Stefanovic v. Old Heidelberg Corp.

Background

Andjela Stefanovic, Uros Dukic, Bojana Novakovic, and Danijel Mirkov sued Old Heidelberg Corp., doing business as Heidelberg Restaurant, and Eva Matischak. They asserted claims under the Fair Labor Standards Act (FLSA) and New York Labor Law (NYLL) concerning alleged wage violations from March 2016 through April 2018. The defendants asserted a counterclaim against Mirkov under New York’s faithless-servant doctrine, alleging misconduct involving customer tips.

The defendants moved for partial summary judgment on the employees’ unpaid-overtime claims, spread-of-hours claim, and wage-statement claim. They also moved for summary judgment on the counterclaim and on all FLSA claims arising before March 7, 2015. The plaintiffs conceded that the defendants were entitled to summary judgment on the FLSA claims arising before that date. The plaintiffs cross-moved for summary judgment against the Restaurant only on the spread-of-hours claim, the wage-statement claim, the wage-notice claim, and the counterclaim.

Overtime claims

The plaintiffs claimed that the Restaurant failed to pay required overtime under both the FLSA and NYLL. The Restaurant argued that the plaintiffs lacked competent evidence of underpayment. The court rejected that argument. The plaintiffs submitted pay stubs and batch time records showing dates worked, daily hours, time-in and time-out information, tips, and pay rates. The court held that this evidence was sufficient to allow a reasonable inference of violations and the amount of any award. Because the defendants did not directly address or effectively challenge that evidence, the court denied the defendants’ motion as to Counts Three and Four.

Spread-of-hours claim

New York’s spread-of-hours rule requires an additional hour of pay at the basic minimum hourly rate for a day whose workday extends beyond ten hours. The parties did not dispute that each plaintiff worked more than ten hours in a single shift on at least two occasions without receiving the additional pay. The court therefore granted the plaintiffs’ motion for summary judgment against the Restaurant as to Count Five, concerning liability only. The court explained that the defendants’ claimed good-faith efforts could relate to liquidated damages but did not defeat liability for the underlying spread-of-hours violations.

Wage notices and wage statements

New York law requires an employer to give employees hiring notices stating the rate and basis of pay and any allowances claimed as part of the minimum wage. The Wage Notices given to the plaintiffs stated that no allowances would be taken and did not disclose that the Restaurant would take a tip credit. The court held that the notices violated the law. It also rejected the defendants’ good-faith defense, finding that generally relying on a payroll company and offering vague descriptions of other payroll or compliance assistance did not show active steps to learn and follow the law. Because each plaintiff worked at least 100 days after receiving a deficient notice, the court held that each was entitled to $5,000 in statutory damages under NYLL section 198(1-b), and granted the plaintiffs’ motion against the Restaurant as to Count Seven.

The wage statements also did not accurately report hours worked, did not identify the tip-credit allowance, and did not report spread-of-hours pay. The court held that these deficiencies established liability under NYLL section 195(3). Because each plaintiff worked at least 20 days while the violations continued, each was entitled to $5,000 in statutory damages under NYLL section 198(1-d). The court granted the plaintiffs’ motion against the Restaurant as to Count Eight and denied the defendants’ motion as to that count.

Faithless-servant counterclaim

The defendants claimed that Mirkov’s alteration of customer tips supported forfeiture of his compensation under New York’s faithless-servant doctrine. Mirkov admitted altering tips approximately twelve times over two years, but the defendants did not identify a total dollar amount stolen. The court concluded that, although the conduct was improper, the record showed conduct more like the minor misconduct described in prior cases than large-scale fraud. It therefore granted the plaintiffs’ motion for summary judgment on the counterclaim and denied the defendants’ motion on that counterclaim.

Disposition

Judge Swain granted the plaintiffs’ motion for summary judgment on Counts Five, Seven, and Eight against the Restaurant only, and as to the counterclaim. She granted the defendants’ motion for summary judgment as to all claims arising under the FLSA before March 7, 2015, and otherwise denied the defendants’ motion. The opinion states that the case remained in pretrial management and set a final pretrial conference for December 9, 2022.