How to Handle a wage and Hour Case - New York County ... Wage and hour BOOK 10.15.13.pdfInformation Regarding CLE Credits and Certification How to Handle a Wage and Hour Case October

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This program has been approved by the Board of Continuing Legal Education of the Supreme Court of New Jersey for 3 hours of total CLE credit. Of these, 1 qualify as hours of credit for Ethics/Professionalism, and 0 qualify as hours of credittoward certification in civil trial law, criminal trial law, workers compensation law and/or matrimonial law.

How to Handle a wage and Hour

CasePrepared in connection with a Continuing Legal Education course presented

at New York County Lawyers’ Association, 14 Vesey Street, New York, NY presented on Tuesday, October 15, 2013.

P r o g r A m C h A I r :

Louis Pechman, Berke-Weiss & Pechman LLP and founder of waiterpay.com

P r o g r A m F A C u L t Y :

Hon. Ramon Reyes, USMJ, EDNY; Joseph Fitapelli, Fitapelli & Schaffer, LLP; Carolyn Richmond, Fox Rothschild

3 TRANSITIONAL & NON-TRANSITIONAL MCLE CREDITS: This course has been approved in accordance with the requirements of the New York State Continuing Legal Education Board for a maximum of 3 Transitional & Non-Transitional credit hours: 1 Ethics; 1 Skills; 1 PP

Information Regarding CLE Credits and Certification

How to Handle a Wage and Hour Case October 15, 2013; 6:00 PM to 9:00 PM

The New York State CLE Board Regulations require all accredited CLE providers to provide documentation that CLE course attendees are, in fact, present during the course. Please review the following NYCLA rules for MCLE credit allocation and certificate distribution.

i. You must sign-in and note the time of arrival to receive your

course materials and receive MCLE credit. The time will be verified by the Program Assistant.

ii. You will receive your MCLE certificate as you exit the room at

the end of the course. The certificates will bear your name and will be arranged in alphabetical order on the tables directly outside the auditorium.

iii. If you arrive after the course has begun, you must sign-in and note the time of your arrival. The time will be verified by the Program Assistant. If it has been determined that you will still receive educational value by attending a portion of the program, you will receive a pro-rated CLE certificate.

iv. Please note: We can only certify MCLE credit for the actual time

you are in attendance. If you leave before the end of the course, you must sign-out and enter the time you are leaving. The time will be verified by the Program Assistant. Again, if it has been determined that you received educational value from attending a portion of the program, your CLE credits will be pro-rated and the certificate will be mailed to you within one week.

v. If you leave early and do not sign out, we will assume that you left at the midpoint of the course. If it has been determined that you received educational value from the portion of the program you attended, we will pro-rate the credits accordingly, unless you can provide verification of course completion. Your certificate will be mailed to you within one week.

Thank you for choosing NYCLA as your CLE provider!

New York County Lawyers’ Association

Continuing Legal Education Institute 14 Vesey Street, New York, N.Y. 10007 • (212) 267-6646

How to Handle a Wage and Hour Case October 15, 2013

6:00PM – 9:00PM

AGENDA Program Chair: Louis Pechman, Berke-Weiss & Pechman LLP Program Faculty: Hon. Ramon Reyes, USMJ, EDNY Joseph Fitapelli, Fitapelli & Schaffer, LLP Carolyn Richmond, Fox Rothschild 5:30PM – 6:00PM Registration 6:00PM - 6:10PM Introductions and Announcements 6:10PM – 7:20PM Presentations and Discussion 7:20PM – 7:30PM BREAK 7:30 PM – 8:45 PM Presentations and Discussion Cont. 8:45 PM – 9:00 PM Questions and Answers

Fitapelli & Schaffer, LLP Basic Primer on Wage and Hour Practice October 15, 2013

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Basic Primer on Wage and Hour Practice

Presented By Joseph A. Fitapelli of Fitapelli & Schaffer, LLP

These materials are meant to be a brief outline of the minimum wage and overtime provisions of the Fair Labor Standards Act (“FLSA”) and the New York Labor Law (“NYLL). While the restaurant industry is one the most common violators of the federal and state labor laws, wage and hour violations occur in a wide variety of businesses from banks1 to the adult entertainment industry.2 While the FLSA and the NYLL at times overlap, certain claims and/or requirements differ. This primer is certainly not indented to be exhaustive, but rather intended to give an overview of common issues encountered in wage and hour litigation.

Limitations Periods

Under the NYLL, the statute of limitations is six years and under the FLSA the limitations period is two years. See NYLL § 663(3); 29 U.S.C. § 255(a). However, if an employer’s acts are found to be “willful,” the statute of limitations under the FLSA increases to three years. 29 U.S.C. § 255(a). For an employer’s actions to be willful, the employer must have “either [known] or showed reckless disregard for the matter of whether its conduct was prohibited by the [FLSA]. Solis v. SCA Rest. Corp., No. 09 Civ. 2212 (JFB) (ETB), 2013 WL 1401396 (E.D.N.Y. Apr. 5, 2013)

Hybrid Actions

As FLSA and NYLL claims usually revolve around the same set of operative facts, plaintiffs frequently bring both types of claims together in a single action using the procedural mechanisms available under 29 U.S.C. § 216(b) to pursue the FLSA claims as a collective action and under Rule 23 to pursue the NYLL claims as a class action under the district court’s supplemental jurisdiction. In the Second Circuit, the FLSA is held not to preempt claims made under the NYLL, and courts can certify hybrid actions that include both an opt-in FLSA collective claim and an opt-out state labor law Fed.R.Civ.P. 23 class action. See Shahriar v. Smith & Wollensky Rest. Group, Inc., 659 F.3d 234, 249, 252 (2d Cir. 2011).

When drafting pleadings for “hybrid actions” it is important to identify both the collective and class mechanisms and the relevant claims that are brought under federal and state law. To illustrate, attached are two examples of “hybrid action” complaints. The first is a typical restaurant wage and hour complaint for hourly employees,3 while the second complaint focuses on overtime violations under the FLSA and NYLL due to a misclassification.4

1 See Yuzary v. HSBC Bank USA, N.A., No. 12 Civ. 3693 (PGG), 2013 WL 5492998 (S.D.N.Y. Oct. 2, 2013) 2 See Flynn v. New York Dolls Gentlemen’s Club, Complaint 3 See Tiro v. Public House Investments, LLC, Complaint 4 See Walker v. Hunter Roberts Construction, Complaint

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Section 216(b) of the FLSA – Collective Actions

Section 216(b) of the FLSA authorizes an employee to maintain a collective action on behalf of himself and all “similarly situated” employees. See 29 U.S.C. § 216(b). Unlike a class action brought under Rule 23 of the Federal Rules of Civil Procedure, a collective action requires “similarly situated” employees to affirmatively opt-in to the litigation by filing written consent5 forms with the court. Id. “[D]istrict courts have discretion, in appropriate cases, to implement [Section] 216(b) by facilitating notice to potential plaintiffs of the pendency of the action and of their opportunity to opt-in as represented plaintiffs.” Myers v. Hertz Corp., 624 F.3d 537, 554 (2d Cir. 2010) (internal quotation marks and alterations omitted). In determining whether to exercise such discretion, courts in this Circuit follow a two-step test. Id. at 554–55. An important fact to remember is that, absent a tolling agreement, a plaintiff’s statute of limitations continues to run until a written consent is filed. The First Step (Notice/Conditional Certification)

The first step is known as the “notice” or “conditional certification” stage. This step is triggered when the plaintiffs move for § 216(b) certification prior to, or very early, in discovery. During this stage, “the court mak[es] an initial determination to send notice to potential opt-in plaintiffs who may be ‘similarly situated’ to the named plaintiffs.” Myers, 624 F.3d at 555. A plaintiff’s burden at this stage is minimal: he must only make a “modest factual showing” that he and the potential opt-in plaintiffs were “victims of a common policy or plan that violated the law.” Id. (internal quotation marks omitted).6

To satisfy this burden, the plaintiff must offer substantial allegations demonstrating a factual nexus between the plaintiff and potential opt-in plaintiffs.

If the court decides that plaintiffs have met their burden, then the court will authorize issuing notice of the lawsuit to all potential opt-in plaintiffs in order for them to have an opportunity to opt-in (join) the case. Also, the action will proceed as a collective action; therefore, discovery will be for the putative class not just the named plaintiff(s).

The Second Stage

The second stage of a collective action usually occurs at the end of discovery. The defendant normally triggers this stage by filing a motion for decertification. Here, the court will use a stricter standard than the first stage. Courts normally consider the similarity of the factual and employment settings of the individual plaintiffs, the various defenses available to the 5 See sample FLSA consent forms. 6 See Chhab v. Darden Restaurants, Inc., No. 11 Civ. 8345 (NRB), 2013 WL 5308004 (S.D.N.Y. Sept. 20, 2013).


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defendant and whether those may be asserted collectively or individually as to each plaintiff and the fairness and procedural considerations. If the court determines that plaintiffs are similarly situated, the lawsuit will be certified as a collective action and proceed to trial as such. Indergit v. Rite Aid Corp., No. 08 Civ. 9361 (JPO), 2013 WL 5380253 (S.D.N.Y. Sept. 26, 2013).

Minimum Wage

The FLSA requires employers to pay their employees at least the statutory minimum wage. 29 U.S.C. § 206. Though employers of “tipped employees” are permitted to pay these workers a reduced amount, by taking a tip credit pursuant to 29 U.S.C. § 203(m), there are clear and specific requirements that must be satisfied. An employer may not avail itself of the tip credit unless it notifies tipped employees of its intention to include tip income when calculating wages actually paid for minimum wage purposes, and ensures that all tips received by tipped employees have been retained by the employees. 29 U.S.C. § 203(m); see Nicholson v. Twelfth Street Corp., No. 09 Civ. 1984 (HB), 2010 WL 1780957, at *2 (S.D.N.Y. May 4, 2010) (citations omitted). “These requirements are to be strictly construed.” Wicaksono v. XYZ 48 Corp., No. 10 Civ. 3635 (LAK)(JCF), 2011 WL 2022644, at *4 (S.D.N.Y. May 2, 2011) (citation and internal quotation marks omitted).

Similarly, while the NYLL also allows employers to pay tipped workers in the food service industry a lower minimum wage, an employer may receive the benefit of the tip credit only if it notifies employees of its intent to take a tip credit, provides employees with regular wage statements, and maintains and preserves weekly payroll records. 12 N.Y.C.R.R. §§ 137-2.1, 137-2.2, 146-1.3, 146-2.2.

Notice of the Tip Credit

Employers bear the burden of showing that they have provided their employees with proper notice of the minimum wage laws. Chan v. Sung Yue Tung Corp., No. 03 Civ. 6048 (GEL), 2007 WL 313483, at *18 (S.D.N.Y. Feb. 1, 2007). This can be accomplished, for example, by providing employees with a copy of § 203(m) and informing them that their tips will be used as a credit against the minimum wage as permitted by law. “Courts have noted that the notice requirement is a firm one.” Copantitla v. Fiskardo Estiatorio, Inc., 788 F. Supp. 2d 253, 287-89 (S.D.N.Y. 2011) (finding that a restaurant failed to meet the notice requirement even though it displayed a Department of Labor poster, as employees were not explicitly told they would be paid a reduced minimum wage because the restaurant intended to use tips to satisfy its minimum wage obligations). If the employer cannot show that it has informed employees that tips are being credited against their wages, then no tip credit can be taken and the employer is liable for the full minimum wage. Lanzetta v. Florio's Enterprises, Inc., 763 F. Supp. 2d 615 (S.D.N.Y. 2011); Azkour v. Little Rest Twelve, Inc., No. 10 Civ. 4132 (RJS)(KNF), 2012 WL 402049, at *5 (S.D.N.Y. Feb. 7, 2012) (the tipped employee must be informed by the employer of the provisions


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of § 203(m)); Yu G. Ke v. Saigon Grill, Inc., 595 F. Supp. 2d 240, 254 (S.D.N.Y. 2008) (the employer must “first notify the employees of the requirements of the law regarding minimum wages and of the employer’s intention to take the tip credit”).

While the NYLL also allows employers to pay tipped workers in the food service industry a lower minimum wage, an employer may receive the benefit of the tip credit only if it provides, “to each employee a statement with every payment of wages listing … allowances … claimed as part of the minimum wage,” and, “maintain[s] and preserve[s] for not less than six years weekly payroll records which shall show for each employee … allowances … claimed as part of the minimum wage.” Copantitla 788 F. Supp. 2d 253, 290 (citing 12 N.Y.C.R.R. §§ 137-2.1, 137-2.2); Cao v. Wu Liang Ye Lexington Restaurant, No. 08 Civ. 3725(DC), 2010 WL 4159391 (S.D.N.Y. Sept. 30, 2010) (Court found that the defendants failed to satisfy the requirements for receiving the benefit of the tip credit, thus, award the plaintiffs damaged based on ordinary minimum wage rather than the tipped minimum wage). These requirements have been clarified by the 2011 New York Department of Labor Hospitality Industry Wage Order, which states that employers may benefit from the tip credit only if, “the food service worker receives enough tips and if the employee has been notified of the tip credit as required in Section 146-2.2” [mandating that employers provide, “each employee written notice of the employee’s regular hourly pay rate, overtime hourly pay rate, the amount of tip credit, if any, to be taken from the basic minimum hourly rate, and the regular payday”]. 12 N.Y.C.R.R. §§ 146-1.3, 146-2.2 (emphasis added).

Retention of Tips

An employer violates § 203(m), and is therefore not entitled to a tip credit, if it dilutes the tip pool by including employees who do not, customarily receive tips, such as employees who play a limited or no customer service role. See Azkour, 2012 WL 402049, at *5 (An employer may not take advantage of the tip credit if it requires tipped employees to share tips with a manager or with employees who do not typically provide direct customer service). Sharing tips with an employer constitutes an employer’s retention of tips, thus violating the FLSA tip credit conditions, 29 U.S.C. § 203(m). See Ayres v. 127 Rest. Corp., 12 F.Supp.2d 308 (S.D.N.Y.1998); Chan v. Triple 8 Palace, Inc., 03 Civ. 6048 (GEL), 2006 WL 851749 at *14 (S.D.N.Y. Mar. 30, 2006) (“[E]mployers are not merely barred from taking the tip credit if they share in the tip pool, but they are barred from taking the tip credit if any person who does not ‘customarily and regularly receive tips’ shares in the tip pool”).

Furthermore, under the NYLL, an employer must refrain from withholding any portion of the employees’ tips or requiring some employees to share the tips they receive with non-service employees, such as managers or kitchen staff, who do not customarily and regularly receive tips. Gunawan v. Sake Sushi Rest., No. 09 Civ. 5018 (JO), 2012 WL 4369754 (E.D.N.Y. Sept. 24, 2012). By requiring Tipped Employees to share tips with ineligible employees, Defendants cannot avail themselves of the tip credit minimum wage rate. Hai Ming Lu v. Jing Fong Rest.,

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Inc., 503 F. Supp. 2d 706, 710 (S.D.N.Y. 2007) (noting that “this separate violation of § 196–d would render Jing Fong ineligible to receive a tip credit under New York law”).

Dual Job Regulations

Section 203(m) of the FLSA permits an employer to take a tip credit against the minimum wage. The United States Department of Labor (“USDOL”) regulation 29 C.F.R. 531.56(e) explains that in cases where an individual works for an employer in a tipped and a non-tipped occupation, and therefore is employed in “dual jobs,” the employer can only take a tip credit for the hours the employee has worked in the tipped occupation. BRIEF FOR THE

USDOL AS AMICUS CURIAE, 2010 WL 3761133, at *7, Fast v. Applebee’s Int’l, Inc., 638 F.3d 872 (8th Cir. 2011) cert. denied, 132 S. Ct. 1094 (U.S. 2012). In its 1988 Handbook, the USDOL further interpreted this regulation concluding that “where the facts indicate that specific employees are routinely assigned to maintenance, or that tipped employees spend a substantial amount of time (in excess of 20 percent) performing general preparation work or maintenance, no tip credit may be taken for the time spent in such duties.” Fast, 638 F.3d at 877-78 (citing DOL Handbook § 30d00(e)). Courts have found the USDOL’s interpretation entitled to deference and applied it to similar factual circumstances. See Id. at 880; Driver v. AppleIllinois, LLC, No. 06 Civ. 6149, 2012 WL 3716482, *23 (N.D. Ill. Aug. 27, 2012) (denying defendants’ motion to dismiss where evidence established that employees regularly performed non-tipped side work in excess of 20% of their shift); Holder v. MJDE Venture, LLC, No. 08 Civ. 2218 (TW), 2009 WL 4641757 (N.D. Ga. Dec. 1, 2009) (relying on USDOL Handbook § 30d00(e) as persuasive).

Additionally, the NYLL requires that on any day that a service employee or food service worker works at a non-tipped occupation for (a) two hours or more, or (b) more than twenty percent (20%) of his or her shift, whichever is less, the wages of the employee shall be subject to no tip credit for that day. 12 N.Y.C.R.R. §§ 146-2.9.

Overtime

The FLSA and NYLL unequivocally state that employees who work more than 40 hours in a workweek are entitled to receive not less than one and one-half the regular rate of compensation for all hours worked in excess of 40 per workweek. 29 U.S.C. § 207; NYLL Article 19, §§ 650 et seq.; 12 N.Y.C.R.R. §§ 137-1.3, 146-1.4.

Employers may avoid paying overtime compensation to an employee if the employee falls within an exemption. An employer seeking to rely upon an exemption as a defense to paying overtime bears the burden of proving that such exemption applies. McLean v. Garage Mgmt. Corp., 819 F.Supp.2d 332, 337 (S.D.N.Y.2011). “Because the FLSA is a remedial statute, its exemptions are construed narrowly against the employer.” Kahn v. Superior Chicken & Ribs, Inc., 331 F.Supp.2d 115, 117 (E.D.N.Y.2004). Below are a few examples of the most common exemptions cited by defendants.

