Summary
In Agudelo v. E & D LLC, 12 Civ. 0960 (HB), 2012 WL 6183677, at *3 (S.D.N.Y. Dec. 11, 2012), the employer argued that facially adequate payroll records show that the employer did not commit any wage and hour violations.
Summary of this case from Lee v. Grand Sichuan E. (N.Y.) Inc.Opinion
12 CV 0960 (HB)
12-11-2012
JEFFERSON AGUDELO, on behalf of himself, FLSA collective plaintiffs, and the class, Plaintiff, v. E & D LLC d/b/a The Prime Grill NY, JA RESTAURANT MANAGEMENT, LLC d/b/a Solo, BROADWAY 21 LLC d/b/a Prime Ko Japanese Steakhouse, and JOSEPH ALLAHAM, Defendants.
OPINION & ORDER
Hon. HAROLD BAER, JR., District Judge :
Before the Court is the defendants' motion for summary judgment. For the reasons set forth below, the motion is DENIED.
Background
This Court recently granted plaintiff Jefferson Agudelo's motion for conditional collective certification for this Fair Labor Standards Act ("FLSA") action. See Agudelo v. E & D LLC, 12 CV 0960 HB, 2012 WL 5426420 (S.D.N.Y. Nov. 5, 2012). Familiarity with that Opinion and Order is presumed. Contemporaneously with its opposition to Agudelo's motion for conditional collective certification, defendants JA Restaurant Management, LLC d/b/a Solo ("Solo"), E&D LLC d/b/a The Prime Grill NY ("The Prime Grill"), Broadway 21, LLC d/b/a Prime Ko Japanese Steakhouse ("Prime Ko"), and Joseph Allaham (collectively, "Defendants") moved for summary judgment on the ground that the payroll records dispose of most if not all of the issues in this case, and any possibly remaining claims are unsupported by the allegations in the Amended Complaint.
The main arguments put forth in Defendants' brief in support of their motion concern the calculation of overtime and spread-of-hours pay and the management of the tip credit. The remaining subjects either are raised in Defendants' reply or are inadequately briefed for me to resolve at this juncture. Defendants' Rule 56.1 Statement serves to do little more than parrot the arguments raised in the briefs—and virtually the only facts that are not in dispute are the existence of the records that are discussed below. As such, I cite to the briefs, declarations, and exhibits throughout.
Agudelo alleges miscalculated overtime and other wages. Defendants claim that Agudelo never worked more than a 40-hour week during his time at Solo or The Prime Grill. Defs.' Supp. 9; see Menegis Decl. ¶ 4, 13-15. Defendants attach as exhibits year-to-date payroll records noting aggregate employee overtime hours and wages. See Menegis Decl. Exs. C-E. Defendants allege that these exhibits prove that overtime wages are accurate and in accordance with the FLSA. Defs.' Supp. 5-6.
Agudelo also alleges improper application of a tip credit against employees' hourly wages. As to the improper pooling of tips, which would negate Defendants' valid use of a tip credit, Defendants assert that Agudelo's allegations are insufficiently developed and note his failure to provide a date range of alleged infractions or the name of a manager or other non-tipped employee that participated in a tip pool. Id. at 6-7. Defendants include tip sheets from The Prime Grill and Solo from May 19, 2010, onward that allegedly demonstrate that only tipped employees participated in the pool. Id. at 8; see Menegis Decl. Exs. F-G. As to the notice of the tip credit, Defendants claim that all employees knew of the restaurants' practice because employees: "(1) had it explained by their managers years ago; (2) received class notices and settlement money on account of the tip credit and tip pool claim in the Manfredi case[;] and (3) each received specific written notice . . . on or about February 8, 2011 . . . ." Defs.' Opp'n 10; see Menegis Decl. Ex. H. The Manfredi case was an earlier litigation that gave rise to a settlement correcting certain wage calculation and other errors.
