Lopez v. MNAF Pizzeria, Inc.

Background

Ivan Lopez and Kevin Campos sued MNAF Pizzeria, Inc. and Musa Nesheiwat under the Fair Labor Standards Act, the New York Labor Law, and the New York Wage Theft Prevention Act. They sought partial summary judgment, meaning a ruling that certain liability issues could be decided without a trial.

MNAF operated Sal’s Pizzeria. The opinion states that MNAF had annual revenues exceeding $500,000. Nesheiwat owned 49% of MNAF, actively managed the pizzeria, and had authority to hire and fire employees, set wages and schedules, and maintain employment records.

Lopez and Campos worked as delivery persons and were paid hourly wages plus tips. Lopez was paid between $5 and $7 per hour, and Campos was paid between $5 and $6 per hour. They did not receive pay stubs, written wage notices, or written information about the defendants’ tip policies. The defendants also did not maintain accurate records of pay, hours, employment dates, or tips, and did not reimburse the plaintiffs for gas, mileage, or vehicle maintenance.

The defendants did not properly respond to the plaintiffs’ statement of material facts under the court’s local rule. The court nevertheless reviewed the supporting evidence rather than automatically treating every properly supported fact as admitted. It also deemed the defendants’ late responses to the plaintiffs’ requests for admissions admitted because doing so would promote consideration of the merits and would not prejudice the plaintiffs.

Court’s analysis

Employer status and coverage. Applying the federal “economic reality” test, the court held that Nesheiwat qualified as an employer under the federal and New York wage laws. The undisputed evidence showed that he had hiring and firing authority, controlled schedules and pay, paid employees, and maintained employment records. The court also held that the plaintiffs were covered employees because MNAF met the federal law’s $500,000 annual-sales threshold. New York law provided coverage without that federal sales requirement.

Hours worked. Because the defendants’ records were inaccurate or incomplete, the plaintiffs could rely on their testimony and reasonable estimates of hours worked. The court found that Lopez worked at least 48 hours per week and that Campos worked at least 36 hours per week and more than 40 hours in some weeks. The court rejected the defendants’ attempt to rely on unauthenticated time cards attached to an attorney’s declaration.

Minimum wage and tip credit. The court held that the defendants violated the federal and New York minimum-wage laws. The plaintiffs’ hourly wages were below the applicable statutory minimums. Although an employer may sometimes count tips toward the minimum wage through a “tip credit,” the employer must satisfy legal notice requirements. The court found that the defendants had not adequately informed the plaintiffs that their tips would be used as a credit against minimum-wage obligations. The defendants therefore could not claim a tip credit, and the court granted partial summary judgment on liability for the minimum-wage claims.

The court did not grant summary judgment on Campos’s assertion that the defendants failed to pay him for his last week of work. Campos said he was owed $130, while Nesheiwat disputed that account, creating a genuine factual dispute.

Overtime. Federal and New York law generally require payment at one and one-half times the regular rate for hours over 40 in a workweek. Because the court found that Lopez worked at least 48 hours per week and Campos worked more than 40 hours in some weeks, and because the defendants did not pay the proper overtime rate, the court granted partial summary judgment on liability for the overtime claims.

Vehicle expenses. The court held that the plaintiffs’ cars were tools of their work because they had to use them for deliveries. Since the defendants did not reimburse gas, mileage, or maintenance costs, the court granted partial summary judgment on liability for the unlawful-deduction claims.

Spread of hours. New York’s spread-of-hours rule can require an additional hour of pay when an employee’s workday extends for more than 10 hours, among other circumstances. The court found a genuine factual dispute about whether the plaintiffs worked more than 10 hours on particular days. It therefore denied partial summary judgment on the spread-of-hours claims.

Wage notices and pay statements. The court granted partial summary judgment on liability for the Wage Theft Prevention Act claims. It found no genuine dispute that the defendants failed to provide the required written wage notices when the plaintiffs were hired and failed to provide required wage statements with their payments.

Liquidated damages. Liquidated damages are additional damages that may be awarded for wage violations. The defendants had the burden of showing that they acted in good faith and had reasonable grounds for believing they complied with the law. The court found that they did not meet that burden. It granted partial summary judgment on liability for liquidated damages under either the federal or New York law, whichever provided greater relief.

Prejudgment interest and fees. The court ruled that the plaintiffs were entitled to prejudgment interest under New York law, although the precise amount would be determined later. It explained that federal-law liquidated damages and federal-law prejudgment interest generally cannot both be recovered for the same damages. The plaintiffs were also permitted to submit a later motion seeking attorneys’ fees and costs.

Disposition

The court’s conclusion states that the plaintiffs’ motion for partial summary judgment as to liability was granted in part and denied in part. The court scheduled a status conference to discuss how the litigation should proceed.