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Executive Exemption

To qualify for the executive employee exemption, all of the following tests must be met: (1) the employee must be compensated on a salary basis at a rate not less than $455 per week; (2) the employee’s primary duty must be managing the enterprise, or managing a customarily recognized department or subdivision of the enterprise; (3) the employee must customarily and regularly direct the work of at least two or more other full-time employees or their equivalent; and; (4) the employee must have the authority to hire or fire other employees, or the employee’s suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees must be given particular weight. see also, 29 U.S.C. § 213(a) and 29 C.F.R. Part 541.

Courts analyze these criteria in terms of a “salary basis” component and a “duties” component. See, e.g., Rowe v. Olthof Funeral Home, Inc., No. 10 Civ. 6220T, 2011 WL 4899970, at *2 (W.D.N.Y. Oct. 13, 2011). An employee’s “primary duty” is the “principal, main, major or most important duty that the employee performs.” 29 C.F.R. § 541.700(a). It must be assessed based on all of the facts “with the major emphasis on the character of the employee’s job as a whole .” Id. Relevant factors are: “the relative importance of the exempt duties as compared with other types of duties; the amount of time spent performing exempt work; the employee’s relative freedom from direct supervision; and the relationship between the employee’s salary and the wages paid to other employees for the kind of nonexempt work performed by the employee.” Id. Although the percentage of an employee’s time spent performing exempt versus nonexempt work is an “important” factor, it is not dispositive. See, e.g., Scott v. SSP America, Inc., No. 09 Civ. 4399 (RRM)(VVP), 2011 WL 1204406, at *8 (E.D.N.Y. Mar. 29, 2011)

Administrative Exemption

An exempt administrative employee under the FLSA is one: (1) who is paid a salary of at least $455 per week; (2) whose “primary duty is the performance of office or non-manual work directly related to the management or general business operations” of the employer or its customers; and (3) whose primary duty also “includes the exercise of discretion and independent judgment with respect to matters of significance.” 29 C.F.R. § 541.200.

With respect to (2), “work directly related to the management or general business operations” must be “work directly related to assisting with the running or servicing of the business.” Id. § 541.201(a). With respect to (3), whether an employee exercises “discretion and independent judgment” requires a holistic assessment of the employee's situation, including the consideration of such factors as: whether the employee has authority to formulate, affect, interpret, or implement management policies or operating practices; whether the employee carries out major assignments in conducting the operations of the business; whether the employee performs work that affects business operations to a substantial degree ...; whether the employee has authority to commit the employer in matters that have significant financial impact; whether the employee has authority to waive or deviate from established policies and procedures without prior approval; whether the employee has authority to negotiate and bind the company on significant matters; whether the employee provides consultation or expert advice to

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management; whether the employee is involved in planning long- or short-term business objectives; whether the employee investigates and resolves matters of significance on behalf of management; and whether the employee represents the company in handling complaints, arbitrating disputes or resolving grievances. Id. § 541.202(b). Outside Sales Exemption

To qualify for the outside sales employee exemption, all of the following tests must be met: (1) the employees primary duty must be making sales or obtaining orders or contracts for services or for the use of facilities for which a consideration will be paid by the client or customer; and (2) the employee must be customarily and regularly engaged away from the employer’s place or places of business. See 29 U.S.C. 13(a)(1) and 29 CFR Part 541.

“Sales” includes any sale, exchange, contract to sell, consignment for sales, shipment for sale, or other disposition. See Id. Recently, the Supreme Court determined that the term “other disposition” can be interpreted to include arrangements that bring about the sale of a commodity. See Christopher v. SmithKline Beecham Corp., 132 S. Ct. 2156, 2171-72 (2012) (“Consequently, we think that the catchall phrase “other disposition” is most reasonably interpreted as including those arrangements that are tantamount, in a particular industry, to a paradigmatic sale of a commodity.”)

Off-the-Clock Work

Another common practice by employers to save money on labor costs is to require employees to perform duties or require them to report to work early (e.g., 15 minutes before the shift starts), before they are allowed to “clock in.” The time spent performing tasks while not punched in is referred to as “off-the-clock” work.

“Off-the-clock” work deals with any work performed before or after a shift starts or ends that is not recorded and not added to their total hours for the workweek. An example of an “off-the-clock” scenario might help clarify:

Claudia performs data entry for her company. Her company has a strict policy that Claudia can only work 37.5 hours per week. Despite this policy, Claudia is required to adhere to quotas that take longer than 37.5 hours to meet. As a result, Claudia will perform work before and after her scheduled shift. Claudia’s manager is aware that she is performing work beyond 37.5 hours per week but will not let her record those hours. As a result, Claudia is working “off-the-clock” and entitled to be compensated for hours that she has worked.

The FLSA “guarantee[s] compensation for all work or employment engaged in by employees covered by the Act.” Tenn. Coal, Iron & R.R. Co. v. Muscoda Local No. 123, 321 U.S. 590, 602, 64 S.Ct. 698, 88 L.Ed. 949 (1944). “In determining the number of hours for which overtime compensation is due, all hours worked (see § 778.223) by an employee for an employer in a particular workweek must be counted.” 29 C.F.R. § 778.315.

To establish liability for hours worked by an employee off the clock, a plaintiff must prove that he performed work for which he was not properly compensated, and that the employer


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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, 66 S.Ct. 1187, 90 L.Ed. 1515 (1946)); See also, Chao v. Gotham Registry, Inc., 514 F.3d 280, 287 (2d Cir.2008); Grochowski v. Phoenix Constr., 318 F.3d 80, 87 (2d Cir.2003).

While an employee is entitled to recover unpaid overtime hours worked “off-the-clock”, the Second Circuit recently ruled that, “An employee who has not worked overtime has no claim under FLSA for hours worked below the 40–hour overtime threshold, unless the average hourly wage falls below the federal minimum wage.” Lundy v. Catholic Health Sys. of Long Island Inc., 711 F.3d 106, 115 (2d Cir. 2013). “So long as an employee is being paid the minimum wage or more, FLSA does not provide recourse for unpaid hours below the 40–hour threshold, even if the employee also works overtime hours the same week.” Id. at 116.

Tipped Employee Overtime Rate Under NYLL

A common violation by restaurants is miscalculating their tipped employees’ overtime pay rate. Most restaurants will take the tipped minimum wage rate of $5.00 per hour and multiply that by 1.5, giving them an overtime rate of $7.50. This is wrong and a violation of the NYLL.

When an employer is taking the “tip credit” towards the basic minimum wage rate, the overtime for that employee should be calculated as his or her regular rate of pay before the tip credit, multiplied by one and one-half minus the tip credit. See, 12 NYCRR § 146-1.4.

Example: (based on the employer taking the full “tip credit” of $2.25) • Regular minimum wage rate = $7.25 • Tipped minimum wage rate = $5.00 ($7.25 - $2.25) • Regular overtime rate = $10.875 ($7.25 x 1.5) • Tipped overtime rate = $8.625 ($10.875 - $2.25)

Miscalculating the overtime rate is a common violation within the restaurant industry. Potential damages include the difference between the overtime rate paid and the required overtime rate (this can also be the full overtime rate of $10.875 if the employer failed to satisfy “tip credit” notification), liquidated damages, attorneys’ fees, costs and prejudgment and post judgment interest.

Spread of Hours 12 NYCRR § 146-1.6

The NYLL provides that any restaurant employee whose workday is longer than ten hours shall receive one hour’s pay at the basic minimum hourly wage rate. 12 N.Y.C.R.R. §§ 137-1.7, 146-1.6. Spread-of-hours is defined as the number of hours from the time an employee starts his/her workday until the time the employee finishes his/her workday, including both working time and non-working time. Courts have routinely concluded that, under New York law, plaintiffs can recover spread-of-hours wages in addition to their federal or state minimum wage and overtime claims. See, e.g., Cao v. Wu Liang Ye Lexington Restaurant, Inc., No. 08 Civ. 3725 (DC), 2010 WL 4159391, at *3 (S.D.N.Y. Sept. 30, 2010). For tipped service


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workers, like Plaintiffs, this extra hour’s pay is at the full minimum wage rate. See 12 N.Y.C.R.R. § 146-1.6(d) (“This section shall apply to all employees in restaurants and all-year hotels, regardless of a given employee’s regular rate of pay).

Examples of a spread of hours greater than 10 are:

• 7 am – 10am, 7pm – 10pm = 6 hours worked but a 15 hour spread; • 11:30am – 3pm, 4pm – 10:00pm = 9½ hours worked but a 10½ hour spread.

Uniform Maintenance Pay 12 NYCRR § 146-1.7

“[I]n New York, where an employer does not maintain required uniforms for employees, it is required to reimburse the employee for the maintenance of the uniforms, except in limited circumstances such as where the uniforms consist of wash and wear materials or where the uniforms may be routinely washed and dried with other personal garments and do not require ironing or dry cleaning.” Benavidez v. Plaza Mexico Inc., Nos. 09 Civ. 5076 (THK), 09 Civ. 9574 (THK), 2012 WL 500428 (S.D.N.Y. Feb. 15, 2012) (The court held that the defendants violated this statutory requirement by failing to maintain the plaintiffs’ uniforms which consisted of an apron); see also 12 N.Y.C.R.R. §§ 137-1.8, 146-1.7. Prior to the 2011 Hospitality Industry Wage Order, the regulations did not have a wash and wear exception, thus an employer was obligated “to launder or maintain required uniforms for any employee.” 12 N.Y.C.R.R. 137-1.8. Under the wash and wear exception, the employer must show the required uniforms: “(1) are made of ‘wash and wear’ materials, (2) may be routinely washed and dried with other personal garments, (3) do not require ironing, dry cleaning, daily washing, commercial laundering, or other special treatment, and (4) are furnished to the employee in sufficient number, or the employee is reimbursed by the employer for eth purchase of a sufficient number of uniforms, consistent with the average number of days per week worked by the employee.” 12 N.Y.C.R.R. § 146-1.7.

The amount of maintenance fees an employer must provide includes:

• $9.00 per week for work weeks over 30 hours; • $7.10 per week for work weeks of more than 20 but not more than 30 hours; and • $4.30 per week for work weeks of 20 hours or less.

Individual Liability Under the FLSA and NYLL

To be held liable under the FLSA, a person must be an employer, which the FLSA defines as “any person acting directly or indirectly in the interest of an employer in relation to an employee....” 29 U.S.C. § 203(d). Courts have consistently viewed the FLSA definition of an employer expansively. See Zheng v. Liberty Apparel Co. Inc., 355 F.3d 61, 66 (2d Cir. 2003); See also Benavidez, 2012 WL 500428, at *n9. (“New York's definition of an employer is nearly identical to that of the FLSA”). In determining whether an individual is an “employer” under the FLSA and NYLL, the overarching concern is whether the alleged employer possessed the power to control the workers in question, with an eye to the “economic reality” presented by the facts of


10

each case. Relevant factors include “whether the alleged employer (1) had the power to hire and fire the employees, (2) supervise controlled employee work schedules or conditions of employment; (3) determined the rate and method of payment and (4) maintained employment records. See Irizarry v. Catsimatidis, 722 F.3d 99 (2d Cir. 2013).

Liquidated Damages Under the FLSA and NYLL

The FLSA and the NYLL provide for liquidated damages in addition to actual damages. 29 U.S.C. §§ 216(b), 260; NYLL §§ 198(1-a), 663(1). Liquidated damages under the FLSA are the functional equivalent of prejudgment interest; they are “not a penalty exacted by the law, but rather compensation to the employee occasioned by the delay in receiving wages due caused by the employer’s violation of the FLSA.” Herman v. RSR Sec. Servs., 172 F.3d 132, 142 (2d Cir. 1999). By contrast, liquidated damages under the NYLL are punitive in nature; they “‘constitute a penalty’ to deter an employer’s willful withholding of wages due.” Reilly v. Natwest Mkts. Group, 181 F.3d 253, 265 (2d Cir. 1999). Consequently, the “majority view” in the Second Circuit is that plaintiffs may be awarded liquidated damages under both the FLSA and NYLL for the same time periods, as these damages, though sharing the same name, serve fundamentally different purposes. See, e.g., Gurung v. Malhorta, 851 F. Supp. 2d 583, 594 (S.D.N.Y. 2012); Benavidez, 2012 WL 500428, at *8 (collecting cases); Lanzetta v. Florio’s Enters., Inc., No. 08 Civ. 6181 (DC), 2011 WL 3209521, at *5 (S.D.N.Y. July 27, 2011).

The FLSA “guarantees” that an employee who is not compensated for his work will also receive an additional equal amount [i.e., an additional 100% of the unpaid wages awarded] as liquidated damages. See Wong v. Hunda Glass Corp., No. 09 Civ. 4402 (RLE), 2010 WL 2541698, at *4 (S.D.N.Y. June 23, 2010). As the Second Circuit has noted, the FLSA’s liquidated damages are compensatory in nature. Reich v. S. New Eng. Telecomms. Corp., 121 F.3d 58, 70 n. 4 (2d Cir. 1997) (“Congress provided for liquidated damages as a means of compensating employees for losses they might suffer by reason of not receiving their lawful wage at the time it was due.”) (citation and internal quotation marks omitted). Thus, liquidated damages “are mandatory under the FLSA, unless the employer demonstrates that it acted in good faith.” Gurung, 851 F. Supp. 2d at 592 (citing 29 U.S.C. §§ 216(b), 260).

The employer has the burden of demonstrating, by plain and substantial evidence, that, “despite its failure to pay appropriate wages, it acted in subjective ‘good faith’ with objectively ‘reasonable grounds’ for believing that its acts or omissions did not violate the FLSA.” Barfield, 537 F.3d at 150. “To establish the requisite subjective ‘good faith,’ an employer must show that it took ‘active steps to ascertain the dictates of the FLSA and then act to comply with them. Copantitla, 788 F. Supp. 2d at 316 (quoting Barfield, 537 F.3d at 150). This burden “is a difficult one to meet, however, and double damages are the norm, single damages the exception.” Cao, 2010 WL 4159391, at *5 (citations omitted); Barfield, 537 F.3d at 150.


11

The NYLL allows a worker to recover liquidated damages where: (a) prior to November 24, 2009 “an employer willfully violates the law when it either knew or showed reckless disregard for the matter of whether its conduct was prohibited by the Act; or (b) from November 24 to present, the employer fails to prove “a good faith basis [for believing] that its underpayment of wages was in compliance with the law.” NYLL §§ 198(1-a), 663(1); see Kadden v. VisuaLex, LLC, No. 11 Civ. 4892 (SAS), 2012 WL 4354781, at *8 (S.D.N.Y. Sept. 24, 2012). In addition to the reasons stated above, Defendants have essentially failed to make any spread-of-hours payments during the statutory period, nor have they discontinued their practice of unlawfully retaining and/or misappropriating gratuities from tipped employees. Therefore, they will be unable to satisfy either standard, entitling Plaintiffs to recover liquidated damages equal to 25% (up to April 8, 2011) or 100% (April 9, 2011 to present) of the total wages owed. See NYLL §§ 198(1-a), 663(1).

Attorneys’ Fees and Costs Under the FLSA and NYLL

Under both the FLSA and the NYLL, a prevailing plaintiff is entitled to reasonable attorneys' fees and costs. Anthony v. Franklin First Fin., Ltd., 844 F. Supp. 2d 504, 506 (S.D.N.Y. 2012) (citing 29 U.S.C. § 216(b); N.Y. Labor Law § 663(1)). The traditional approach to determining a fee award is the “lodestar” calculation, which is the number of hours multiplied by a reasonable hourly rate. See Healey v. Leavitt, 485 F.3d 63, 71 (2d Cir.2007).

lawclerk2

Typewritten Text

Yuzary v. HSBC Bank USA, N.A. Exhibit 1

Yuzary v. HSBC Bank USA, N.A., Slip Copy (2013)

© 2013 Thomson Reuters. No claim to original U.S. Government Works. 1

2013 WL 5492998Only the Westlaw citation is currently available.

United States District Court,S.D. New York.

Sharon YUZARY, Jon Racow, Henry Hu,Mina Dimetry, Teron Haughton, Daniel

Hauer, Billy Tzewa Mui, Calvin Mazlumyan,and Kim Lebleu, on behalf of themselves

and all others similarly situated, Plaintiffs,v.

HSBC BANK USA, N.A.; HSBC USA, Inc.; andHSBC North America Holdings, Inc., Defendants.

No. 12 Civ. 3693(PGG). | Oct. 2, 2013.

Opinion

ORDER GRANTING PLAINTIFFS' MOTIONFOR CERTIFICATION OF THE SETTLEMENT

CLASS, FINAL APPROVAL OF THE CLASSACTION SETTLEMENT, APPROVAL OF THE

FLSA SETTLEMENT, AND APPROVAL OFATTORNEYS' FEES, REIMBURSEMENTOF EXPENSES, AND SERVICE AWARDS

PAUL G. GARDEPHE, District Judge.

