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California Overtime Lawsuit Settlement Awards Restaurant Workers

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Los Angeles, CAContrary to how some restaurant employers choose to conduct business, it doesn’t pay to cheat employees out of California overtime pay. For example, a recent overtime complaint resulted in the owners of a number of sushi and ramen eateries, namely Gatten Sushi and Yushoken Ramen, paying their sushi chefs and other workers $621,000 in back wages and damages, and $156,640 in civil penalties.

The Associated Press (AP) reported last month that violations by Cerritos-based Gatten Sushi and its sister company GTN affected nearly 400 workers at 11 restaurants in Los Angeles and Orange counties. Federal investigators discovered that workers’ timecards had been tampered with: Their hours were shaved off and their pay docked for 10-minute breaks. Some sushi chefs reported having worked more than 90 hours per week without overtime, according to AP.

“This employer’s failure to pay legally earned wages hurts the workers, their families and restaurant owners who play by the rules,” said Ruben Rosalez of the Labor Department’s San Francisco office. Why do some restaurant owners, particularly those in California, choose not to play by the rules and instead, they are willing to gamble with liability for overtime violations? (Most wage and hour litigation nationwide is occurring in California, with overtime violations the most common claims. NERA Economic Consulting reports that an increasing proportion of the settlement dollars are related to food and food services.)

One likely reason is that exploited workers rarely report overtime violations fearing retaliation - from losing their jobs to getting a call from immigration authorities. They figure the chances of getting caught are minimal and the penalties amount to less than overtime compensation. But times are changing...

The Westin Hotel in Long Beach is facing a class-action lawsuit for overtime violations. It likely lost business when employees called for a boycott of the hotel. The pending lawsuit filed last August claims the hotel violated California labor laws regarding denied rest breaks and meal periods and unpaid overtime that could involve more than 100 workers.

And if you live in Beverly Hills, you might consider boycotting Upper Crust, a new pizza shop expected to open this month. In 2012, the Boston pizza chain declared bankruptcy following allegations of exploiting immigrants and violating wage laws. Upper Crust recruited workers from a small town in Brazil and failed to pay them minimum wage and overtime wages. Workers sued Upper Crust in 2010 and the US Labor Department ordered the pizza company to pay $850,000 in back wages and damages to its employees.

For California employers, it is getting tougher to violate overtime laws. Here are two new rules (as of January 2016) to consider:

Back wages

If an employee doesn’t get paid what they are owed, SB 588 allows the California Labor Commissioner’s Office to slap a lien on the boss’s property to try and recoup the value of the unpaid wages. This was a slimmed-down version of a prior, unsuccessful bill that was pushed by organized labor but repudiated by business interests - the key difference being that the commissioner, not workers, files the liens.

Wage theft

The California Labor Commissioner’s Office under SB 588 and AB 970 now has the power to collect back wages and penalties from bosses who fail to pay minimum wage and overtime, force employees to work off the clock, refuse to offer meal and rest breaks, or make illegal paycheck deductions.

Employers can now be subject to stop-work orders, levies against their bank accounts and liens against their property. Employers, as well as owners, directors or managing agents acting on behalf of an employer, can be subject to criminal and personal liability. Previously, companies could avoid judgments by changing names. Now successor companies will be deemed liable if they engage in substantially the same work.

Visit the California Restaurant Association for a detailed (and easy to understand) review of overtime for food and hospitality workers.


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