages by check. (Garzon: Tr. 67, 73). The checks were
attached to a “stub” that would show the number
of hours worked and the tips each employee had been paid.
(Garzon: Tr. 76). Garzon would also distribute tips to the
delivery workers daily, in cash, after pooling the tips from
every delivery worker. (Garzon: Tr. 67-68). The delivery
workers would keep cash tips customers gave them - apparently
without being recorded in their wage statements.
(See Garzon: Tr. 69). Most of the tips were on
credit cards, however. (Id.). Garzon would run a
report each day that would tell him credit card tips from the
previous day, then divide that total by the number of
delivery workers who worked and pay each one their share in
cash. (Garzon: Tr. 67-68, 71-72). Garzon would receive a
check from Wartski each week, made out to “cash,
” which he would redeem and use to distribute tips on a
daily basis. (See id.).
tips paid in this manner were reflected on the pay stubs.
(Garzon: Tr. 73). Garzon admitted that he does not know what
a “tip credit” is, and that he did not provide
the delivery workers with a written notice about what it
means to take a tip credit. (Garzon: Tr. 89).
testified that, in addition to delivering food, delivery
workers would also make soy sauce, make salad, make fruit
salad, prepare delivery bags with utensils, napkins, and
chopsticks, wash utensils, wash the floor, help put away
delivery containers, buy soda, take out garbage, and make
ginger sauce. (Garzon: Tr. 101-05). He estimated that Cid and
Valle spent an average of one hour and 15 minutes per day
doing these tasks. (Garzon: Tr. 106).
testified that he consulted with “professionals”
concerning his payroll obligations, attempting to learn when
pay rates changed, and that he was familiar with “tip
rate” and “non-tip rate.” (Wartski: Tr.
112). He claimed, concerning “the integrity of
recordkeeping, ” that he gave instructions “[t]o
do everything according to how we are supposed to, ”
meaning that all employees had to “punch in” and
“punch out” each day. (Wartski: Tr. 112).
said that he has never told Garzon to lie or “put in
improper records, ” and instructed him to “keep a
time clock, record it on the sheet, and get it over to the
payroll company, ” all of which was done to his
satisfaction. (Wartski: Tr. 113). He very rarely reviewed the
paychecks Garzon issued to the delivery workers. (Wartski:
Tr. 113-14). On cross-examination, Wartski testified that he
could fire Garzon, or make any other change he wanted to the
business dealings of Hakata. (Wartski: Tr. 115-16).
Pay Statements and Payroll Registers
entered into evidence defendants' trial exhibits A
through H (Tr. 53-54), which were copies of weekly pay
statements issued to “Lopez” (a.k.a Cid) from
2009 to 2011, weekly pay statements issued to Valle from 2010
to 2011, and weekly payroll registers maintained by
defendants referencing payments to Valle and Lopez from 2012
to 2014, Exs. A-H. The pay statements generally show the
number of hours plaintiffs worked, their hourly rates, the
tips they reportedly received, the number of any overtime
hours worked, and an hourly overtime rate one and one-half
times their base rate. See Exs. A-E. The payroll
registers contain the same information. See Exs.
records indicate that plaintiffs were paid at a rate of $4.60
per hour from 2009 to May 2010, $4.65 per hour from May 2010
to January 2011, $5 per hour from January 2011 to December
2011, and $5.65 per hour for the remainder of their
employment.See, e.g., Balverde
Lopez Pay Stub, dated Jan. 2, 2009, Ex. A ($4.60 per hour);
Balverde Lopez Pay Stub, dated May 28, 2010, Ex. B (same);
Balverde Lopez Pay Stub, dated June 4, 2010, Ex. B ($4.65 per
hour); Alejandro Valle Pay Stub, dated Dec. 31, 2010, Ex. D
(same); Alejandro Valle Pay Stub, dated Jan. 6, 2011, Ex. E
($5 per hour); Alejandro Valle Pay Stub, dated Dec. 30, 2011,
Ex. E (same); Payroll Registers, Exs. F-H ...