Discussion
A district court may not grant summary judgment if there exists a genuine issue of material fact. See Cotarelo v. Vill. of Sleepy Hollow Police Dep't, 460 F.3d 247, 251 (2d Cir. 2006) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986)). "For summary judgment purposes, a 'genuine issue' exists where the evidence is such that a reasonable jury could decide in the non-moving party's favor." Cambridge Realty Co., LLC v. St. Paul Fire & Marine Ins. Co., 421 F. App'x 52, 53 (2d Cir. 2011) (internal citations omitted).
To establish liability under the FLSA on a claim for unpaid minimum wages or overtime, "a plaintiff must prove that he performed work for which he was not properly compensated, and that the employer had actual or constructive knowledge of that work." Kuebel v. Black & Decker Inc., 643 F.3d 352, 361 (2d Cir. 2011) (citing Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 686-87 (1946)). "When the employer has kept proper and accurate records, the employee may easily discharge his burden by securing the production of those records." Anderson, 328 U.S. at 687; see also 29 U.S.C. § 211(c) (requiring employers to maintain accurate records of its employees' hours). If an employer's records are inaccurate or inadequate, an employee need only present "sufficient evidence to show the amount and extent of [the uncompensated work] as a matter of just and reasonable inference". Id. at 687. "[I]it is possible for a plaintiff to meet this burden through estimates based on his own recollection." Kuebel, 643 F.3d at 362. A plaintiff need not compute FLSA damages with precision. Reich v. S. New England Telecomms. Corp., 121 F.3d 58, 66 (2d Cir. 1997). The burden then shifts to the employer to present evidence either of the precise wages paid or evidence to "negative the reasonableness of the inference to be drawn from the employee's evidence." Anderson, 328 U.S. at 688. In the absence of rebuttal by defendants, a plaintiff's recollection and estimates of hours worked are presumed to be correct. See, e.g., id. at 688 ("If the employer fails to produce such evidence, the court may then award damages to the employee, even though the result be only approximate."); see also Grochowski v. Phoenix Constr., 318 F.3d 80, 87-88 (2d Cir. 2003).
I. Defendants' Payroll Records
In wages and hours cases in which payroll and time records are kept, the accuracy and adequacy of the records can be determined in a variety of ways. Further, plaintiff may, under appropriate circumstances, meet this burden "by relying on recollection alone." Santillan v. Henao, 822 F. Supp. 2d 284, 294 (E.D.N.Y. 2011) (citing Doo Nam Yang v. ACBL Corp., 427 F. Supp. 2d 327, 335 (S.D.N.Y. 2005)); see also Park v. Seoul Broadcasting Sys. Co., 2008 WL 619034, at *7 (S.D.N.Y. March 6, 2008).
Here, Defendants offer their payroll records, claiming that they are dispositive of Agudelo's claims and show that Defendants did not commit any violations. Defs.' Supp. 11. Defendants, somewhat disingenuously, argue that Agudelo has not produced "some admission from a defendant or some documentary evidence to corroborate the assertion that the payroll and time records do not reflect the hours worked," id. at 12, and that such evidence is necessary to "go beyond the pleadings and present affirmative evidence to show that genuine issues of material fact exist." Id. However, the timing of this motion for summary judgment—brought in response to a motion by Agudelo for conditional collective certification—left Agudelo with very little time to expand the record or provide such evidence; Defendants may not unduly benefit from the aggressive timing of their motion. Further, regardless of timing, Defendants' payroll records alone are simply not dispositive of Agudelo's claims.
District courts are to "view the evidence in the light most favorable to the party against whom summary judgment is sought and must draw all reasonable inferences in [its] favor." Matsushita Elec. Indus. Co. Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). Agudelo's evidentiary filings are limited, but include a Declaration from Agudelo that raises genuine issues of material fact when compared with Defendants' contributions to the record, as well as copies of pay stubs that indicate that Agudelo's interpretation of the payroll records is reasonable. A plaintiff's declaration is essentially testimonial in nature, and, assuming it raises genuine issues of fact, requires a credibility determination as to its veracity; credibility issues are for the jury at trial. See, e.g., Etienne v. Inter-County Security Corp., 173 F.3d 1372, 1374 (11th Cir. 1999); see also Chung v. New Silver Palace Restaurant, Inc., 246 F. Supp. 2d 220, 224 n.2 (S.D.N.Y. 2002) (noting that a district court may not make credibility determinations at the summary judgment stage).