*1 Plaintiffs Sharon Yuzary, Jon Racow, Henry Hu,Mina Dimetry, Teron Haughton, Daniel Hauer, Billy TzewaMui, Calvin Mazlumyan, and Kim LeBleu (“Plaintiffs”)are former Personal Bankers, Branch Relationship Bankers,Premier Relationship Managers, Small Business Specialists,and Business Banking Specialists (collectively, the “CoveredPositions”) who worked for Defendants HSBC Bank USA,N.A., HSBC USA, Inc., and HSBC North America Holdings,Inc. (“HSBC” or “Defendants”). On February 7, 2012,Plaintiff Mui filed a lawsuit in the United States District Courtfor the Southern District of New York, Mui v. HSBC BankUSA, N.A., et al., No. 12 Civ. 961(BSJ) (“Mui” ), bringingFLSA collective action and Rule 23 class claims under theNYLL. On May 9, 2012, Plaintiff Yuzary filed a class andcollective action overtime lawsuit in the United States DistrictCourt for the Southern District of New York, Yuzary v. HSBCBank USA, N.A., et al., No. 12 Civ. 3693(PGG) (“Yuzary”). On June 8, 2012, Plaintiff Hauer filed a collective actionovertime lawsuit in the United States District Court for theSouthern District of Florida, Hauer v. HSBC Bank USA,

N.A., et al., No. 12 Civ. 61155(KMW) (“Hauer” ). OnJuly 23, 2012, this Court consolidated the Mui, Yuzary, andHauer actions. ECF No. 25. In the consolidated amendedcomplaint, Plaintiffs alleged that HSBC violated the FairLabor Standards Act (“FLSA”) and the wage and hour lawsof New York, California, Connecticut, and New Jersey byimproperly classifying them as exempt from federal and stateovertime requirements and failing to pay them and otheremployees in Covered Positions overtime wages. ECF No.48. Plaintiffs sought unpaid overtime wages, attorneys' feesand costs, interest, liquidated damages, and injunctive anddeclaratory relief. Id.

After exchanging informal discovery to enable Plaintiffs tocalculate damages and undertaking extensive and vigorousnegotiations, the parties reached a settlement totaling$15,625,000. Decl. of Justin M. Swartz in Supp. of Pls.'Mot. for Certification of the Settlement Class, Final Approvalof the Class Action Settlement, and Approval of the FLSASettlement (“Swartz Decl.”) ¶¶ 12–13, 18–20, 27. The partiesreached this settlement after a formal mediation under thesupervision of an experienced employment law mediator,Michael Young. Id. ¶¶ 18–20. At the mediation, the partiesreached agreement on the settlement amount and several otherkey terms. Id. ¶ 20. During the next three months, the partiesnegotiated the remaining terms of the settlement, which werememorialized in a formal settlement agreement (“SettlementAgreement”). Id.

On April 29, 2013, this Court entered an Order preliminarilyapproving the settlement on behalf of the class set forththerein (the “Class” or the “Class Members”), conditionallycertifying the settlement class, and appointing Outten &Golden LLP; Fitapelli & Schaffer, LLP; Lee LitigationGroup, PLLC; and Shavitz Law Group, P.A. as ClassCounsel, and authorizing notice to all Class Members. ECFNo. 70.

*2 On May 31, 2013, a claims administrator sent Court-approved notices to all Class Members informing them oftheir rights under the settlement, including the right to optout or object to the settlement for Class Members in thefour states where Rule 23 claims were brought, and of ClassCounsel's intention to seek up to one-third of the settlementfund for attorneys' fees, and reimbursement of their out-of-pocket expenses. Swartz Decl., Ex. D (Cudworth Decl.) ¶ 8.After the initial Notices were mailed, Defendants discoveredthat 62 Class Members had inadvertently been omitted fromthe data initially provided to the claims administrator and that

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the data also omitted a number of workweeks for 93 ClassMembers who had received Notice. Id. ¶ 16. New Noticeswere subsequently mailed to those 62 Class Members whohad received no Notice. No Class Members objected to thesettlement, seven filed timely opt-out requests, and one fileda late opt-out request. Id . ¶¶ 14–15.

On July 16, 2013, Plaintiffs filed a Motion for Certificationof the Settlement Class, Final Approval of the Class ActionSettlement, and Approval of the FLSA Settlement (“Motionfor Final Approval”). That same day, Plaintiffs also filedMotions for Approval of Attorneys' Fees and Reimbursementof Expenses (“Motion for Attorneys' Fees”) and for ServiceAwards (“Motion for Service Awards”). Defendants took noposition with respect to any of these motions and did notobject to the requests for attorneys' fees, costs, or servicepayments.

The Court held a fairness hearing on July 25, 2013. No ClassMember objected to the settlement at the hearing.

Having considered the Motion for Final Approval, the Motionfor Attorneys' Fees and Reimbursement of Expenses, theMotion for Service Awards, and the supporting declarations,the oral argument presented at the July 25, 2013 fairnesshearing, and the complete record in this matter, for the reasonsset forth therein and stated on the record at the July 25, 2013fairness hearing, and for good cause shown.

NOW, THEREFORE, IT IS HEREBY ORDERED,ADJUDGED AND DECREED: CERTIFICATION OFTHE SETTLEMENT CLASS1. The Court certifies the following sub-classes under FederalRule of Civil Procedure 23(e), for settlement purposes, whichconsist of individuals who worked in Covered Positions forat least fifteen (15) days in any state who fit within thedefinitions set forth in subparagraphs (A) through (D) below(the “State Sub–Classes”) (the “Rule 23 Class Members”);

A. all individuals who were employed in Covered Positionsin the State of New York from February 7, 2006 throughNovember 15, 2012, excluding individuals who signedreleases of state law wage and hour claims as evidencedin releases provided by Defendants to Class Counsel onor before the date of the Court's Final Approval Order;

B. all individuals who were employed in Covered Positionsin the State of California from May 9, 2008 throughNovember 15, 2012;

*3 C. all individuals who were employed in CoveredPositions in the State of Connecticut from May 9, 2010through November 15, 2012; and

D. all individuals who were employed in Covered Positionsin the State of New Jersey from May 9, 2010 throughNovember 15, 2012.

2. Plaintiffs meet all of the requirements for class certificationunder Federal Rule of Civil Procedure 23(a) and (b) (3).

3. Plaintiffs satisfy Federal Rule of Civil Procedure 23(a)(1) because there are approximately 2,203 Rule 23 ClassMembers and, thus, joinder is impracticable. See Consol. RailCorp. v. Town of Hyde Park, 47 F.3d 473, 483 (2d Cir.1995)(“[N]umerosity is presumed at a level of 40 members.”).

4. The proposed class also satisfies Federal Rule of CivilProcedure 23(a)(2), the commonality requirement. Plaintiffsand the Class Members share common issues of fact andlaw, including whether Defendants misclassified them asexempt employees, failed to pay them overtime wages inviolation of state wage and hour laws, and failed to keepaccurate records of time worked. See Beckman v.. KeyBank,N.A., No. 12 Civ. 7836, 2013 WL 1803736, at *2 (S.D.N.Y.Apr. 29, 2013) (common issues that help to satisfy Rule23 commonality requirement include whether “Defendantmisclassified them as exempt employees, failed to pay themovertime wages in violation of state wage and hour laws,and failed to keep accurate records of time worked”); Morrisv. Affinity Health Plan, Inc., 859 F.Supp.2d 611, 615–16(S.D.N.Y.2012) (commonality satisfied where, among otherallegations, plaintiffs claimed that defendant had a policy ofnot paying all class members overtime pay).

5. Plaintiffs satisfy Federal Rule of Civil Procedure 23(a)(3), typicality, because Plaintiffs' claims arose from thesame factual and legal circumstances that form the basesof the class members' claims. See Hernandez v. MerrillLynch & Co., Inc., No. 11 Civ. 8472, 2013 WL 1209563,at *3 (S.D.N.Y. Nov. 15, 2012) (typicality satisfied where“[p]laintiffs' claims [for overtime pay] arose from the samefactual and legal circumstances that form[ed] the bases of the[c]lass [m]embers' claims”); Morris, 859 F.Supp.2d at 616(same).

6. Plaintiffs satisfy Federal Rule of Civil Procedure 23(a)(4) because there is no evidence that the Plaintiffs' and theclass members' interests are at odds. See Beckman, 2013 WL

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1803736, at *3 (finding adequacy requirement met wherethere was no evidence that plaintiffs' and class members'interests were at odds); Morris, 859 F.Supp.2d at 616 (same).

7. In addition, Plaintiffs' Counsel are experienced andadequate to serve as Class Counsel. See, e.g., Beckman,2013 WL 1803736, at *3 (noting that Outten & Golden LLPand Shavitz Law Group, P.A. “have substantial experienceprosecuting and settling employment class actions, includingwage and hour class actions[,] and are well-versed in wageand hour law and class action law,” and finding bothfirms adequate class counsel) (internal quotation and citationomitted); Tiro v. Pub. House Invs., LLC, 288 F.R.D. 272,275 (S.D.N.Y.2012) (Fitapelli & Schaffer approved as classcounsel); Han v. AB Gansevoort, No. 11 Civ. 2423, DocketNo. 40 (S.D.N.Y. April 4, 2012) (appointing Kraselnik & Lee,PLLC as class counsel).

*4 8. Plaintiffs also satisfy Rule 23(b)(3). Plaintiffs'common factual allegations and a common legal theory—thatDefendants violated federal and state wage and hour laws bymisclassifying Plaintiffs as exempt administrative employeesand failing to pay them for premium overtime hours—predominate over any factual or legal variations among classmembers. See Hernandez, 2013 WL 1209563, at *3 (commonfactual allegations and legal theory predominated overvariations in wage and hour misclassification case); Torres v.Gristede's Corp., No. 04 Civ. 3316, 2006 WL 2819730, at *16(S.D.N.Y. Sept. 29, 2006) (plaintiffs “introduced sufficientproof that Defendants engaged in a common practice to denyemployees overtime pay,” and “[t]his issue predominatesover any individual calculations of overtime wages”).

9. Class adjudication of this case is superior to individualadjudication because it will conserve judicial resources andis more efficient for class members, particularly those wholack the resources to bring their claims individually. See

Beckman, 2013 WL 1803736, at *3; Morris, 859 F.Supp.2dat 617. Concentrating the litigation in this Court is desirablebecause the allegedly wrongful conduct occurred within itsjurisdiction.

APPROVAL OF THE SETTLEMENT AGREEMENT

10. The Court hereby grants the Motion for Final Approvaland finally approves the settlement as set forth in theSettlement Agreement.

11. Rule 23(e) requires court approval for a class actionsettlement to ensure that it is procedurally and substantivelyfair, reasonable, and adequate. Fed.R.Civ.P. 23(e). Todetermine procedural fairness, courts examine the negotiatingprocess leading to the settlement. See Wal–Mart Stores,Inc. v. Visa U.S.A. Inc., 396 F.3d 96, 116 (2d Cir.2005);D'Amato v. Deutsche Bank, 236 F.3d 78, 85 (2d Cir.2001).To determine substantive fairness, courts determine whetherthe settlement's terms are fair, adequate, and reasonableaccording to the factors set forth in City of Detroit v. GrinnellCorp., 495 F.2d 448 (2d Cir.1974).

12. Courts examine procedural and substantive fairness inlight of the “strong judicial policy favoring settlements” ofclass action suits. Wal–Mart Stores, 396 F.3d at 116 (internalquotation and citation omitted); see also In re EVCI CareerColls. Holding Corp. Sec. Litig., No. 05 Civ. 10240, 2007WL 2230177, at *4 (S.D.N.Y. July 27, 2007); Spann v. AOLTime Warner, Inc., No. 02 Civ. 8238, 2005 WL 1330937, at*6 (S.D.N.Y. June 7, 2005).

13. A “presumption of fairness, adequacy and reasonablenessmay attach to a class settlement reached in arm's-lengthnegotiations between experienced, capable counsel aftermeaningful discovery.” Wal–Mart Stores, 396 F.3d at 116(quoting Manual for Complex Litigation, Third, § 30.42(1995)); see also D'Amato, 236 F.3d at 85. “Absentfraud or collusion, [courts] should be hesitant to substitute[their] judgment for that of the parties who negotiated thesettlement.” In re EVCI Career Colls. Holding Corp. Sec.Litig., 2007 WL 2230177, at *4; see also In re Top Tankers,Inc. Sec. Litig., No. 06 Civ. 13761, 2008 WL 2944620, at*3 (S.D.N.Y. July 31, 2008); In re BankAmerica Corp. Sec.Litig., 210 F.R.D. 694, 700 (E.D.Mo.2002).

Procedural Fairness*5 14. The settlement is procedurally fair, reasonable,

adequate, and not a product of collusion. See Fed.R.Civ.P.23(e); McMahon v. Olivier Cheng Catering & Events, LLC,No. 08 Civ. 8713, 2010 WL 2399328, at *4 (S.D.N.Y. Mar.3, 2010). The settlement was reached after the parties hadconducted a thorough investigation and evaluated the claimsand defenses, and after arm's-length negotiations between theparties. Swartz Decl. ¶¶ 6–13, 18–23.

15. Prior to mediation, Plaintiffs and Defendants both retainedeconomic experts to analyze the data and perform damagescalculations. Swartz Decl. ¶ 19. On August 22, 2012, theparties attended a 17.5 hour mediation with an experienced























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employment law mediator. Id. ¶ 20. The parties madeprogress toward a settlement and, during the next threemonths, exchanged more information and ultimately reachedan agreement on all terms, which they memorialized in theSettlement Agreement. Id. These arm's-length negotiationsinvolved counsel and a mediator well-versed in wage andhour law, raising a presumption that the settlement achievedmeets the requirements of due process. See Wal–Mart Stores,396 F.3d at 116; McMahon, 2010 WL 2399328, at *4.

16. In addition, courts encourage early settlement of classactions, when warranted, because early settlement allowsclass members to recover without unnecessary delay andallows the judicial system to focus resources elsewhere.See Hernandez v. Merrill Lynch & Co., Inc., No. 11 Civ.8472, 2012 WL 5862749, at *2 (S.D.N .Y. Nov. 15,2012) (endorsing early settlement of wage and hour classaction); Castagna v. Madison Square Garden, L.P., No. 09Civ. 10211, 2011 WL 2208614, at *10 (S.D.N.Y. June 7,2011) (commending Plaintiffs' attorneys for negotiating earlysettlement); In re Interpublic Sec. Litig., No. 02 Civ, 6527,2004 WL 2397190, at * 12 (S.D.N.Y. Oct. 26, 2004) (earlysettlements should be encouraged when warranted by thecircumstances of the case). The parties here acted responsiblyin reaching an early settlement. See Hernandez, 2012 WL5862749, at *2; In re Interpublic Sec. Litig., 2004 WL2397190, at *12.

Substantive Fairness17. The settlement is substantively fair. All of the factors setforth in Grinnell, which provides the analytical frameworkfor evaluating the substantive fairness of a class actionsettlement, weigh in favor of final approval.

18. The Grinnell factors are: (1) the complexity, expense andlikely duration of the litigation; (2) the reaction of the class;(3) the stage of the proceedings and the amount of discoverycompleted; (4) the risks of establishing liability; (5) the risksof establishing damages; (6) the risks of maintaining the classaction through the trial; (7) the ability of the defendants towithstand a greater judgment; (8) the range of reasonablenessof the settlement fund in light of the best possible recovery;and (9) the range of reasonableness of the settlement fundto a possible recovery in light of all the attendant risks oflitigation. 495 F.2d at 463.

*6 19. Litigation through trial would be complex, expensiveand long. Therefore, the first Grinnell factor weighs in favorof final approval.

20. The class's reaction to the settlement was positive. TheNotices included an explanation of the allocation formulaand an estimate of each Class Member's award. The Rule23 Notice also informed Rule 23 Class Members of theirright to object to or exclude themselves from the Settlementand explained how to do so. No Class Member objected tothe settlement, and only eight of the 2,203 Rule 23 ClassMembers opted out. This favorable response demonstratesthat the class approves of the settlement and supports finalapproval. “The fact that the vast majority of class membersneither objected nor opted out is a strong indication offairness.” See Willix v. Healthfirst, Inc., No. 07 Civ. 1143,2011 WL 754862, at *4 (E.D.N.Y. Feb. 18, 2011) (approvingsettlement where seven of 2,025 class member submittedtimely objections and two requested exclusion); Khait v.Whirlpool Corp., No. 06 Civ. 6381, 2010 WL 2025106, at*5 (E.D.N.Y. Jan. 20, 2010) (the fact that no class membersobjected and two opted out demonstrated favorable responseweighing in favor of final approval); Wright v. Stern, 553F.Supp.2d 337, 344–45 (S.D.N.Y.2008) (“[t]he fact that thevast majority of class members neither objected nor opted outis a strong indication” of fairness).

21. The parties have completed enough discovery torecommend settlement. The pertinent question is “whethercounsel had an adequate appreciation of the merits of the casebefore negotiating.” In re Warfarin Sodium Antitrust Litig.,391 F.3d 516, 537 (3d Cir.2004) (internal quotation marksomitted). Here, through an efficient, informal exchange ofinformation, Plaintiffs obtained sufficient discovery to weighthe strengths and weaknesses of their claims and to accuratelyestimate the damages at issue. The parties' participation ina 17.5 hour mediation allowed them to further explore theclaims and defenses. The third Grinnell factor weighs in favorof final approval.

22. The risk of establishing liability and damages furtherweighs in favor of final approval. “Litigation inherentlyinvolves risks.” In re PaineWebber Ltd. P'ships Litig., 171F.R.D. 104, 126 (S.D.N.Y.1997). Indeed, the primary purposeof settlement is to avoid the uncertainty of a trial on themerits. See In re Ira Haupt & Co., 304 F.Supp. 917, 934(S.D.N.Y.1969); see also Velez v. Majik Cleaning Serv., Inc.,No. 03 Civ. 8698, 2007 WL 7232783, at *6 (S.D.N.Y. June25, 2007). Here, Plaintiffs faced numerous risks as to bothliability and damages, including overcoming Defendants'exemption defenses, proving willfulness in order to obtaina third year of liability and damages, and overcoming







































Defendants' likely fluctuating workweek argument, amongothers. The proposed settlement eliminates this uncertainty.This factor therefore weighs in favor of final approval.

*7 23. The risk of obtaining collective and class certificationand maintaining both through trial is also present. Contestedcollective and class certification motion would likely requireextensive discovery and briefing. If the Court did authorizenotice to the FLSA collective, Defendants would likelychallenge that determination by seeking decertification at alater date, after the close of discovery. If the Court wereto grant class certification, Defendants might seek to filean appeal under Federal Rule of Civil Procedure 23(f), theresolution of which would require an additional round ofbriefing. Settlement eliminates the risk, expense, and delayinherent in the litigation process. The fifth Grinnell factorweighs in favor of final approval.

