Abe v. Uezu Corporation

Background

Hisami Abe and Maromi Martinez worked as servers at Kurumazushi, a sushi restaurant operated by Uezu Corporation. They brought claims under the federal Fair Labor Standards Act (FLSA) and the New York Labor Law (NYLL), alleging failure to pay the minimum wage, failure to pay spread-of-hours wages, improper handling of tips, and wage-notice and wage-statement violations. The plaintiffs moved for partial summary judgment, asking the court to decide two issues: whether each defendant was their employer and whether the defendants could use a tip credit when calculating whether the plaintiffs received the required minimum wage.

Toshihiro Uezu and Kumiko Uezu were the equal co-owners of Uezu Corporation and its sole directors. Kumiko Uezu managed the servers, including hiring them, setting their schedules and pay rates, preparing wage notices, and maintaining employment records. Toshihiro Uezu managed and hired sushi chefs and kitchen workers, but the evidence was disputed as to whether he exercised similar authority over the restaurant’s servers. The restaurant’s tip pool included money that went to restaurant employees, and Toshihiro and Kumiko Uezu also received some money from the pool.

Employer Status

The court held that Uezu Corporation was the plaintiffs’ employer under both the FLSA and the NYLL. The defendants conceded that point, and the court found no genuine dispute of material fact.

The court also held that Kumiko Uezu was the plaintiffs’ employer under both statutes as a matter of law. Applying the economic-reality test, the court relied on her authority over the servers’ hiring, firing, schedules, work conditions, pay rates, wage notices, and employment records. The court concluded that the undisputed evidence established her operational control over the plaintiffs’ employment.

The court denied the motion as to Toshihiro Uezu’s employer status. Although he had general responsibility for managing, hiring, firing, and disciplining Uezu Corporation’s employees, the evidence showed that he exercised those responsibilities over sushi chefs and kitchen workers. His declaration and deposition testimony stated that he did not manage, hire, fire, schedule, set the pay of, supervise, or maintain records for the servers. Because a reasonable jury could find either that his authority extended to the servers or that it did not, material factual disputes remained. The court also explained that his ownership, officer position, and directorship alone were not enough to establish that he was an employer.

Tip Credit

A tip credit allows an employer to pay a tipped employee less than the ordinary minimum wage if the employee’s wages plus permitted tips equal at least the required minimum wage. The court held that the defendants were not entitled to use a tip credit under either the FLSA or the NYLL.

Under the FLSA, an employer may not keep employees’ tips or require tipped employees to share tips with people who do not customarily and regularly receive tips. Because Kumiko Uezu was an employer and received money from the servers’ tip pool, the court held that the defendants could not claim the tip credit. Under the NYLL, employers likewise may not accept or retain any part of employees’ gratuities. The court reached the same result under New York law, regardless of whether Kumiko Uezu performed some restaurant work that could ordinarily be tipped.

Disposition

The court granted the plaintiffs’ motion for partial summary judgment as to the employer status of Uezu Corporation and Kumiko Uezu, denied the motion as to Toshihiro Uezu’s employer status, and granted the motion on the tip-credit issue. The court held that the defendants could not receive a tip credit against the plaintiffs’ wages under either the FLSA or the NYLL. The parties were directed to appear for a status conference to discuss a trial date, and the clerk was directed to terminate the pending motion.