II. Calculations
Here, the Court is confronted by imprecise records submitted by Defendants, not simply minimal computational errors or other nonmaterial mistakes. See Defs.' Supp. 12 (citing Etienne, 173 F.3d 1372).
a. Overtime Pay For Work in Excess of 40 Hours
During the period in question, Agudelo was first paid an hourly rate of $5.12 and later an hourly rate of $5.00. Defendants are allowed to pay this sub-minimum wage rate by taking what is known as a "tip credit" (in this case, an amount of $2.25) from its tipped employees' hourly minimum wage. This credit is taken in reliance on and in anticipation of tips and gratuities received by tipped employees, and may only be taken from tipped employees; if there are insufficient tips within a certain time frame, the employer must compensate the employee an amount sufficient to bring their total compensation up to that required by minimum wage laws. When a tipped employee whose wages are subject to a tip credit is paid at a time-and-a-half overtime rate for hours worked in excess of 40 per week, it is important to ensure that the correct hourly rate is calculated: the pre-tip-credit wage must be multiplied by 1.5 before the tip credit is subtracted, otherwise the tipped employee will be underpaid for their overtime.
Agudelo alleges, and Defendants concede, that Defendants' payroll provider "somehow calculated the time-and-a-half rate of $7.25 to be $10.81 per hour rather than $10.875," an amount that is six and a half cents less per hour than that which should have been paid. Pl.'s Opp'n 9; Defs.' Reply 2. Agudelo also notes that, after the $2.25 tip credit is deducted from that time-and-a-half wage, the actual overtime rate that should have been paid was $8.625; however, in the notice given to Agudelo, the amount was $8.65 rather than the correct $8.625. Pl.'s Opp'n 9; Menegis Decl. Ex. H. It is not clear where the noticed $8.65 overtime rate comes from: subtracting a $2.25 tip credit from the incorrectly calculated time-and-a-half of $10.81 would be $8.56.
Defendants claim that, despite this seven-cent miscalculation in the time-and-a-half overtime rate, they actually neglected to take the tip credit out of the overtime pay at all, thus resulting in employees who worked overtime being paid the full time-and-a-half miscalculated rate of $10.81, which is approximately $2.15 per hour more than the $8.625 that they were owed. Defs.' Reply 2. Thus, Defendants argue that any employees who worked overtime were overpaid for that overtime work. Id. at 3. The payroll records may support this, see Menegis Decl. Ex. C., but, as noted in the next section, the records lack the necessary clarity to resolve this case with any amount of certainty.
Defendants also claim that Agudelo never worked over 40 hours per week, and was thus ineligible to receive overtime. Defs.' Reply 1. Defendants offer their payroll records as proof. Menegis Decl. Ex. I (showing that Agudelo never earned what was labeled as "4 OVERTIME" at Solo in 2010 and at Prime Grill in 2011). The records list Agudelo as receiving only "2 OVERTIME" (which, as noted below, Defendants claim is their payroll provider's way of labeling shift-spread pay). Agudelo states that he "periodically" worked in excess of 40 hours per week. Agudelo Decl. ¶ 8.
b. "Shift-Spread" or "Split-Shift" Pay
New York requires that an employer pay an employee an extra hour's wages at the basic minimum wage rate for "shift-spread" or "split-shift" pay. This may occur when (1) the spread of hours worked in a day exceeds 10, (2) there is a split shift (such as an 8-hour day split over two 4-hour shifts), or (3) both situations occur. 12 NYCRR § 142-2.4. In either of these situations, Defendants are required by law to pay that employee an extra $7.25, or one hour at the minimum wage rate.
Defendants claim that they paid $7.68 per hour for spread-of-hours pay when Agudelo's hourly wage was $5.12 and $7.50 per hour for spread-of-hours pay when his hourly wage was $5.00. Defs.' Supp. 5; Pl.'s Opp'n 17. As Defendants note, these amounts are greater than $7.25, the amount required by law. Defs.' Reply 3. According to Defendants, their payroll provider labels shift-spread pay as "2 OVERTIME" in the payroll records, and overtime paid in excess of 40 hours per week is labeled as "4 OVERTIME". They argue that Agudelo's allegations regarding a failure to pay for a spread of hours result from a failure to understand that the listed "OVERTIME" amount was in fact spread-of-hours pay.