24. Even if Defendants could have withstood a greaterjudgment, a “defendant's ability to withstand a greaterjudgment, standing alone, does not suggest that the settlementis unfair.” Frank v. Eastman Kodak Co., 228 F.R.D. 174,186 (W.D.N.Y.2005) (quoting In re Austrian & German BankHolocaust Litig., 80 F.Supp.2d 164, 178 n. 9 (S.D.N.Y.2000)(alterations and citation omitted)). Accordingly, this factor isneutral and does not preclude the Court from approving thesettlement.

25. The substantial amount of the settlement, in light of thebest possible recovery and the attendant risks of litigation,weighs in favor of final approval. The determination ofwhether a settlement amount is reasonable “does not involvethe use of a ‘mathematical equation yielding a particularizedsum.’ “ Frank, 228 F.R.D. at 186 (quoting In re Austrian& German Bank Holocaust Litig., 80 F.Supp.2d at 178).“Instead, ‘there is a range of reasonableness with respectto a settlement-a range which recognizes the uncertaintiesof law and fact in any particular case and the concomitantrisks and costs necessarily inherent in taking any litigation tocompletion.’ “ Id. (quoting Newman v. Stein, 464 F.2d 689,693 (2d Cir.1972)). These factors also weigh in favor of finalapproval.

APPROVAL OF THE FLSA SETTLEMENT26. The Court hereby approves the FLSA settlement.

27. Because, under the FLSA, “parties may elect to opt inbut a failure to do so does not prevent them from bringingtheir own suits at a later date,” McKenna v. Champion Intern.

Corp., 747 F.2d 1211, 1213 (8th Cir.1984); FLSA collectiveactions do not implicate the same due process concernsas Rule 23 actions, McMahon, 2010 WL 2399328, at *6.Accordingly, the standard for approval of an FLSA settlementis lower than for a class action under Rule 23.

28. Courts approve FLSA settlements when they are reachedas a result of contested litigation to resolve bona fide disputes.See Lynn's Food Stores, Inc. v. United States, 679 F.2d 1350,1353 n. 8 (11th Cir.1982); McMahon, 2010 WL 2399328,at *6. Typically, courts regard the adversarial nature of alitigated FLSA case to be an adequate indicator of the fairnessof the settlement. Lynn's Food Stores, 679 F.2d at 1353–54. If the proposed FLSA settlement reflects a reasonablecompromise over contested issues, it should be approved. Id.at 1354; McMahon, 2010 WL 2399328, at *6.

*8 29. In this case, the settlement was the result ofarm's-length negotiation involving vigorous back and forth.Swartz Decl. ¶ 23. During the entire process, Plaintiffsand Defendants were represented by counsel experienced inwage and hour law. Accordingly, the Settlement Agreementresolves a bona fide dispute under circumstances supportinga finding that is fair and reasonable.

DISSEMINATION OF NOTICE30. Pursuant to the Preliminary Approval Order, the Rule23 and FLSA Notices were sent by first-class mail to eachrespective Class Member at his or her last known address(with re-mailing of returned Notices for which new addressescould be located). The Court finds that the Rule 23 and FLSANotices fairly and adequately advised Class Members of theterms of the settlement, as well as the right of Rule 23 ClassMember to opt out of or to object to the settlement, and toappear at the fairness hearing conducted on July 25, 2013.Class Members were provided with the best notice practicableunder the circumstances.

31. On August 1, 2013, additional Notices were sent to the62 Class Members who were inadvertently excluded from thedata sent to the Claims Administrator.

32. The second notice period ended on September 3, 2013.No Class Members included in this second mailing opted outor objected.

33. The addition of the 62 Class Members who hadinadvertently been omitted from the original mailing and thecorrected workweeks for the 93 Class Members who were






















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entitled to higher settlement amounts caused a shortfall inthe Settlement Fund because the original Notices advisedClass Members that they would receive no less than theamount that had been printed on their Notice. To absorb someof the shortfall, Class Counsel voluntarily reduced their feerequest from one-third to 31.7% of the Settlement Fund. Anadditional $45,000 will be used from the errors and omissionsfund, and HSBC agreed to pay the remaining balance.

34. The Court further finds that the Notices and theirdistribution comported with all constitutional requirements,including those of due process.

35. The Court confirms Kurtzman Carson Consultants, LLCas the claims administrator.

AWARD OF FEES AND COSTS TO CLASS COUNSELAND AWARD OF SERVICE AWARDS TO PLAINTIFFS36. On April 29, 2013, the Court appointed Outten & GoldenLLP; Fitapelli & Schaffer, LLP; Lee Litigation Group, PLLC;and Shavitz Law Group, P.A. as Class Counsel because theymet all of the requirements of Federal Rule of Civil Procedure23(g). See Damassia v. Duane Reade, Inc., 250 F.R.D. 152,165 (S.D.N.Y.2008) (Rule 23(g) requires the court to consider“the work counsel has done in identifying or investigatingpotential claims in the action, ... counsel's experience inhandling class actions, other complex litigation, and claims ofthe type asserted in the action, ... counsel's knowledge of theapplicable law, and ... the resources counsel will commit torepresenting the class.”) (internal quotation marks omitted).

*9 37. Class Counsel are experienced employment lawyerswith good reputations among the employment law bar. SeeSewell v. Bovis Lend Lease, Inc., No. 09 Civ. 6548, 2012WL 1320124, at *12 (S.D.N .Y. Apr. 16, 2012) (notingOutten & Golden LLP's reputation as a “respected laborand employment firm” and that attorneys had “prosecutedand favorably settled many employment law class actions,including wage and hour class actions”); Palacio v.E*TRADE Fin. Corp., No. 10 Civ. 4030, 2012 WL 1058409,at *2 (S.D.N.Y. Mar. 12, 2012) (appointing Outten & GoldenLLP and Shavitz Law Group, P.A. as Class Counsel basedon their experience in “numerous wage and hour class andcollective actions”); Tiro v. Pub. House Investments, LLC,288 F.R.D. 272, 280 (S.D.N.Y.2012) (appointing Fitapelli &Schaffer, LLP as class counsel because “counsel is qualifiedto represent the classes”).

38. The work that Class Counsel has performed in litigatingand settling this case demonstrates their commitment to theclass and to representing the class's interests. Class Counselhave committed substantial resources to prosecuting this case.

39. The Court hereby grants Plaintiffs' Motion for Attorneys'Fees and awards Class Counsel $4,953,125, which is 31.7%of the settlement fund.

40. The trend in this Circuit is to use the percentage of the fundmethod to compensate attorneys in common fund cases likethis one. McDaniel v. County of Schenectady, 595 F.3d 411,417 (2d Cir.2010); Wal–Mart Stores, Inc. v. Visa U.S.A., Inc.,396 F.3d 96, 121 (2d Cir.2005); Sewell, 2012 WL 1320124,at *10; Beckman, 2013 WL 1803736, at *8.

41. Although the Court has discretion to award attorneys'fees based on the lodestar method or the percentage-of-recovery method, McDaniel, 595 F.3d at 417, in wage andhour class action lawsuits, public policy favors a commonfund attorneys' fee award, Beckman, 2013 WL 1803736, at*8; McMahon, 2010 WL 2399328, at *7. Fee awards in wageand hour cases are meant to “encourage members of the barto provide legal services to those whose wage claims mightotherwise be too small to justify the retention of able, legalcounsel.” Sand v. Greenberg, No. 08 Civ. 7840, 2010 WL69359, at *3 (S.D.N.Y. Jan. 7, 2010). The FLSA and statewage and hour statutes are remedial statutes, the purposes ofwhich are served by adequately compensating attorneys whoprotect wage and hour rights. McMahon, 2010 WL 2399328,at *7; Sand, 2010 WL 69359, at *3.

42. Where relatively small claims can only be prosecutedthrough aggregate litigation, and the law relies on prosecutionby “private attorneys general,” attorneys who fill the privateattorney general role must be adequately compensated fortheir efforts. McMahon, 2010 WL 2399328, at *7; Sand, 2010WL 69359, at *3. If not, wage and hour abuses would gowithout remedy because attorneys would be unwilling to takeon the risk. Willix v. Healthfirst Inc., No. 07 Civ. 1143, 2011WL 754862, at *6 (E.D.N.Y. Feb. 18, 2011); Sand, 2010WL 69359, at *3 (“But for the separate provision of legalfees, many violations of the Fair Labor Standards Act wouldcontinue unabated and uncorrected.”).

*10 41. Class Counsel's request for 31.7% of the Fund isreasonable and “consistent with the norms of class litigationin this circuit.” McMahon, 2010 WL 2399328, at *7.







































42. Although Arbor Hill Concerned Citizens NeighborhoodAssociation v. County of Albany does not address a commonfund fee petition, it supports class counsel's request for one-third of the fund because “ ‘reasonable, paying client[s]’ ...typically pay one-third of their recoveries under privateretainer agreements.” McMahon, 2010 WL 2399328, at *8(internal citation and quotations omitted).

43. In addition, in Plaintiffs' retainer agreements with ClassCounsel, Plaintiffs agreed that Class Counsel could apply tothe Court for up to 33% of a class-wide recovery and that theywould pay Class Counsel 33% of any individual recovery.Decl. of Justin M. Swartz in Supp. of Pls.' Mot. for Approvalof Attys' Fees and Reimbursement of Expenses and Pls.' Mot.for Approval of Service Awards (“Swartz Fees & ServiceAwards Decl.”) ¶ 11. This also provides support for ClassCounsel's request for 31.7% of the fund.

44. No Class Member objected to Class Counsel's request forone-third of the fund, which also provides support for ClassCounsel's fee request of 31.7%.

45. All of the factors in Goldberger v. Integrated Resources,Inc., 209 F.3d 43, 48–49 (2d Cir.2000) weigh in favor of therequested fee award.

46. Applying the lodestar method as a “cross check,” see id.at 50, the Court finds that the fee that Class Counsel seeksis reasonable. “Courts regularly award lodestar multipliersof up to eight times the lodestar, and in some cases, evenhigher multipliers.” Beckman, 2013 WL 1803736, at *13;see also Vizcaino v. Microsoft Corp., 290 F.3d 1043, 1052–54 (9th Cir.2002) (listing nationwide class action settlementswhere multiplier ranged up to 8.5 times); Sewell, 2012WL 1320124, at *13 (“Courts commonly award lodestarmultipliers between two and six.”); In re Lloyd's Am. TrustFund Litig., No. 96 Civ. 1262, 2002 WL 31663577, at *27(S.D.N.Y. Nov. 26, 2002) (a “multiplier of 2.09 is at the lowerend of the range of multipliers awarded by courts within theSecond Circuit”); see, e.g., Steiner v. Am. B'casting Co., Inc.,248 Fed. Appx. 780, 783 (9th Cir.2007) (multiplier of 6.85“falls well within the range of multipliers that courts haveallowed); Ramirez v. Lovin' Oven Catering Suffolk, Inc., No.11 Civ. 520, 2012 WL 651640, at *4 (S.D.N.Y. Feb. 24,2012) (granting attorneys' fees equal to 6.8 times lodestar);Davis v. J.P. Morgan Chase & Co., 827 F.Supp.2d 172, 184–86 (W.D.N.Y.2011) (awarding multiplier of 5.3 in wage andhour class action); Buccellato v. AT & T Operations, Inc.,No. 10 Civ. 463, 2011 WL 3348055, at *2 (N.D.Cal. Jun.

30, 2011) (awarding multiplier of 4.3 in wage and hour classaction); New England Carpenters Health Benefits Fund v.First Databank, Inc., No. 05 Civ. 11148, 2009 WL 2408560,at *2 (D.Mass. Aug, 3, 2009) (awarding multiplier of 8.3);In re Enron Corp. Sec., Derivative & ERISA Litig., 586F.Supp.2d 732, 803 (S.D.Tex.2008) (awarding multipler of5.2); In re Cardinal Health Inc. Sec. Litig., 528 F.Supp.2d752, 768 (S.D.Ohio 2007) (awarding multiplier of six times);In re Rite Aid Sec. Litig., 362 F.Supp.2d 587 (E.D.Pa.2005)(awarding multiplier of seven times); Maley v. Del GlobalTechs. Corp., 186 F.Supp.2d 358, 371 (S.D.N.Y.2002)(“modest multiplier” of 4.65 in wage and hour class actionwas “fair and reasonable”); In re RJR Nabisco, Inc. Sec. Litig.,No. 88 Civ. 7905, 1992 WL 210138, at *5 (S.D.N.Y. Aug. 24,1992) (awarding multiplier of 6); Cosgrove v. Sullivan, 759F.Supp. 166, 167 n. 1 (S.D.N.Y.1991) (awarding multiplierof 8.74).

*11 47. Here, the lodestar sought by Class Counsel,approximately 7.6 times, falls within the range grantedby courts and equals the 31.7% being sought. While thismultiplier is near the higher end of the range of multipliersthat courts have allowed, this should not result in penalizingplaintiffs' counsel for achieving an early settlement, particularwhere, as here, the settlement amount is substantial. SeeWal–Mart Stores, 396 F.3d at 121 (“[T]he lodestar create[s]an unanticipated disincentive to early settlements, tempt[s]lawyers to run up their hours, and compel[s] district courtsto engage in a gimlet-eyed review of line-item fee audits.”);Vizcaino, 290 F.3d at 1050 n. 5 (noting that “the lodestarmethod does not reward early settlement” and that “classcounsel should [not] necessarily receive a lesser fee forsettling a case quickly”); Savoie v. Merchants Bank, 166F.3d 456, 461 (2d Cir.1999) (“[T]he percentage-of-the-fundmethod also removes disincentives to prompt settlement,because plaintiffs' counsel, whose fee does not increase withdelay, have no reason to drag their feet.”).

48. The lodestar multiplier Class Counsel seeks is alsoreasonable because it will diminish over time. Parker v.Jekyll & Hyde Entm't Holdings, LLC, No. 08 Civ. 7670,2010 WL 532960, at *2 (S.D.N.Y. Feb. 9, 2010) (“[A]sclass counsel is likely to expend significant effort in thefuture implementing the complex procedure agreed uponfor collecting and distributing the settlement funds, themultiplier will diminish over time”). “[W]here ‘class counselwill be required to spend significant additional time on thislitigation in connection with implementing and monitoringthe settlement, the multiplier will actually be significantly
















































lower’ because the award includes not only time spent priorto the award, but after in enforcing the settlement.” Sewell,2012 WL 1320124, at *13 (quoting Bellifemine v. Sanofi–Aventis U.S. LLC, No. 07 Civ. 2207, 2010 WL 3119374,at *6 (S.D.N.Y. Aug. 6, 2010)). In wage and hour cases,Class Counsel is often called upon to perform work afterthe final approval hearing, including answering class memberquestions, answering questions from the claims administrator,and negotiating and sometimes litigating disagreementswith defendants about administering the settlement anddistributing the fund. See Swartz Fees & Service AwardsDecl. ¶ 12. “The fact that Class Counsel's fee award will notonly compensate them for time and effort already expended,but for time that they will be required to spend administeringthe settlement going forward, also supports their fee request.”See McMahon, 2010 WL 2399328, at *8.

49. The Court also awards Class Counsel reimbursement oftheir litigation expenses in the amount of $33,155.56. Courtstypically allow counsel to recover their reasonable out-of-pocket expenses. See In re Indep. Energy Holdings PLC Sec.Litig., 302 F.Supp.2d 180, 183 n. 3 (S.D.N.Y.2003). Here,Class Counsel's unreimbursed expenses, including court andprocess server fees, postage and courier fees, transportation,working meals, photocopies, electronic research, expert fees,and Plaintiffs' share of the mediator's fees, are reasonable andwere incidental and necessary to the representation of theclass.

*12 50. The attorneys' fees and the amount inreimbursement of litigation costs and expenses shall be paidfrom the settlement fund.

51. The Court finds reasonable service awards of $10,000each to named Plaintiffs Sharon Yuzary, Jon Racow, HenryHu, Mina Dimetry, Teron Haughton, Daniel Hauer, BillyTzewa Mui, Calvin Mazlumyan, and Kim LeBleu. Theseamounts shall be paid from the settlement fund.

52. Service awards are common in class action cases andserve to “compensate plaintiffs for the time and effortexpended in assisting the prosecution of the litigation, therisks incurred by becoming and continuing as a litigant, andany other burdens sustained by the plaintiff[s].” McMahon,2011 4599822, at *9. Service awards fulfill the important

purpose of compensating plaintiffs for the time they spendand the risks they take. Massiah v. MetroPlus Health Plan,Inc., No. 11 Civ. 5669, 2012 WL 5874655, at *8 (E.D.N.Y.Nov. 20, 2012).

53. The “Effective Date” of the settlement shall be 5 days afterthe date of this Order if no party appeals this Order. If a partyappeals this Order, the “Effective Date” of the settlement shallbe the day after all appeals are finally resolved. This Ordershall constitute a judgment for purposes of Rule 58 of theFederal Rules of Civil Procedure.

54. Within 3 days of time to appeal this Order has expired,the claims administrator shall distribute the funds in thesettlement account by making the following payments in theorder below:

A. Paying Class Counsel 31.7% of the fund ($4,953,125);

B. Reimbursing Class Counsel for $33,155.56 in litigationcosts and expenses;

C. Paying service awards of S 10,000 each to namedPlaintiffs Sharon Yuzary, Jon Racow, Henry Hu, MinaDimetry, Teron Haughton, Daniel Hauer, Billy TzewaMui, Calvin Mazlumyan, and Kim LeBleu;

D. Paying the remainder of the fund to class membersin accordance with the allocation plan described in theSettlement Agreement.

