Lee v. New Kang Suh Inc.

Background

Young Min Lee worked as a waitress at defendants’ Korea Garden restaurant from 2001 until June 15, 2017. The court found that she generally worked 58.5 hours per week. She was paid $55 per day in 2014 and 2015 and $60 per day in 2016 and 2017. The defendants did not keep accurate records of her tips.

After her employment ended, Lee asked Myung Sook Choi for $30,000 in severance pay. Lee received $17,000 and signed an English-language settlement agreement releasing claims against the defendants, including claims under the Fair Labor Standards Act (FLSA). Lee testified that she did not read English, that no one explained the agreement or her wage rights, and that she understood the payment to be severance pay. The defendants conceded that the agreement was prepared by a third party and that neither party understood its terms.

In an earlier round of this case, the court dismissed Lee’s New York Labor Law claims based on the settlement agreement but allowed her FLSA claims to continue. The case proceeded to a bench trial, where Lee testified and the defendants did not call any witnesses.

Rulings

The court set aside Lee’s release of her FLSA claims and held that it was unenforceable. The court found that the agreement was not the product of a fair bargaining process because Lee did not understand its terms or know that she was waiving FLSA rights, the payment was not tied to a calculation of wages owed, and she was told to sign the agreement if she wanted the money.

The court found that New Kang Suh, Inc. and Myung Sook Choi were Lee’s employers under the FLSA. It also found that the restaurant met the FLSA’s coverage requirement because its gross sales were at least $500,000 in each relevant year. The court determined that Lee was paid between $4.70 and $5.13 per hour, below the federal minimum wage of $7.25 per hour, and that she was not properly paid for work beyond 40 hours per week.

The court applied the FLSA’s three-year limitations period after finding that the violations were willful. It awarded Lee $26,636.75 in unpaid wages and $26,636.75 in liquidated damages, an additional amount allowed under the FLSA when an employer cannot show a good-faith basis for underpaying wages. Judge Davison found in Lee’s favor on her FLSA minimum-wage and overtime claims and awarded total damages of $53,273.50. The clerk was directed to enter judgment, and the court set deadlines for any motion by Lee for attorney’s fees and costs.