However, Agudelo submits a different, but similarly reasonable, interpretation of the evidence currently in the record. First, he contends that Defendants failed to provide spread-of-hours pay at the proper rate. Pl.'s Opp'n 13. Shift-spread pay is required to be paid under the NYCRR at a rate equal to one hour at the basic minimum wage rate, or $7.25, no matter what the employee's actual hourly wages are. Agudelo notes that, on his pay stubs, there are only items labeled as "REGULAR" or "HOURLY PAY", "OVERTIME", "CHARGE TIPS", and "MEALS". Lee Decl. Exs. G, H. There is no separate listing for "shift-spread" or "split-shift" pay, and Agudelo argues that "a reasonable person could not read or comprehend 'OVERTIME' listed on an employee's pay stub as a spread of hours pay." Pl.'s Opp'n 13.
Second, and most importantly, the hourly amounts paid within the "2 OVERTIME" field strongly resemble improperly calculated overtime hours rather than shift-spread pay, which makes Agudelo's interpretation of the evidence even more reasonable. Each listing of "2 OVERTIME" contains an amount paid equal to Agudelo's hourly rate minus the tip credit, multiplied by 1.5 ($5.12 * 1.5 = $7.68, and $5.00 * 1.5 = $7.50). Shift-spread pay is not expected to change with the fluctuations in Agudelo's hourly wages, as it is only required to be paid at a rate of $7.25 (the basic minimum wage). Unless Defendants are running eleemosynary institutions, it seems unlikely that they would pay more than they had to.
Third, the payroll records show a fractional amount of shift-spread hours—4.23 for the Servers and 3.32 for the bussers—paid at the alleged rate of shift-spread pay. See Menegis Decl. Ex. C. It is unclear to me how or why shift-spread pay should be accruing in fractional hours, as it is only paid in single-hour increments when one or both of the statutory conditions is met.
The confusion inherent in the record as it presently stands creates a material issue of fact with regard to overtime and spread-of-hours pay. The parties also discuss call-in pay, meal credits, and other issues that the record and briefs insufficiently address for me to decide on this motion.
III. Tip Credit and Tip Pooling
a. Non-Tipped Employees Participating in Tip Pool
Agudelo alleges that non-tipped employees illegally participated in the tip pool. Agudelo notes that the tip sheets provided by Defendants cover a "sporadic" time period and list only the tips earned by tipped employees, not how they were distributed among employees. Pl.'s Opp'n 9-10, see Menegis Decl. Exs. F, G. Agudelo further alleges that Defendants failed to keep proper records as required by NYCRR 146-2.17, which requires a log of tips collected by each employee, a list of occupations that are designated to receive tips, the shares of tips allocated to each employee, and the amount each employee receives by date. Id. at 10. Defendants have produced weekly and daily tip sheets that include handwritten divisions of tips, lists of the various positions that receive them, the employees, the tip shares allocated to each employee, and the amount each employee received on each date. Rubertone Decl. Ex. A. The manner in which the evidence has been presented to me serves only to emphasize the premature nature of Defendants' motion. These daily and weekly tip sheets, when presented and taken as a whole, may dispose of Agudelo's arguments regarding proper records but conflict with assertions raised in Agudelo's declaration that he was "required to pool [his] tip income with management and other non-tipped employees." Agudelo Decl. ¶ 13.
b. Sufficiency of the Notice of a Tip Credit
Employees subject to a tip credit must be given adequate notice in English and in their primary language that includes the regular hourly pay rate, the overtime hourly pay rate, the amount of tip credit, the regular pay day, and a statement that extra pay is required if tips are insufficient to bring the employee up to the basic minimum hourly wage. See NYLL § 195.1(a). Section 195.1(b) requires that the Commissioner of the Department of Labor provide templates for dual-language notices. Defendants point to three separate notices that they claim are sufficient: (1) an explanation from management "years ago"; (2) class notices and settlement money from the Manfredi wages and hours settlement; and (3) a notice signed by Agudelo designed to comply with NYLL. Defs.' Supp. 10, 15. Defendants argue that written notice, actual notice, and estoppel disposes of the notice claims. Id. at 15.