55. The Court retains jurisdiction over this action forthe purpose of enforcing the Settlement Agreement andoverseeing the distribution of settlement funds. The partiesshall abide by all terms of the Settlement Agreement, whichare incorporated herein, and this Order.

56. Upon the Effective Date, this litigation shall be dismissedwith prejudice, and all Rule 23 Class Members who havenot excluded themselves from the settlement and all FLSAClass Members who have opted in to the lawsuit shall bepermanently enjoined from pursuing and/or seeking to reopenclaims that have been released pursuant to the settlement.

It is so ORDERED.

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Chhab v. Darden Restaurants, Inc. Exhibit 6

Chhab v. Darden Restaurants, Inc., Slip Copy (2013)


2013 WL 5308004Only the Westlaw citation is currently available.

United States District Court,S.D. New York.

Ahmed CHHAB, Kathryn Shrader, Lance Feldhun,Michael Rella, Vinent Anthony Boreland, and

Adrianne Benzion, on behalf of themselvesand all others similarly situated, Plaintiffs,

v.DARDEN RESTAURANTS, INC., GMRI,

Inc., Capital Grille Holdings, Inc.d/b/a the Capital Grille, and Rare

Hospitality International, Inc., Defendants.

No. 11 Civ. 8345(NRB). | Sept. 20, 2013.

Attorneys and Law Firms

Joseph A. Fitapelli, Esq., Brian S. Schaffer, Esq., Eric J.Gittig, Esq., Fitapelli & Schaffer, LLP, Louis Pechman, Esq.,N. Marely Mercado, Esq., Berke–Weiss & Pechman LLP, D.Maimon Kirschenbaum, Esq., Matthew D. Kadushin, Esq.,Joseph, Herzfeld, Hester & Kirschenbaum, LLP, New York,NY, for Plaintiffs.

Craig R. Benson, Esq., George Pauta, Esq., Sarah E. Moss,Esq., Lauren Schwartzreich, Esq., Littler Mendelsohn, P.C.,New York, NY, Gerald L. Maatman, Jr., Esq., Seyfarth ShawLLP, Chicago, IL, for Defendants.

Opinion

MEMORANDUM AND ORDER

NAOMI REICE BUCHWALD, District Judge.

*1 Ahmed Chhab, Kathryn Shrader, Lance Feldhun,Michael Rella, Vincent Anthony Boreland, and AdriannaBenzion (collectively, “plaintiffs”) bring this action under theFair Labor Standards Act (the “FLSA”). In the instant motion,plaintiffs request that this Court: (1) authorize the distributionof a collective action notice to a class of potential opt-inplaintiffs; (2) approve plaintiffs' proposed notice of lawsuit,opt-in consent form, and deadline reminder letter; and (3)direct the defendants to disclose the names, work locations,dates of employment, addresses, phone numbers, and emailaddresses of potential opt-in plaintiffs. For the reasons set

forth below, plaintiffs' motion is granted in part and deniedin part.

BACKGROUND 1

I. Factual BackgroundPlaintiffs work or have worked as servers and bartenders

(“tipped employees” 2 ) at The Capital Grille (“TCG”), awell-known chain of restaurants with forty-seven locationsacross the United States. Defendant Darden Restaurants, Inc.(“Darden”) is a publicly traded company that owns andoperates all TCG locations, as well as over 1,900 otherrestaurant chains including Red Lobster, The Olive Garden,

Bahama Breeze, and Longhorn Steakhouse. 3

According to plaintiffs, Darden maintains significant control“down to the smallest detail” over each of its TCGrestaurants to ensure their adherence with its uniform policies.(Deposition of Brian Foye, Fitapelli Decl. Ex. B (“FoyeTr.”), at 134:23–24, 182:24–183:13.) It selects managingpartners (“MP”) to manage its individual TCG locations,each of whom report to one of seven regional Directors ofOperations (“DO”), who in turn report to a single SeniorVice President of Operations. (Foye Tr. at 13:25–14:16.) Byutilizing this network of managing employees, Darden is ableto communicate directly with individual TCG locations toimplement nationwide policies, manage menu and servicespecifications, and deliver training, finance and payrollinformation. (See July 2012 Form 10–K, Fitapelli Decl. Ex.C, at 7; see also Foye Tr. at 16:17–17:14, 225:13–19.)

Plaintiffs rely on Darden's acknowledgment that it providesextensive training to its TCG employees, evidencing itscommitment to consistency and uniformity across TCGlocations. (July 2012 Form 10–K, Fitapelli Decl. Ex. C,at 7 (“Restaurants are visited regularly by all levels ofsupervision to help ensure strict adherence to all aspectsof our standards. Our Learning Center of Excellence inpartnership with each brand's head of training, together withsenior operations executives, are responsible for developingand maintaining our operations training programs.”) EachMP attends the manager-in-training program at “DardenUniversity,” as well as a week of standardized training atDarden's corporate support center in Orlando. (See Foye Tr. at54:6–9; Deposition of Thomas Gathers, Fitapelli Decl. Ex. E(“Gathers Tr.”), at 109:21–112:21.) TCG employees confirmthat such training is standardized, designed to ensure that all

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locations adhere to the same policies and procedures. (SeeGathers Tr. at 90:12–22.) MPs “cannot change policy” atTCG. (Foye Tr. at 165:16–18.)

*2 TCG's tipped employees are trained at their respectiverestaurants by “certified trainers,” hourly employees fromother locations who have been selected by Darden based ontheir MPs' recommendations and who are themselves taughtto provide such training. (Id. at 36:2–9; Gathers Tr. at 56:8–11, 58:19–59:5; Deposition of Jill Dickstein, Fitapelli Decl.Ex. F (“Dickstein Tr.”), at 252:23–253:16.) The certifiedtrainers provide tipped employees with standardized trainingmaterials, including a server and bartender manual, a memberhandbook, and a payroll guide. (See Foye Tr. at 43:6–19;Gathers Tr. at 52:11–22.) Notably, once they have beentrained by certified trainers, tipped employees are permittedto transfer from one TCG location to another withoutundergoing further training, since the policies in which theyhave been trained are “essentially identical” at each location.(Deposition of Ahmed Chhab, Fitapelli Decl. Ex. K (“ChhabTr.”), at 128:9–20; Deposition of DuJuan White, FitapelliDecl. Ex. L (“White Tr.”), at 21:19–22; Deposition of CrystalBeng, Fitapelli Decl. Ex. M (“Beng Tr.”), at 34:10–18;Deposition of Tasiya Oliver, Fitapelli Decl. Ex. N (“OliverTr.”), at 10:21–25, 18:1–9.)

Plaintiffs further claim that Darden mandates theimplementation of certain standardized programs in allTCG locations nationwide. (July 2012 Form 10–K, FitapelliDecl. Ex. C, at 9.) For example, each TCG location mustuse the Darden Application for Service and Hospitality(“DASH”), TCG's proprietary timekeeping system; theDarden Information Super Highway (“DiSH”), whichprovides access to payroll information and various Dardenpublications; the Labor Management System (“LMS”),TCG's shift scheduling system; and the Par Pull System,which measures food preparation requirements. (Pl. Mem. at3–4.)

In reliance on the foregoing, plaintiffs move for conditionalclass certification, claiming that defendants have violated theFLSA in connection with four common policies affectingTCG's tipped employees nationwide: side work, tip pooling,uncompensated off-the-clock hours, and denial of overtimepay. We summarize each of those claims below.

A. Federal Tip Credit and Side WorkThe FLSA generally requires employers to pay employeesa federal minimum wage of $7.25 per hour. See 29 U.S.C.

§ 206(a)(1). However, under the statute's “tip credit,”employers may pay tipped employees at an hourly wage ratebelow the minimum wage, provided that the hourly wage andthe employees' tips, taken together, are at least equivalent to

the minimum wage. See 29 U .S.C. § 203(m). 4

When an employee is employed by a single employer in botha tipped and a non-tipped position, DOL regulations permitthe employer to utilize the tip credit only for hours spentby the employee in the tipped occupation. See 29 C.F.R.§§ 531.51. Thus, if a tipped employee works two jobs, onein which his work customarily and regularly produces tipsand one in which it does not, the employee is consideredemployed in dual occupations, and the tip credit may notbe taken for any hours worked in the non-tip-producingoccupation. See id. § 531.56(e). However, the regulationdistinguishes that situation from “a waitress who spendspart of her time cleaning and setting tables, toasting bread,making coffee and occasionally washing dishes or glasses,”concluding that “[s]uch related duties in an occupation thatis a tipped occupation need not by themselves be directedtoward producing tips.” Id.

*3 In the case of servers and bartenders, the thresholdbetween tip-producing and non-tip-producing work isparticularly important. Waitstaff commonly perform “sidework,” such as setting and clearing tables, that is related totheir tipped occupation but does not itself generate tips. Insuch circumstances, the DOL has stated that an employercan “take the tip credit for time spent in duties related tothe tipped occupation, even though such duties are not bythemselves directed toward producing tips (i.e. maintenanceand preparatory or closing activities),” but that such dutiesmust be “incidental to the regular duties of the server.” DOLField Operations Handbook § 30d00(e) (rev. June 30, 2000),available at http://www.dol.gov/whd/FOH/FOH_ Ch30.pdf(last visited Sept. 13, 2013). The DOL further clarified thisissue in a March 2011 opinion in which it concluded thattipped employees who spend a substantial amount of time,or more than twenty percent of their workweeks, engagedin related but non-tip-producing work must be paid thefull minimum wage for the time spent performing the non-tipped work. See U.S. Department of Labor, Wage and HourDivision Fact Sheet # 15: Tipped Employees Under theFair Labor Standards Act (FLSA) (rev. Mar. 2011) (“DOLFact Sheet # 15”), available at http://www.dol.gov/whd/regs/compliance/whdfsl5.pdf (last visited September 3, 2013).While not expressly mandated in the DOL regulations, certaincourts have concluded that the twenty percent limit on side

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work under the federal tip credit is entitled to deference.See, e.g., Fast v. Applebee's International, Inc., 638 F.3d872, 879–81 (8th Cir.2011); Driver v. AppleIllinois, LLC, 890F.Supp.2d 1008, 1032–33 (N.D.Ill.2012).

Plaintiffs allege that, during the relevant period, defendantsuniformly required tipped employees to perform a substantialamount of side work, or non-tip-producing duties, in excessof twenty percent of their shift. Nevertheless, plaintiffs assertthat defendants unlawfully utilized the FLSA tip credit wagerate for the excessive hours spent on side work. (See Pl. Mem.at 6–7.) As explained below, plaintiffs' side work allegationsdiffer slightly for the periods before and after November2011, when Darden implemented a uniform side work policyin all of its TCG locations.

1. Pre–November 2011 TCG Side WorkPrior to November 2011, each TCG location circulatedgeneral side work guidelines containing lists of the side worktasks to be completed by tipped employees at those locations.(See, e.g., New York—42nd Street Side Work Guidelines,Fitapelli Decl. Ex. T; New York—51st Street Side WorkGuidelines, Fitapelli Decl. Ex. U; New York—Wall StreetSide Work Guidelines, Fitapelli Decl. Ex. V; Indianapolis,Indiana Side Work Guidelines, Fitapelli Decl. Ex. Y;Charlotte, North Carolina Side Work Guidelines, FitapelliDecl. Ex. Z; Phoenix, Arizona Side Work Guidelines,Fitapelli Decl. Ex. AA.)

*4 Those guidelines divided the requisite side work intoopening, closing, and running side work tasks. Openingside work, such as folding napkins, polishing glasses andsilverware, cutting and wrapping lemon wedges, and fillingbutter ramekins, was required to be completed before thestart of lunch and dinner services. (See Chhab Tr. at 155:2–7; White Tr. at 151:2–19, 152:9–18; Beng. Tr. at 122:5–21; Deposition of Amy Mitchell, Fitapelli Decl. Ex. DD(“Mitchell Tr.”), at 133:17–23, 135:2–11; Deposition ofMichael Rella, Fitapelli Decl. Ex. EE (“Rella Tr.”), at159:4–22.) Closing side work, such as running used glassesand steak knives through the dishwasher, creating “setups”of washed and polished silverware, cleaning the coffeemachines, and restocking coffee beans and tea bags, wasrequired to be completed at the end of service, before therestaurants closed each night. (See Chhab Tr. at 172:4–173:21; White Tr. at 174:8–17, 183:5–18; Oliver Tr. at 69:9–16; Rella Tr. at 155:23–157:8, 160:11–161:18; Deposition ofVincent Anthony Boreland, Fitapelli Decl. Ex. FF (“BorelandTr.”), at 132:12–22; Deposition of Kathryn Shrader, Fitapelli

Decl. Ex. HH (“Shrader Tr.”), at 93:7–19, 95:2–9, 97:12–98:24, 101:4–21.) Opening and closing side work tasks weredivided among the tipped employees by station. (See ChhabTr. at 184:16–23; White Tr. at 134:11–135:3; Rella Tr. at130:15–131:15; Mitchell Tr. at 132:18–133:1.) Running sidework, which tipped employees were required to completethroughout their shifts, included brewing coffee and tea,polishing and replacing clean silverware, restocking cleandishes, cleaning counters, and refilling ice bins. (See, e.g.,New York—42nd Street Side Work Guidelines, FitapelliDecl. Ex. T; New York—51st Street Side Work Guidelines,Fitapelli Decl. Ex. U; Charlotte, North Carolina Side WorkGuidelines, Fitapelli Decl. Ex. Z; Phoenix, Arizona SideWork Guidelines, Fitapelli Decl. Ex. AA.)

Plaintiffs claim that although they spent a substantial amountof time, in excess of twenty percent of their shifts, performingopening and closing side work duties, defendants failed topay them for that time at the full minimum wage rate. (SeeFoye Tr. at 87:11–13.) Several plaintiffs have testified thatopening side work duties alone often took between thirtyand ninety minutes, as compared to an average meal shiftof six hours. (See, e.g., Chhab Tr. at 155:2–7; White Tr. at152:9–18; Beng Tr. at 50:24–51:1, 55:15–23; Oliver Tr. at56:16–18); see also Tr. at 11:12–12:4. They claim that tippedemployees were required to finish their assigned opening sidework tasks before the start of service, and if a tipped employeewas assigned to an “easier” task, he or she would be requiredto assist with the more time consuming duties. (See ChhabTr. at 131:9–17; White Tr. at 154:8–21; Beng Tr. at 50:24–51:1; Oliver Tr. at 56:16–18.) Similarly, plaintiffs were notallowed to leave following their shift until all closing taskswere completed and the next meal service had been set up.(See Beng Tr. at 55:15–23.)

*5 Plaintiffs further claim that defendants failed to monitorthe amount of time tipped employees spent performing sidework at the opening and close of each service, therebyperpetrating a common policy of permitting side work toexceed twenty percent of their shifts. (See Chhab Tr. at 131:9–17, 155:2–23; Beng Tr. at 55:15–23; see also Wirnowski Tr.at 20:8–24 (alleging that defendants had the ability to recordtime spent by tipped employees performing side work).)

2. Post–November 2011 TCG Side WorkIn November 2011, Darden introduced its Universal SideWork program, which standardized and memorialized therequired opening, running, and closing side work tasks to becompleted at all TCG locations across the U.S. (Universal







Side Work Edge Training Guide, Fitapelli Decl. Ex. KK.)Plaintiffs claim that the introduction of the program reflectsdefendants' concession that previous side work policies hadresulted in tipped employees spending more than twentypercent of their shifts performing side work. (Pl. Mem. at 12.)

Although Universal Side Work redistributed certain tasks,such as lemon wedges and butter, to non-tipped employees,it required tipped employees to perform new tasks, such as“backwashing” espresso machines and running trays throughthe dishwasher. (Universal Side Work Edge Training Guide,Fitapelli Decl. Ex. KK, at D000918.) Plaintiffs have testifiedthat the program neither reduced the amount of time tippedemployees spent performing side work (see Mitchell Tr.at 132:1–8; Deposition of Rebecca Ledwell, Fitapelli Decl.Ex. JJ (“Ledwell Tr.”), at 451:4–17), nor required MPs orany other Darden or TCG employee to monitor the timespent performing such work (see Foye Tr. at 115:13–116:20;Dickstein Tr. at 190:14–191:5; Zemlock Tr. at 214:2–19;Hamilton Tr. at 117:19–119:4.). As a result, plaintiffs allegethat defendants' policy of utilizing tipped employees toperform a substantial amount of non-tip producing side work,while being paid less than full minimum wage, continuedeven after the November 2011 introduction of Universal SideWork. (See Pl. Reply Mem. at 1.)

B. Tip PoolingThe FLSA permits the pooling of tips so long as the tippool includes only “employees who customarily and regularlyreceive tips .” 29 U.S.C. §§ 203(m), (t); see 29 C.F.R. §531.54; see also Gillian v. Starjem Restaurant Corp., No.10 Civ. 6056(JSR), 2011 WL 4639842, at *4 (S.D.N.Y.Oct. 4, 2011) (“When all tips are received and retainedby the employee, the pool only includes employees who‘customarily and regularly receive tips,’ and employeesare notified that the employer is taking the tip credit, therequirements of the FLSA are satisfied and the employer ispermitted to take a tip credit against minimum wage thatwould permit it to pay tipped employees an hourly rate lowerthan the standard minimum wage.”). The inclusion of anemployee who does not customarily and regularly receivetips will invalidate the tip credit applied to participatingemployees' wages. See Delaney v. Geisha NYC, LLC, 261F.R.D. 55, 58 (S.D.N.Y. Sept. 22, 2009) (“If the tip poolincludes employees who do not customarily and regularlyreceive tips, the employer must pay them the full minimumwage.”); Chung v. New Silver Palace Rest., Inc., 246F.Supp.2d 220, 230–31 (S.D.N.Y.2002).

