Restaurant co. likely to pay $3.9M in wage-and-hour deal

NEW YORK In a decision likely to grab the attention of foodservice employers, a federal judge has reportedly indicated he will approve a $3.9 million settlement of two employee lawsuits brought against the Fireman Hospitality Group, operator of several upscale New York City restaurants.

District Judge Paul A. Crotty on Wednesday approved the first $588,000 of the payment, which covers a suit filed against Fireman’s Redeye Grill, according to news reports. The New York Times said Crotty also indicated he would approve a subsequent settlement of more than $3 million against the company’s other eateries: Cafe Fiorello, Brooklyn Diner, Bond 45, Shelly’s and Trattoria Dell’Arte. The latter action reportedly involves more than 1,000 plaintiffs.

The lawsuits were filed in 2005 by a group of employees who accused the company of violating tip-pooling regulations and other wage-and hour laws. The decision came as a number of restaurants in the city are facing similar lawsuits, some of which accuse the employers of unlawfully forcing tipped employees to share gratuities with managers. At least some of the restaurants maintain that the so-called managers are actually shift members who should share in the pool of tips.

“Restaurateurs in New York, and throughout the country, have been placed in an untenable position by a variety of forces including state legislatures and agencies,” attorney Carolyn D. Richmond of Fox Rothschild LLP told Nation’s Restaurant News. She has represented restaurants in a number of lawsuits.

“There is simply no consistent definition of ‘supervisor’ for purposes of tip pooling,” adds Richmond, who is not Fireman's attorney.

The suit against Fireman also leveled a slew of other accusations. The plaintiffs claimed the company fudged their time cards, shortchanged them on overtime and minimum wages, and forced them to pay the tabs of patrons who skipped out on their bills. In addition, some employees said they were forced to work 12-hour shifts without breaks.

Fireman could not be reached for comment.

The settlement also calls for the creation of a system whereby employees could raise concerns about such issues as sexual harassment or race discrimination without fear of retaliation. According to The Times' report, five Fireman employees were threatening to sue on the grounds of harassment and discrimination.

Restaurant worker activist Saru Jayaraman said she was happy with the settlement. Jayaraman is co-director of Restaurant Opportunities Center United, a national advocacy group spun off the New York City organization she co-founded in 2002. Fireman had accused ROC-NY of fostering the lawsuits.

“Fireman has done the right thing and set an example for the industry by making changes in terms of compliance with the law and creating new promotions policies and sex harassment policies and grievance procedures that will allow employees to have equal opportunity for advancement within the company,” Jayaraman said. “I hope the industry takes note and follows Fireman’s lead.”

Attorney Richmond cautioned against viewing the settlement as a model for resolving other actions that are pending in New York and elsewhere.

“The settlement is just that, a settlement,” she said. “It has no precedential value as it is not a ‘court decision’ and will not affect any case.”

She added, “The restaurant industry nationwide needs to continue to lobby the various state legislatures to revise the labor codes to reflect today's workplace.”

She explained that “many of the [tip pooling] regulations in place were written over 40 years ago and are not relevant to today's restaurants. As a result, there are very large loopholes that plaintiff class action lawyers have swooped in and taken advantage of.”