As an individual whose primary language is Spanish and who does not read English, Agudelo was entitled to a notice in Spanish. Pl.'s Opp'n 8-9 (citing NYLL § 195.1(a)). While Defendants raise concerns about Agudelo's ability to understand English, Defs.' Reply 5, if his primary language is Spanish, then § 195.1 entitles him to notice in Spanish. Defendants argue that the Commissioner's templates lack notice that "extra pay is required to bring the employee up to the basic minimum hourly rate," and therefore the Commissioner has not made the required notice form available on the DOL website. Defs.' Reply 5. As a result, Defendants contend that, because NYCRR § 146-2.2 notes that providing bilingual notice forms is only necessary if they are available, and that a notice meeting the requirements of 195.1(a) is not available in Spanish, the English notice is sufficient. Defs.' Reply 5. NYLL § 195.1(d) does provide that "An employer shall not be penalized for errors or omissions in the non-English portions of any notice provided by the commissioner." But Defendants cite no law and make no argument to suggest that when the Commissioner's notice is deficient, an employer need provide no notice whatsoever.
c. Did Agudelo spend 20% or more of his time on non-tipped activities?
Under NYLL § 146-2.9, when a tipped employee spends more than 20% of his or her shift in non-tip-related work, the employee may not be subjected to the tip credit. See Pl.'s Opp'n 8; Agudelo Decl. ¶ 13. Defendants claim that Agudelo's allegations are conclusory and fail "to specify what jobs he performed amounting to more than 2 hours, or more than 20% of his time." Defs.' Reply 10. Defendants offer declarations from managers to "confirm that neither servers, bussers, or runners work at non-service tasks 20% of their work day [or] for more than 2 hours." Id.
* * *
The issues, poorly argued and insufficiently developed, drag on in this fashion. Suffice it to say, Defendants have not met their burden for summary judgment. Notwithstanding Defendants' protestations that "[t]he claims so clearly lack merit" and that "the combination of the payroll and time records, accompanied by an affidavit explaining any deductions, sheds all the light that is needed to determine the case", Defs.' Supp. 1, 11, I have struggled to resolve this motion without a need for reliance on disputed issues of material fact. Certainly, it is possible that Agudelo received the overtime and other pay that he was due, and Defendants might be paying more than the required spread-of-hours rate. It is also possible that this extra pay offsets the minor seven cent miscalculation their payroll company made in the calculation of overtime pay noted above. However, the questions raised by the competing, and reasonable, interpretations of the payroll records cannot on these papers be resolved at this early stage in the litigation. While better briefing or a greater effort at resolution amongst yourselves might have helped, those are concerns for you to examine further, As for this Court's role, the motion is not ripe for summary judgment and is denied.
Conclusion
I have considered the parties other arguments and find them, for now at least, without merit. For the foregoing reasons, Defendants' motion for summary judgment is DENIED. Nothing in this Opinion and Order is intended to constitute a finding by the Court. The Clerk of Court is instructed to close the open motion and remove it from my docket.
SO ORDERED.
Date: 12/11/12
New York, New York
/s/ _________
HAROLD BAER, JR.
United States District Judge
See, e.g., Herman v. RSR Sec. Servs. Ltd., 172 F.3d 132, 138 (2d Cir. 1999) (finding allegations of failure to pay proper overtime substantiated by timesheets and logbooks whose contents contradicted payroll records); Moon v. Kwon, 248 F. Supp. 2d 201, 219 (S.D.N.Y. 2002) (finding payroll records inaccurate based on documentary evidence and testimony of other credible witnesses); Gale v. Levi Strauss & Co., 1999 WL 438470 (N.D. Ga. April 29, 1999) (finding plaintiff met the burden of production despite having no payroll records to support her claims after she produced affidavits from other employees, her former husband, and emails from supervisor indicating unpaid overtime).