*6 When deciding whether an employee customarily andregularly receives tips, courts must determine whether theemployee's job is historically a tipped occupation and whetherhe has more than “de minimis” interaction with customersas a part of his employment. See, e.g., Hai Ming Lu v. JingFong Rest. Inc., 503 F.Supp.2d 706, 712 (S.D.N.Y.2007);Garcia v. La Revise Assocs. LLC, No.08 Civ. 9356(LTS),2011 WL 135009, at *5 (S.D.N.Y. Jan. 13, 2011); Chan v.Triple 8 Palace, Inc., No. 03 Civ. 6048(GEL), 2006 WL851749, at *14 n. 22 (S.D.N.Y. Mar. 30, 2006). Courts inthis District have concluded that certain back-of-the-houserestaurant staff, including cooks and dishwashers, cannotparticipate in valid tip pools under the FLSA because theydo not interact with customers. See, e.g., Shahriar v. Smith &Wollensky Rest. Grp., Inc., 659 F.3d 234, 240 (2d Cir.2011)(observing that a “salad maker” was not a tipped employeebecause he had no “direct intercourse with diners, workedentirely outside the view of restaurant patrons, and solelyperformed duties traditionally classified as food preparationor kitchen support work”) (citing Myers v. Cooper CellarCorp., 192 F.3d 546, 550–51 (6th Cir.1999); Hai Ming Lu,503 F.Supp.2d at 711 (denying summary judgment due toremaining issue of fact regarding “whether pantry workersand dim sum servers ... are ... entitled to share in the tippool, or, in the alternative, whether they are ‘like dishwashers,cooks, or off-hour employees like an overnight janitor [who]do not directly relate with customers at all’ and who may notshare in the pool”) (citing Kilgore v. Outback Steakhouse,160 F.3d 294, 301 (6th Cir.1998)). However, employees whoprovide direct services to customers, such as servers, hosts,and busboys, are valid tip pool participants. See 29 C.F.R. §531.54; see also Kilgore, 160 F.3d at 301–02; Garcia, 2011WL 135009, at *7.

Plaintiffs assert that because employees who did notcustomarily and regularly receive tips shared in the tip poolat TCG locations, defendants improperly took advantageof the tip credit and paid them less than minimum wage.(See Pl. Mem. at 14.) Plaintiffs only assert their tip poolingallegations for the period before November 2011, whenDarden implemented a uniform tip sharing policy in all TCGlocations nationwide.

1. Pre–November 2011 Tip PoolingUnder a typical tip-pooling arrangement, a restaurant collectsits employees' tips and then redistributes them in sharesamong tipped employees to equalize their incomes. Here,plaintiffs allege that while certified trainers informed tippedemployees that tip pooling was mandatory, they did not


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themselves redistribute the tips among non-tipped employees.Rather, plaintiffs assert that the trainers instructed the tippedemployees to themselves “tip out,” or give a portion oftheir individual tips, to certain non-tipped TCG employees,including dishwashers and silverware polishers. (See FoyeTr. at 66:5–13; Rella Tr. at 43:6–444:16; Oliver Tr. at18:7–19:16, 109:18–19; Duke Tr. at 182:4–16; White Tr.at 75:9–12; Ledwell Tr. at 393:12–24; Beng Tr. at 81:22–82:3; Smith Decl. ¶ 10). They allege that non-tip-eligibleemployees thus participated in the tip pools at the followinglocations: New York–42nd Street, New York–Wall Street,Fort Lauderdale, Florida, Orlando, Florida, Tampa, Florida,Indianapolis, Indiana, Charlotte, North Carolina, Phoenix,Ariznoa, and Pittsburgh, Pennsylvania. (See Pl. Mem. at 13& nn. 69–76.)

*7 Plaintiffs further point to a series of emails sent by aDarden DO to several MPs in late 2010 instructing them toremove silverware polishers from the tip pools and ensure thatsuch employees were not receiving tips which, they contend,indicates defendants' awareness of the violation. (See Emailfrom Paula Thomas, Fitapelli Decl. LL, at 1.) Nevertheless,plaintiffs have testified that no follow up was conducted. (See,e.g., Foye Tr. at 112:1–21.)

2. Post–November 2011 Tip PoolingSimultaneous with the introduction of Universal Side Work,Darden rolled out a Standardized “One Best Way” TipShare program, to be implemented at all TCG locationsacross the U.S. (See Standardized “One Best Way” TipShare Program Rollout Guide, The Capital Grille, FitapelliDecl. Ex. R.) That program provided, inter alia, that onlyservers, bartenders, bar servers, runners, bar backs, andservice assistants could participate in valid tip pools. (See id.at 5.) Thus, according to plaintiffs, defendants only violatedthe FLSA as a result of their tip-sharing policies prior toNovember 2011. See Tr. at 29 (“After the rollout of the newtip share, what we have determined is that the ineligibleemployees were effectively removed from the tip pool.”).

C. Off–the–Clock HoursPlaintiffs allege, and defendants do not dispute, that all TCGlocations nationwide use the same standardized timekeepingsystem, DASH, which keeps track of the employeesscheduled to work during any given shift and the number ofhours worked by each employee. (See Pl. Mem. at 15.) Nor dodefendants dispute that all TCG locations adhere to Darden's“Safe and Secure” program, which requires “[a]t least one

Manager and two other employees ... [to] be in the restaurantat all times ... at opening and closing.” (The Capital GrilleRecommitment 2011–2012, Fitapelli Ex. MM, at 11.)

As a result of the above policies, plaintiffs allege thatdefendants regularly denied tipped employees compensationby preventing them from being “on the clock” for the fullamount of time spent working. (See Pl. Mem. at 14–15.)For example, tipped employees have testified that the DASHsystem prohibits them from clocking in more than fiveminutes before the official start of their shifts, or remainingclocked in between the lunch and dinner shifts, no matter howlong the employees have been working before or in betweenshifts. (See, e.g., Wirnowski Tr. at 26:22–27:9; Boreland Tr.at 112:13–113:15; Deposition of John Mirabal, Fitapelli Decl.Ex. PP (“Mirabal Tr.”), at 204:1–12.) Plaintiffs also allegethat DASH prohibits them from clocking in if they are notlisted on the schedule, either because they are substitutingfor the scheduled employee or because they picked up theshift after the schedule was entered. Since only MPs—who plaintiffs submit are disincentivized from permitting

employees to work in excess of forty hours per week 5 —are authorized to make adjustments to the DASH schedule,plaintiffs claim that they were regularly denied compensationfor these unrecorded shifts. (See, e.g., Foye Tr. at 151:8–16;Wirnowski Tr. at 25:12–19, 26:22–27:9; White Tr. at 238:7–239:1; Rella Tr. at 76:6–24; Oliver Tr. at 39:19–40:21.)

*8 Next, plaintiffs allege that the “Safe and Secure” programregularly requires tipped employees to be at TCG for anuncompensated period of time while closing the restauranteach night. Specifically, they claim that in order for the MPsto run the end of night report, the tipped employees whohave remained at TCG pursuant to the “Safe and Secure”policy must clock out. As such, the program requires tippedemployees to wait off the clock while MPs complete theirclosing responsibilities. (See, e.g., Chhab Tr. at 97:14–24,100:17–22; Oliver Tr. at 101:4–20; Mitchell Tr. at 81:2–16;Ledwell Tr. at 128:5–129:20.) Plaintiffs further argue that theoff the clock time was “significant” due to the length of timeit takes to run the end of night report and complete variousforms of closing paperwork. Tr. at 38:2–5; (see Pl. Mem. at14; Foye Tr. at 158:3–8; Email from Joe Rossi, Fitapelli Decl.Ex. NN, at 1 (recalling clocking out before having to completeweekly sales accountings and compile credit card receipts andserver check out reports after closing shift); October 24, 2011Email from Ron Adelman to MPs, Fitapelli Decl. Ex. OO, at 1(“There should not be more than a 5 minute variance from thetime the last team member clocks until the closing manager



runs end of day. Team members can not being [sic] waitingfor managers to close the restaurant off the clock!”).)

D. Denial of Overtime PayFinally, plaintiffs allege that defendants regularly deniedtipped employees overtime wages when they worked morethan forty hours per week. (Pl. Mem. at 15–16); see 29 U.S.C.§ 207(a)(1). Largely, plaintiffs claim that this was perpetratedthrough defendants' “de facto policy” against overtime, asenforced by MPs who prohibited tipped employees fromworking on the clock in excess of forty hours per week (seeWhite Tr. at 227:2–20; Oliver Tr. at 33:4–13) and permittedthem to work off the clock hours and shifts (see Chhab Tr. at205:21–206:1; Benzion Tr. at 125:5–17; Rella Tr. at 85:15–86:14).

In addition, due to defendants' alleged failure to satisfy therequirements by which they can avail themselves of the FLSAtip credit, plaintiffs claim that the overtime rates paid to tippedemployees are inaccurate because they are not calculated attime and one half the full statutory minimum wage. (See Pl.Mem. at 16.)

II. Procedural HistoryPlaintiffs filed their complaint on November 17, 2011, andan amended complaint on March 1, 2012, alleging thatdefendants had perpetrated the above willful FLSA violationsthrough a common policy or plan with respect to all tippedemployees at the forty-seven TCG restaurants nationwide.(Amended Compl., Fitapelli Decl. Ex. A.) Defendants joinedissue on April 30, 2012. The parties have since engaged inlimited discovery regarding common policies. To date, forty-

five tipped employees representing eleven TCG locations 6

have opted into the instant action.

*9 On October 25, 2012, plaintiffs moved for conditionalclass certification pursuant to 29 U.S.C. § 216(b). Defendantsfiled their opposition on December 17, 2012, and plaintiffsreplied on January 16, 2013. We held oral argument on the

motion on August 21, 2013. 7

DISCUSSION

I. Motion for Conditional Certification

A. Legal Standards

Section 216(b) of the FLSA authorizes an employee tomaintain a collective action on behalf of himself and all“similarly situated” employees. 29 U.S.C. § 216(b). Unlikea class action brought under Rule 23 of the Federal Rulesof Civil Procedure, a collective action requires “similarlysituated” employees to affirmatively opt-in to the litigationby filing written consent forms with the court. Id. “[D]istrictcourts have discretion, in appropriate cases, to implement[Section] 216(b) by facilitating notice to potential plaintiffs ofthe pendency of the action and of their opportunity to opt-in asrepresented plaintiffs.” Myers v. Hertz Corp., 624 F.3d 537,554 (2d Cir.2010) (internal quotation marks and alterationsomitted). In determining whether to exercise such discretion,courts in this Circuit follow a two-step test. Id. at 554–55.

The first step, at issue in this motion, is commonly referredto as conditional certification. See Guillen v. Marshalls ofMA, Inc ., 750 F.Supp.2d 469, 475 (S.D.N.Y.2010). Duringthis stage, “the court mak[es] an initial determination to sendnotice to potential opt-in plaintiffs who may be ‘similarlysituated’ to the named plaintiffs.” Myers, 624 F.3d at 555.A plaintiff's burden at this stage is minimal: he must onlymake a “modest factual showing” that he and the potentialopt-in plaintiffs were “victims of a common policy or planthat violated the law.” Id. (internal quotation marks omitted).

To satisfy this burden, the plaintiff must offer “substantialallegations” demonstrating a “factual nexus” between theplaintiff and the potential opt-in plaintiffs. Diaz v. S & HBondi's Dep't Store, No. 10 Civ. 7676(PGG), 2012 WL137460, at *3 (S.D.N.Y. Jan. 18, 2012) (internal quotationmarks omitted); see also Myers, 624 F.3d at 555 (stating thatthe plaintiff must offer more than “unsupported assertions” tosatisfy its burden at the first stage) (internal quotation marksomitted). The plaintiff may adduce evidence through its ownpleadings, affidavits, and declarations, Raniere v. CitigroupInc., 827 F.Supp.2d 294, 319 (S.D.N.Y.2011), including anyhearsay statements contained therein. Hernandez v. MerrillLynch & Co., No. 11 Civ. 8472(KBF), 2012 WL 1193836,at *3 (S.D.N.Y. Apr. 6, 2012); see also Cunningham v. Elec.Data Sys. Corp., 754 F.Supp.2d 638, 644 (S.D.N.Y.2010)(noting that courts use a “relatively lenient evidentiarystandard” during the first stage of the analysis) (internalquotation marks omitted).

The plaintiff's burden at the first stage is “very low.” Raniere,827 F.Supp.2d at 319; see also Myers, 624 F.3d at 555;Lynch v. United Servs. Auto. Ass'n, 491 F.Supp.2d 357, 368(S.D.N.Y.2007). Importantly, the court does “not weigh the



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merits” of the plaintiff's underlying claims. Cunningham, 754F.Supp.2d at 644. Nor does the court resolve factual disputesor evaluate credibility. Id.; see also Raniere, 827 F.Supp.2dat 324. Although “unsupported assertions” are insufficient,the Second Circuit has emphasized that the standard of proofshould remain “low” because “the purpose of this first stageis merely to determine whether ‘similarly situated’ plaintiffsdo in fact exist.” Myers, 624 F.3d at 555 (internal quotationmarks omitted); see also Amador v. Morgan Stanley, No.11 Civ. 4326(RJS), 2013 WL 494020, at *3 (S.D.N.Y. Feb.7, 2013). Because the standard at the first stage is “fairlylenient,” courts applying it “typically grant [ ] conditionalcertification.” Malloy v. Richard Fleischman & Assocs. Inc.,No. 09 Civ. 332(CM), 2009 WL 1585979, at *2 (S.D.N.Y.June 3, 2009) (internal quotation marks omitted).

*10 As the term conditional certification suggests, thecourt's determination at the first stage is only preliminary.During the second stage, which often occurs after theclose of discovery, the court applies increased scrutiny todetermine whether the opt-in plaintiffs are in fact “similarlysituated” to the named plaintiff, such that a collectiveaction should proceed. Myers, 624 F.3d at 555; see also

Morano v. Intercontinental Capital Grp., Inc., No. 10 Civ.2192(KBF), 2012 WL 2952893, at *5 (S.D.N.Y. July 17,2012) (describing the second-stage standard as “stringent”)(internal quotation marks omitted). If the court is notsatisfied that the opt-in plaintiffs are similarly situated tothe named plaintiffs, the court will decertify the collectiveaction and dismiss the claims of the opt-in plaintiffs withoutprejudice. See, e.g., Co hen v. Gerson Lehrman Grp., Inc.,686 F.Supp.2d 317, 327 (S.D.N.Y.2010); Morano, 2012 WL2952893, at *6.

B. AnalysisBased on the above allegations, plaintiffs seek conditionalcertification of a collective action on behalf of all tippedemployees who are or were employed at TCG locationsnationwide between November 17, 2008 and the entry ofjudgment in this case. In response, defendants argue thatplaintiffs' proposed certification should be denied becausethey have not established that they are similarly situated toputative collective members with respect to their side work,tip sharing, and off the clock claims. In addition, defendantsobject to various aspects of plaintiffs' proposed notice andrelated requests. We address each of defendants' argumentsin turn.

1. Side WorkAccording to defendants, plaintiffs have not established thatthey are similarly situated to putative collective members withrespect to their side work allegations for two reasons: first,plaintiffs fail to show TCG's use of a facially unlawful sidework policy (see Def. Opp. at 19), and second, plaintiffs havenot shown that there were common side work practices inexistence prior to November 2011, since each TCG locationhad “its own unique side work policy” during that time

(see id. at 18). 8 Defendants also submit that individualizeddifferences among tipped employees' performance of sidework make it impossible for plaintiffs to show common proof.(See id. at 20–21.) For the following reasons, the Courtdisagrees with each of defendants' arguments.

As an initial matter, it is undisputed that TCG locations didnot adhere to any formal, written side work policy prior to theimplementation of Universal Side Work in November 2011.However, plaintiffs need not show the existence of a faciallyunlawful formal policy in order to meet the burden required ofthem at the conditional certification stage. See, e.g., Winfield,843 F.Supp.2d at 405 (“[T]he existence of a formal policy ofrequiring overtime pay should not immunize the defendantwhere the plaintiffs have presented evidence that this policywas commonly violated in practice.”). They need only showevidence of a “de facto” policy which, in practice, resultedin a pattern of FLSA violations. See id. (listing cases); Myers,624 F.3d at 555; Amador, 2013 WL 494020, at *6–7.

*11 Defendants concede that TCG locations adheredto certain side work practices nationwide. For example,defendants argue that “each MP understood that ... sidework assignments should not take more than 30 minutes pershift.” (See Def. Opp. at 18). At oral argument, they furtherargued that while MPs did not record the specific amount oftime spent by tipped employees on side work, they uniformlyensured that a “cushion” existed between a tipped employee'stotal shift hours and the likely time spent performing openingside work. See Tr. at 10:12–18. Plaintiffs do not contend thatthese policies themselves constitute the “common policy orplan that violated the law” that they must show for conditionalcertification. Myers, 624 F.3d at 555. Rather, they submitthat defendants' side work policies resulted, in practice, ina pattern of FLSA violations across TCG locations. For thereasons that follow, we agree.

First, plaintiffs have adduced substantial evidence showingthat Darden centrally controlled the side work performed


























across TCG locations even before the implementationof Universal Side Work. Its Par Pull System mandatedadherence to detailed specifications for commonly performedside work tasks, including the preparation of lemon wedgesand butter ramekins. (See Foye Tr. at 99:24–100:1.) Dardenpersonally selected certified trainers to oversee the trainingof tipped employees in its side work practices, the formatof which does not vary across TCG locations. It also madeoccasional brand-wide changes to its side work specificationsduring the relevant period, which became effective in everyTCG location nationwide. (See, e.g., Email from JamesNuetzi to DL–CG Regional Managers, Fitapelli Decl. Ex.CC, at 1 (requiring all TCG locations to transition to a new,standardized butter service no later than October 2010).)

