Guevara v. Goodnight Group LLC

Background

Stephanie Ruiz Guevara and Sandra Heras sued Fine & Rare Operations LLC, Flatiron Room Operations LLC, Goodnight Group LLC, and Thomas Tardie. They alleged violations of the Fair Labor Standards Act (FLSA) and New York Labor Law involving minimum wages, overtime, tip credits, tip pooling, meal deductions, spread-of-hours pay, wage notices, and wage statements.

Guevara worked as a busser at Fine & Rare from approximately November 2019 through February 2020. Heras stated that she worked there as a server and food runner from June 2017 through August 2019, although the court noted that her pay records and an email indicated that she may have left in August 2018. Neither named plaintiff worked at Flatiron Room.

The plaintiffs stated that they were paid a cash wage reduced by a tip credit while spending at least 20 percent of their workday on non-tipped side work. They also stated that salaried managers participated in the tip pool and that a meal credit was automatically deducted from their wages. The plaintiffs further alleged violations involving tip-credit notices, wage notices, wage statements, and spread-of-hours pay. The defendants disputed parts of these accounts, including the meal practices and the scope of any common policy.

Legal standard

Under the FLSA, employees may bring a collective action for themselves and other employees who are similarly situated. At the initial, conditional-certification stage, plaintiffs must make a modest factual showing that they and potential participants were affected by a common policy or plan that violated the law. The court does not decide the ultimate merits, resolve factual disputes, or make credibility determinations at this stage.

Conditional certification

The court held that the plaintiffs met this modest burden for non-exempt tipped employees at Fine & Rare. Their sworn declarations described their own wage practices and conversations with identifiable coworkers about tip-credited wages, substantial side work, meal deductions, and meal quality. The court concluded that this evidence supported an inference that other tipped employees at Fine & Rare were similarly situated concerning the alleged FLSA violations.

The court limited the collective to non-exempt tipped employees. The plaintiffs had not provided enough evidence about non-tipped employees such as cooks, food preparers, dishwashers, porters, or hosts. In addition, the plaintiffs did not show that the alleged wage policies were uniform at Flatiron Room. Although the two restaurants were jointly owned, jointly promoted, and at least partly jointly managed, the plaintiffs did not provide specific evidence about wages, side work, meal deductions, or meal quality at Flatiron Room.

Employee information and notice

The court required defendants to provide, within two weeks, a spreadsheet containing the names, last known mailing addresses, email addresses, telephone numbers, dates of employment, current or most recent job titles, and current or most recent compensation rates of current and former non-exempt tipped employees who worked at Fine & Rare on or after July 11, 2017. The court used the three-year period applicable to FLSA claims involving willful violations rather than the six-year period applicable to New York Labor Law claims, because no New York class had been certified.

The proposed notice had to be revised before distribution. The revised notice must explain that the court will review any request for attorneys' fees and costs for fairness and reasonableness, describe how costs may be handled if defendants win, include defendants' attorneys' names and contact information, and advise represented participants not to contact defendants' lawyers directly. The court authorized distribution by mail, email, and/or text message, with no more than two contacts through any one channel during the 60-day opt-in period. Defendants must also post the notice in English and Spanish at Fine & Rare in a location accessible to tipped employees. The court allowed a Spanish translation and directed the parties to submit a revised notice, opt-in form, and proposed distribution order for approval.

Equitable tolling

The court denied the plaintiffs' request for blanket equitable tolling of the FLSA limitations period until notice could be sent. It found no rare and exceptional circumstances supporting that request. The court stated that its decision did not prevent one or more individual plaintiffs from later seeking equitable tolling based on circumstances specific to their claims.

Disposition

The court's conclusion states that the plaintiffs' motion for conditional collective certification was granted in part as to all former and current non-exempt tipped employees who worked at Fine & Rare on or after July 11, 2017, and otherwise denied.