Plaintiffs' evidence further indicates that there was substantialoverlap in the type of side work performed by tippedemployees at each location prior to November 2011. (See,e.g., Foye Tr. at 87:4–8; Chhab Tr. at 128:9–23; White Tr. at135:24–138:7; Beng Tr. at 42:10–15; Oliver Tr. at 86:16–19;Declaration of Amy Smith, Fitapelli Decl. Ex. BB (“SmithDecl.”), ¶ 13.) Nearly every TCG location divided those tasksinto opening, running, and closing side work, and assignedthem to tipped employees by station. (See New York—42ndStreet Side Work Guidelines, Fitapelli Decl. Ex. T, at 6.; NewYork—51st Street Side Work Guidelines, Fitapelli Decl. Ex.U, at 7–8; New York—Wall Street Side Work Guidelines,Fitapelli Decl. Ex. V, at 3–4, 6–8; Indianapolis, Indiana SideWork Guidelines, Fitapelli Decl. Ex. Y, at 2–3; Charlotte,North Carolina Side Work Guidelines, Fitapelli Decl. Ex. Z,at 7, 14; Phoeniz, Arizona Side Work Guidelines, FitapelliDecl. Ex. AA, at 6–7.)

Based on the above, plaintiffs have submitted ampledeposition testimony in support of their argument thatdefendants' side work practices resulted in a pattern ofsimilar FLSA violations. For example, tipped employeesfrom multiple TCG locations testified that they performed“significant” amounts of side work at the opening and closingof each meal service. (See Chhab Tr. at 172:4–173:21;White Tr. at 174:8–17, 183:5–18; Oliver Tr. at 69:9–16;Rella Tr. at 155:23–157:8, 160:11–161:18; Boreland Tr. at132:12–22; Shrader Tr. at 93:7–19, 95:2–9, 97:12–98:24,101:4–21.) Notably, several tipped employees testified thattheir opening side work often exceeded an hour and a half,compared to an average shift of six hours, and continuedthroughout their shifts. (See, e.g., Chhab Tr. at 155:2–7;White Tr. at 152:9–18; Beng Tr. at 50:24–51:1, 55:15–23; Oliver Tr. at 56:16–18; Dickstein Tr. at 190:22–191:5).

Plaintiffs further testified that these violations occurred as aresult of defendants' uniform failure to record or monitor thetime spent on non-tip-producing side work, both before andafter the implementation of Universal Side Work. (See FoyeTr. at 88:13–25; Dickstein Tr. at 190:14–191:5; Depositionof James Zemlock, Fitapelli Decl. Ex. J (“Zemlock Tr.”), at214:2–19; Deposition of James Hamilton, Fitapelli Decl. Ex.P (“Hamilton Tr.”), at 117:19–119:4.)

*12 To rebut plaintiffs' showing, defendants urge theCourt to consider a number of competing declarations whichthey assert undermine the contention that tipped employeesuniformly performed side work in excess of twenty percentof their workweeks. (See Def. Opp. at 19 & n. 79.) Doingso, however, would require the Court to evaluate credibilityand determine the facts. Such rulings are inappropriate atthis stage. Raniere, 827 F.Supp.2d at 324; see also Co hen,686 F.Supp.2d at 330 (declining to “wade into a thicket ofcompeting factual asserts at this preliminary stage”). Theaccuracy of the parties' competing views will be testedthrough discovery and may be raised before the Court ona motion to decertify the class after the close of discovery.At this stage, however, defendants' untested declarationsdo not undermine plaintiffs' showing. See Winfield, 843F.Supp.2d at 407 n. 6 (“[C]ourts in this Circuit regularlyconclude that [competing] declarations do not underminethe plaintiffs' showing in the first stage of the conditionalcertification process.”); Iglesias–Mendoza v. La Belle Farm,Inc., 239 F.R.D. 363, 368 (S.D.N.Y.2007) (stating that, at thenotice stage, “the factual variations defendants rely on do notundercut plaintiffs' allegations of common wage and overtimepractices that violate the FLSA”).

Finally, defendants submit that conditional certificationof plaintiffs' side work allegations would require an“individualized inquiry” into the number of hours eachtipped employee worked per shift as compared to thenumber of hours those employees spent on non-tip-producingside work. (See Def. Opp. at 20–21.) To support thatargument, defendants rely solely on the reasoning espousedin Strait v. Belcan Engineering Grp., Inc., 911 F.Supp.2d709 (N.D.Ill.2012), in which the U.S. District Court for theNorthern District of Illinois concluded that conditional classcertification was not warranted where liability is potentiallydependent on a number of individualized factual assessmentsregarding potential plaintiffs' employment duties. See id. at723. Beyond the non-binding nature of that precedent on theresolution of this motion, we note that courts in this Districthave rejected such arguments. See Co hen v. Gerson Lehrman













Grp., Inc., 686 F.Supp.2d 317, 329 (S.D.N.Y.2010); Francisv. A & E Stores, Inc., 2008 WL 4619858, at *3 & n. 3(S.D.N.Y. Oct. 16, 2008) (concluding that it “seem[s] to beagainst the weight of authority in undertaking that analysisat the first stage of the certification process, rather thanevaluating at the decertification stage whether the need forindividual analysis makes a collective action inappropriate”).We find defendants' argument more appropriately addressedat a damages phase should the case reach that point.Accordingly, we believe it is premature for the Court toconclude at this stage that plaintiffs' experiences were soindividualized as to defeat their motion for conditionalcertification.

*13 In sum, none of defendants' arguments refute plaintiffs'showing that they are similarly situated to putative collectivemembers with respect to their side work allegations.

2. Tip PoolingDefendants next argue that plaintiffs are not similarly situatedto putative collective members with respect to their tippooling claims because they establish neither the existenceof a common policy or practice regarding tip sharing prior toNovember 2011, nor that ineligible employees received tips“at all locations, and at the direction of management.” (SeeDef. Opp. at 16.)

Once again, plaintiffs do not assert the existence of aformal, chain-wide tip pooling policy prior to November2011. However, they have adduced considerable evidenceindicating that common tip sharing practices across TCGlocations resulted in a pattern of FLSA violations. Testimonyfrom putative collective members confirms that MPsinstructed tipped employees to “tip out,” or give a portion oftheir individual tips, to tip-ineligible employees. (See FoyeTr. at 66:5–13; Rella Tr. at 43:6–444:16; Oliver Tr. at 18:7–19:16, 109:18–19; Duke Tr. at 182:4–16; White Tr. at 75:9–12; Ledwell Tr. at 393:12–24; Beng Tr. at 81:22–82:3; SmithDecl. ¶ 10.) Moreover, Brian Foye, the former Senior VicePresident of Operations at TCG, has testified that such tippooling practices were implemented by Darden's certifiedtrainers, although they were perpetuated by generations ofMPs without further training. (See Foye Tr. at 66:5–13.)

Plaintiffs have established that silverware polishers anddishwashers were tip-ineligible employees because theydo not interact with customers at TCG, as their primaryresponsibility was to clean flatware and glasses in the kitchenarea, away from table service. (See, e.g., Chhab Tr. at 243:23–

25; White Tr. at 183:3–13; Oliver Tr. at 109:10–17; LedwellTr. at 438:6–10.) They have further submitted evidenceindicating that tip pools included silverware polishers anddishwashers in at least nine TCG locations: New York—42ndStreet, New York—Wall Street, Fort Lauderdale, Florida,Orlando, Florida, Tampa, Florida, Indianapolis, Indiana,Charlotte, North Carolina, Phoenix, Arizona, and Pittsburgh,Pennsylvania. (See Rella Tr. at 43:6–44:16; Oliver Tr. at109:18–19; Duke Tr. at 182:4–16; White Tr. at 75:9–12;Ledwell Tr. at 393:12–24; Beng Tr. at 81:22–82:3; seealso Foye Tr. at 106:25–108:7 (confirming that silverwarepolishers were included in the tip pool at the Boca Raton,Florida location.) Thus, plaintiffs have made the minimalfactual showing required of them that there was a commonpractice of requiring tipped employees to share tips with non-eligible employees in multiple TCG locations.

In response, defendants submit that any common practice of“tipping out” tip-ineligible employees was voluntary on thepart of the tipped employees. (See Def. Opp. at 17 & n. 71.)We note that defendants have failed to support their argumentwith documentary evidence or deposition testimony, andfind that the emails sent by Darden management, instructingMPs to root out and eradicate any such practices, furtherundermine that contention. (See Fitapelli Decl. LL, at 1.) Tothe contrary, plaintiffs have adduced substantial testimonialevidence showing that the practice of “tipping out” tonon-tipped employees was not voluntary, but rather was

represented to them as reflecting mandatory TCG policy. 9

(See Foye Tr. at 66:5–13; Rella Tr. at 43:6–444:16; OliverTr. at 18:7–19:16, 109:18–19; Duke Tr. at 182:4–16; WhiteTr. at 75:9–12; Ledwell Tr. at 393:12–24; Beng Tr. at 81:22–82:3; Smith Decl. ¶ 10.) Thus, defendants' competing factualassertion neither overcomes plaintiffs' showing of beingsimilarly situated with respect to tip pooling, nor deserves this

Court's consideration at the conditional certification stage. 10

3. Off–the–Clock Hours and Denial of Overtime Pay*14 Defendants next argue that plaintiffs have not made the

requisite factual showing that they were victims of a commonpolicy requiring them and other putative collective membersto work off the clock because TCG's time-recording and Safeand Secure policies were facially lawful, and plaintiffs havenot shown that those policies led to common deviations whichresulted in FLSA violations. (See Def. Opp. at 12–14.) Again,we disagree with defendants' assertions.







As stated above, plaintiffs' off the clock allegations need notallege the existence of a facially unlawful common policy.Plaintiffs' declarations sufficiently establish Darden's controlover the timekeeping policies and procedures implemented atTCG locations nationwide, as it is undisputed that all tippedemployees were required to log into Darden's centralizedDASH network to clock in or out, request time off, or accesspayroll information. (See Darden Team Member Handbook,Benson Decl. Ex. 10, at 31.) It is also undisputed that onlyMPs possessed the requisite authorization to make changes tothe shift schedule and authorize overtime hours in the DASHsystem. (Id.) Darden further mandated the implementation ofthe Safe and Secure policy in all TCG locations nationwide.(See The Capital Grille Recommitment 2011–2012, FitapelliEx. MM, at 11.)

Although they concede that the above policies were faciallylawful, plaintiffs have presented significant evidence thatthey resulted, in practice, in a pattern of FLSA violationsacross TCG locations. With respect to their off the clockclaims, they establish that MPs refused to adjust tippedemployees' scheduled shifts or record overtime hours in theDASH system, which requires MPs' authorization to effectsuch changes, in order to keep labor hours low. (See FoyeTr. at 151:8–16; Wirnowski Tr. at 25:12–19, 26:22–27:9;White Tr. at 238:7–239:1; Rella Tr. at 76:6–24; Oliver Tr. at39:19–40:21; Boreland Tr. at 112:13–113:15; Mirabal Tr. at204:1–12.) With respect to the Safe and Secure policy, at leastfour putative collective members have testified that they wererequired to wait off the clock while their MPs ran the end ofnight report. (See Chhab Tr. at 97:14–24; Oliver Tr. at 101:4–20; Mitchell Tr. at 81:2–16; Ledwell Tr. at 128:5–129:20.)Foye, the former Senior Vice President of Operations at TCG,further testified that he was aware of incidents of off theclock waiting resulting from adherence to Safe and Secure,that he spoke to the DOs who reported to him to ask them tofollow up, and that in one instance he terminated an MP whocontinued to take a significant amount of time to close up afteremployees clocked out. (See Foye Tr. at 158:3–25.) Thus,we find that plaintiffs' declarations and supporting testimonysupport their contention that the operation of TCG's lawfulpolicies could have resulted in common violations.

To rebut the above allegations, defendants rely primarilyon alternative declarations from other putative collectivemembers who attest that they were not uniformly requiredto wait off the clock due to Safe and Secure, but as westated supra, at this stage such competing declarations areinsufficient to undermine plaintiffs' showing. See Winfield,

843 F.Supp.2d at 407 n. 6; Cohen, 686 F.Supp.2d at 329;In re Penthouse Exec. Club Compensation Litig., 2010 WL4340255, at *4. As a result, we conclude that plaintiffs havemet their minimal burden with respect to their off the clockand overtime allegations.

C. Conclusion*15 For the foregoing reasons, the Court authorizes the

distribution of notice to all tipped employees who work orhave worked at any of the forty-seven U.S. locations of TCG.

II. Notice to Potential Opt–In Plaintiffs

A. Legal StandardsUpon authorizing the distribution of notice to potential opt-inplaintiffs, the district court maintains “broad discretion” overthe form and content of the notice. Gjurovich v. EmmanuelsMarketplace, Inc., 282 F.Supp.2d 101, 106 (S.D.N.Y 2003)(citing Hoffmann–La Roche Inc. v. Sperling, 493 U.S. 165,170 (1989)). In exercising this discretion, the court should be“guided by the goals of the notice: to make as many potentialplaintiffs as possible aware of this action and their right to optin without devolving into a fishing expedition or imposingundue burdens on the defendants.” Guzelgurgenli, 2012 WL3264314, at *13 (internal quotation marks omitted).

B. AnalysisPlaintiffs request that the Court approve their proposed noticeof lawsuit, opt-in consent form, and deadline reminder letter.(Fitapelli Decl., Exs. R, S, T.) Defendants contend thatplaintiffs' proposed materials are deficient in a number ofrespects. We consider defendants' objections seriatim.

1. RecipientsWith respect to defendants' first objection, we note that,because the three-year statute of limitations period for willfulFLSA violations runs for each individual plaintiff until thatplaintiff consents to join the action, notice should generallybe directed to those employed within three years of the date ofthe Order granting conditional certification or to the mailingof the notice. See 29 U.S.C. § 255; Whitehorn v. Wolfgang'sSteakhouse, Inc., 767 F.Supp.2d 445, 451 (S.D.N.Y.2011);In re Penthouse Exec. Club Compensation Litig., No. 10Civ. 1145(NRB), 2010 WL 4340255, at *5 n. 4 (S.D.N.Y.Oct. 27, 2010). However, plaintiffs seek to toll the statuteof limitations in order to provide court-authorized notice toall tipped employees who work or have worked at TCG










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since November 17, 2008, three years before the filing of thecomplaint in this action.

When faced with a request for equitable tolling of thenotice period, some courts in this district have permittedplaintiffs to send notice to similarly situated personsemployed within three years of the filing of the complaint,“with the understanding that challenges to the timelinessof individual plaintiffs' actions will be entertained at alater date.” Winfield v. Citibank, N.A., 843 F.Supp.2d 397,410 (S.D.N.Y.2012) (quoting Whitehorn, 767 F.Supp.2d at451); see also Thompson v. World Alliance Fin. Corp .,No. 08 Civ. 4951, 2010 WL 3394188, at *7 (E.D.N.Y.Aug. 20, 2010). Generally, we are not comfortable with thereasoning offered in support of granting defendants leaveto challenge the timeliness of individual plaintiffs' claims atsome later date. It would severely undermine the provisionof a three-year maximum statute of limitations if courtswere prepared to readily widen that period to span fouror five years simply because some litigation ensued in theinterim. Nevertheless, we agree with plaintiffs' argument that,absent tolling, defendants would be perversely incentivizedto drag out preliminary discovery so as to shorten the pre-filing notice period. Moreover, given the unique timing ofevents in this case, particularly defendants' implementation ofcertain uniform policies to address potential FLSA violationsjust days before the filing of plaintiffs' complaint, denyingplaintiffs the tolling they seek would exclude a large chunk oftime during which defendants were potentially violating theFLSA, and include instead the period during which they weremaking attempts to comply.

*16 Thus, we conclude that notice should be sent to alltipped employees who work or have worked at TCG sinceNovember 17, 2008. Defendants are free to challenge thetimeliness of individual plaintiffs' claims in the future.

2. Notice PeriodPlaintiffs' proposed notice and consent form provide a 90–daynotice period. Defendants contend that a 60–day notice periodis sufficient. The Court agrees. See, e.g., Diaz, 2012 WL137460, at *8 (noting that “[m]any courts in this district haveset a 60–day period,” and that longer periods are warranted“on consent or where special circumstances indicate that anextended opt-in period is appropriate”).

Accordingly, the notice and consent form shall require opt-in plaintiffs to consent to join the collective action within 60days of the notice mailing date.

3. Form of NoticeDefendants object to various aspects of plaintiffs' proposedform of notice. Specifically, they contend such notice isimproper because it uses larger font, bold typeface, andunderlining to highlight the language that promotes joiningthe lawsuit. (See Def. Opp. at 24.) We agree with defendantsthat such emphasis is promotional and improper. All languagein the notice is important and should be equally emphasized.

Defendants further object to the portion of plaintiffs'proposed notice which directs potential collective membersto contact only plaintiffs' counsel with questions. Instead,defendants contend that both plaintiffs' and defendants'counsel's information should be made available to permit bothparties to act as a source of information. (See Def. Opp. at24–25.) We disagree. Only plaintiffs' counsel can potentiallyrepresent the individuals to whom the notice is mailed, andonly they should be privy to certain sensitive informationthat may otherwise fall within the attorney-client privilege.Thus, it is appropriate that defendants' counsel not be listedas contacts on the form of notice.

4. Reminder NoticePlaintiffs propose the distribution of a “reminder” noticeprior to the expiration of the opt-in period to alert potentialplaintiffs that the deadline is coming due. Plaintiffs contendthat a reminder notice promotes the broad remedial purpose ofthe FLSA. In response, defendants characterize the proposednotice as an endorsement by the Court for putative collectivemembers to join the lawsuit. (Def. Opp. at 25.) They ask theCourt to deny plaintiffs' request in its entirety. We decline todo so.

Both parties cite case law either authorizing or rejectingthe issuance of a reminder notice. Compare Guzelgurgenli,

2012 WL 3264314, at *15–16 (denying plaintiffs' request todistribute a reminder notice when plaintiffs did “not identif[y]any reason why a reminder notice [wa]s necessary”), withMorris v. Lettire Constr. Corp., 896 F.Supp.2d 265, 281(S.D.N.Y.2012) (authorizing reminder notice to promotebroad remedial purpose of FLSA). Given that notice underthe FLSA is intended to inform as many potential plaintiffsas possible of the collective action and their right to opt-in,we find that a reminder notice is appropriate. Lettire, 896F.Supp.2d at 281; Raniere, 827 F.Supp.2d at 327; accordHarris v. Vector Mktg. Corp., 716 F.Supp.2d 835, 847(N.D.Cal.2010).



















5. Posting of Notice*17 Finally, defendants oppose plaintiffs' request to post

the approved form of notice in a conspicuous location atall TCG locations, arguing that such posting is unnecessarywhere defendants provide sufficient contact information forpotential collective members. (See Def. Opp. at 24.) Basedon applicable precedent within this District, we agree anddeny plaintiffs' request to post notice. See Amador, 2013 WL494020, at *7 (concluding that posting notice at potentialplaintiffs' work locations is unnecessary when the form ofnotice is mailed to potential plaintiffs).

III. Disclosure RequestFinally, plaintiffs seek expedited disclosure by defendantsof the names, work locations, dates of employment, lastknown addresses, phone numbers, and email addresses ofall potential plaintiffs to the collective action in order tosend them the proposed notice and consent form. Numerouscourts have found that discovery of such information is

appropriate, see Raniere, 827 F.Supp.2d at 327 (collectingcases), and defendants do not oppose this request. However,defendants do object to the provision of email addressesand telephone numbers, both because they do not maintainsuch records for past employees and because providingsuch disclosures may encourage plaintiffs' counsel to harasspotential collective members. (See Def. Opp. at 25.) While weare unwilling to adopt defendants' suggestion that plaintiffs'counsel would engage in harassing behavior, nonethelesswe agree with defendants' proposed limitation on disclosureof data concerning potential class members. Thereby weorder defendants to produce the names, work locations, datesof employment, and last known addresses for all tippedemployees who work or have worked at TCG since November18, 2007 to plaintiffs' counsel by October 4, 2013.

CONCLUSION

For the foregoing reasons, the motion (dkt. no. 71) is grantedin part and denied in part.

Footnotes

1 The background is derived from the Class and Collective Action Complaint (“Compl.”), filed November 17, 2011; Plaintiffs'

Memorandum of Law in Support of Plaintiffs' Motion for Preliminary Certification Pursuant to the Fair Labor Standards Act,

for Court–Authorized Notice to Similarly Situated Persons, and for Expedited Discovery, filed November 5, 2012 (“Pl.Mem.”);

the Declaration of Joseph A. Fitapelli, Esq. in Support of Plaintiffs' Motion for Preliminary Certification (“Fitapelli Decl.”), filed

November 5, 2012, and the exhibits annexed thereto; Defendants' Memorandum of Law in Opposition to Plaintiffs' Motion for

Preliminary Certification Pursuant to the Fair Labor Standards Act, for Court–Authorized Notice to Similarly Situated Persons, and

for Expedited Discovery, filed December 17, 2012 (“Def.Opp.”); the Declaration of Craig R. Benson in Opposition to Plaintiffs'

Motion for Preliminary Certification (“Benson Decl.”), filed December 17, 2012, and the exhibits annexed thereto; and the Reply

Memorandum of Law in Support of Plaintiffs' Motion for Preliminary Certification, filed January 16, 2013 (“Pl. Reply Mem.”) and

the exhibits annexed thereto.

2 Under the FLSA, a “tipped employee” is one who customarily and regularly receives more than $30 in tips per month. See 29 U.S.C.

§ 203(t).

3 Plaintiffs also bring FLSA claims against GMRI, Inc. (“GMRI”), a direct subsidiary of Darden, and RARE Hospitality International,

Inc. (“RARE”), a subsidiary of GMRI that owned and operated TCG locations before being sold to Darden. (Compl.¶ ¶ 5, 64–71,

80–86.)

4 Under section 203(m), the minimum required cash wage that an employer can pay a tipped employee is $2.13 per hour, so the

maximum tip credit that the employer can claim per employee is $5.12 per hour.

5 Plaintiffs have alleged that TCG MPs receive bonus compensation in amounts tied in part to the total labor hours worked by their

tipped employees. (See Foye Tr. at 204:24–206:17.) They claim that MPs were reluctant to permit tipped employees to clock in for

extra shifts—even if the employees in fact worked during those shifts—when they were approaching forty hours for that week. (See

White Tr. at 227:2–20; Oliver Tr. at 33:4–13.) Thus, to reduce total labor hours, plaintiffs contend that MPs effectively required

tipped employees to choose between working an overtime shift on the clock, but having future scheduled shifts taken away once they

surpassed forty hours, or working the same shift off the clock, but retaining any tips earned during that shift. See Tr. at 41:15–42:7

(“The policy, again, is don't go into overtime. If they're losing hours, if they're screaming for these hours, they get taken from the

next week. So you may gain a couple of hours here, but you're going to lose a shift in the following week. That's what the testimony

reflects.”).









6 The eleven locations currently represented in this action are as follows: New York—Wall Street; New York—42nd Street; New

York—51st Street; Charlotte, North Carolina; Fort Lauderdale, Florida; Indianapolis, Indiana; McLean, Virginia; Orlando, Florida;

Pittsburgh, Pennsylvania; Phoenix, Arizona; and Tampa, Florida.

7 All references herein preceded by “Tr.” refer to the transcript of oral argument.

8 Defendants do not dispute that TCG's side work policies were standardized following the implementation of Universal Side Work

in November 2011.

9 As a result, defendants' reliance on Turner v. Millennium Park Joint Venture, LLC, 767 F.Supp.2d 951 (N.D.Ill.2011), is inapposite.

There, the court permitted silverware rollers to participate in a valid tip pool because it had been conclusively established that the

tipped employees voluntarily agreed to include them. Id. at 954.

10 We further point out defendants' incorrect legal assertion that there is “nothing unlawful about ... tip-sharing in the first instance if

it was voluntary.” Tr. at 27:21–22. To the contrary, defendants are prohibited from taking advantage of the FLSA's tip credit with

respect to tipped-employees who participate in a tip pool, voluntary or not, when that pool includes employees who do not customarily

and regularly receive tips as a part of their employment. See 29 U.S.C. §§ 203(m), 203(1); Chung, 246 F.Supp.2d at 228–30; Garcia,

2011 WL 135009, at *6–7.

End of Document © 2013 Thomson Reuters. No claim to original U.S. Government Works.







1

Overview of New York State Wage and Hour Laws Contents 1. Employment Relationship 2. State Minimum Wage Rate 3. Exemptions to Coverage 4. Overtime Provisions 5. Allowances for Tips, Meals, Lodging 6. Tip Regulations 7. Split Shift & Spread of Hours 8. Call-in Pay 9. Required Uniforms and Uniform Maintenance 10. Unlawful Deductions from Wages 11. Frequency of Payments 12. Notices of Pay Rate & Wage Statements 13. Prohibition against Retaliation 14. Powers of the Commissioner of Labor 15. Burden-Shifting in the Absence of Employer Records 16. Comparison Chart

1. Employment Relationship: "Employee," "Employer," and Employer Liability (a) New York Labor Law Under New York labor laws and regulations, the definitions of both "employee" and "employer" are short and simple:

• Labor Law Article 19, the Minimum Wage Act defines an employee as "any individual employed or permitted to work by an employer in any occupation," and an employer as "any individual, partnership, association, corporation, business trust, legal representative, or any organized group of persons acting as employer."

• The Miscellaneous Wage Order, a set of labor regulations promulgated pursuant to Article 19, which applies to all industries not addressed in other Wage Orders, defines an employee as "any individual employed, suffered or permitted to work by an employer" subject to certain exemptions. 12 NYCRR 14203.12(a). .

Given these expansive definitions, most employees in the state are entitled to minimum wage and overtime pay, although there are specific exemptions contained in New York Labor Law § 651(5), in various Wage Orders, and in court interpretations explained later in this section.

2

(b) Federal Fair Labor Standards Act The Fair Labor Standards Act ("FLSA") defines "employer" to include "any person acting directly or indirectly in the interest of an employer in relation to an employee," 29 U.S.C. § 203(d), which covers not only corporate employers, but also individual corporate officers or others with power over employees. (c) Individual Liability

Both state and federal law impose liability on individual owners or employers for violations of wage and hour laws. Liability depends upon the extent of the individual’s involvement in the day-to-day aspects of the business and knowledge about the wage and hour violations. There is no need to pierce the corporate veil. The Labor Law, like the federal FLSA, defines "employ[]" to include "permit[] or suffer[] to work." See Labor Law § 2(7); compare 29 U.S.C. § 203(g) ("`Employ' includes suffer or permit to work"). In addition, the Labor Law as a whole, its Article 19 (the Minimum Wage Act establishing required minimums) and its Article 6 (requiring payment of earned wages as promised, even at levels above statutory minimums) all define "employer" broadly, clearly including individuals. The general definition is "the person employing any such mechanic, workingman or laborer, whether the owner, proprietor, agent, superintendent, foreman or other subordinate," see Labor Law § 2(6); the Article 19 definition "includes any individual, partnership, association, corporation… or any organized group of persons acting as employer," see § 651(6); and the Article 6 definition "includes any person, corporation… or association employing any individual," see § 190(3).

Because complaints often allege violation of both FLSA and the Labor Law (both Article 19 and Article 6) and are brought in federal court with pendent jurisdiction over the Labor Law claims, there is more federal-court than state-court interpretation of the Labor Law, and in light of the similar definitions of "employ," many federal cases give both statutes the same construction. See, e.g., Zheng v. Liberty Apparel Co., 355 F.3d 61, 78 (2d Cir. 2003); Chen v. Street Beat Sportswear, Inc., 364 F.Supp.2d 269, 278 (E.D.N.Y. 2005) (collecting cases). For employer status, the federal cases generally recognize an "economic reality" test, that is, a worker is "employed" by the entity or entities, and/or person or persons, who in economic reality suffer or permit work to be done, as shown by factors having to do with who controls the work. See, e.g., Zheng, 355 F.3d at 66-76; Herman v. RSR Sec. Servs., Ltd., 172 F.3d 132, 139 (2d Cir. 1999); Brock v. Superior Care, Inc., 840 F.2d 1054, 1058-59 (2d Cir. 1988). In addition, the federal cases specifically recognize that under this test, an individual corporate owner or officer (as well as the corporation) can be a statutory employer and found personally liable for violations if in economic reality he or she controls the work, as shown by such factors as power to hire and fire, supervision and control of work schedules or conditions of employment, and determination of the rate and method of payment.

3

The “overarching concern” when deciding whether FLSA liability exists is not how often an individual dealt with employees but whether he or she possessed the power to control the workers in question. In making that determination, courts use the "economic reality" test, in which the relevant factors include whether the alleged employer (1) had the power to hire and fire the employees, (2) supervised and controlled employee work schedules or conditions of employment, (3) determined the rate and method of payment, and (4) maintained employment records. Herman v. RSR Security Services, Ltd., 172 F.3d 132, 139 (2d Cir. 1999). No one of the four factors standing alone is dispositive, and any relevant evidence may be examined. As the Herman court noted, employer status "does not require continuous monitoring of employees, looking over their shoulders at all times, or any sort of absolute control of one's employees. Control may be restricted, or exercised only occasionally, without removing the employment relationship from the protections of the FLSA." It should be noted that while federal case law is clear regarding applicability of the economic realities test, there has not been a definitive state court determination regarding whether the economic realities test applies under the New York Labor Law. See Ovadia v. Industrial Bd. of Appeals, 19 N.Y.3d 138 (2012), in which the Court of Appeals did not take the opportunity to accept the economic realities test as the appropriate test. (d) Misclassification of employees Misclassification of workers occurs when an employer improperly treats an individual as an independent contractor instead of as an employee, or when an employer pays an individual entirely "off the books," with minimal records, generally at insufficient wage rates, and more often than not in cash. Employers who misclassify their workers avoid complying with a number of laws, including, among others, those related to unemployment insurance, workers’ compensation, social security, tax withholding, temporary disability, and minimum wage and overtime laws that protect workers. The problem of misclassification is manifold: (1) workers are deprived of certain protections that employees are entitled to under the law, leaving them with more vulnerable job status and less money in their pockets; (2) law-abiding businesses are placed at a competitive disadvantage because of the disproportionate unemployment insurance and workers’ compensation expenses they incur for their employees; and (3) the state loses significant amounts of revenue from unpaid taxes that could buttress unemployment insurance and other funds. In September 2007, then-Governor Spitzer signed an Executive Order creating an interagency strike force to address the problem of employers who inappropriately classify employees as independent contractors or pay workers off the books as part of the underground economy. Since then, the interagency task force has been charged with coordinating efforts to root out misclassification and with issuing annual reports that indicate progress and future steps. (The February 2012 report is available here: http://www.labor.ny.gov/agencyinfo/PDFs/Misclassification-Task-Force-Report-2-3-2012.pdf.)

4

Misclassification is common in certain industries, and several states have passed laws specifically to address it. New York's law regarding misclassification, the Construction Industry Fair Play Act, is limited to the Construction Industry. Effective in October, 2010, this law created a presumption that a construction worker is an employee, not an independent contractors, unless that worker meets three specific conditions that denote a traditional independent contractor. In addition, Act created a 12-part test to determine when a sole proprietor, partnership, corporation or other business entity can properly be considered a “separate business entity” from the contractor for whom it provides a service; it is only if the entity meets all of the 12 criteria that it will not be considered an employee of the contractor. If all 12 criteria are not met, that entity is itself subject to the Act's presumption of workers as employees. 2. State Minimum Wage Rate: The state minimum wage rate is set forth in Labor Law § 652(1). The statute contains a provision indexing the state rate to federal law, and as a result, the state minimum wage increased to $7.25 per hour in July 2009 when the federal minimum wage increased. The minimum wage is generally applicable to all employees, subject to specific exemptions in Labor Law § 651(5). The minimum wage statute sets forth the basic outlines of the law, while accompanying regulations known as wage orders provide much more detailed descriptions of legal requirements, both for general employment as well as in specific industries. In non-farm industries, the Commissioner of the Department of Labor (the "Commissioner") may appoint a wage board, comprising representative employers, employees, and members of the general public, to examine and make recommendations about the adequacy of wages in particular industries. The wage orders currently in effect in New York are:

o Building Service Industry, 12 NYCRR § 141 o Farm Workers, 12 NYCRR § 190 o Hospitality Industry, 12 NYCRR § 1461 o Miscellaneous Industries, 12 NYCRR § 142 o Not for Profit, 12 NYCRR § 143

The Hospitality Wage order, effective January 1, 2011, changed a number of minimum wage provisions as they relate to workers in hotels and restaurants. Specifically, the minimum wage for a food service worker (defined as an employee who is "primarily engaged in the serving of food and beverages," such as wait staff and bartenders, and excluding restaurant delivery workers) is $5/hour with a maximum tip credit of $2.25/hour, for a total of at least $7.25/hour. The minimum wage for a service employee (defined as an "employee, other than a food service worker, who customarily receives 1 In January, 2011, the Hospitality Wage Order replaced the prior Hotel Industry Wage Order, 12 NYCRR § 138, and Restaurant Industry Wage Order, 12 NYCRR § 137.

5

tips at the rate of $1.60 or more per hour) is $5.65/hour with a maximum tip credit of $1.60/hour, for a total of at least $7.25/hour. In addition, most workers in restaurants and hotels (subject to exemptions set forth in § 146-3.2 of the Wage Order) must be paid an hourly rate instead of by salary or by weekly rate. (Tip credits are explained in further detail in section 5 below.) Throughout this outline, the references will typically be to requirements in the Miscellaneous Wage Order unless specifically noted. Labor Law § 652(2), provides that changes to wage orders (other than provisions involving food service workers) shall be made to reflect changes occasioned by statute or indexing. Section 652(2) also provides that all allowances in wage orders (other than for food service workers) must be increased in an amount that is proportionate to the increase in the wage rate. 3. Exemptions to coverage The full list of exemptions to coverage under state minimum wage laws is contained in Labor Law § 651(5). Specifically enumerated occupations, such as farm workers and individuals working in a bona fide executive, administrative, or professional capacity, are not covered by minimum wage laws altogether. Exemptions to minimum wage coverage must be narrowly construed, since the minimum wage law is remedial and humanitarian legislation. See Settlement Home Care v. Industrial Bd. of Appeals of Dep't of Labor, 151 A.D.2d 580 (N.Y. App. Div. 2d Dep't 1989) at 581- 582: "The State Minimum Wage Act constitutes remedial legislation designed to relieve the financial hardship experienced by persons employed in occupations "at wages insufficient to provide adequate maintenance for themselves and their families." As such, it is to be liberally construed so as to permit as many individuals as possible to take advantage of the benefits it offers (see generally, Matter of Mlodozeniec v Worthington Corp., 9 A.D.2d 21, 189 N.Y.S.2d 468, affd 8 N.Y.2d 918, 204 N.Y.S.2d 163, 168 N.E.2d 834, appeal dismissed and cert denied 364 U.S. 628, 5 L. Ed. 2d 363, 81 S. Ct. 356). Conversely, exceptions to this remedial legislation are to be narrowly construed so as not to frustrate the legislative purpose underlying its enactment. Job titles alone are not determinative of coverage; enforcement agencies and courts look to an employee’s actual job duties and tasks performed to determine whether he or she is covered. 4. Overtime Provisions. Under the FLSA's overtime provision, the overtime rate is the same for all industries and is equal to one and one half times the employee's regular rate for all hours in excess of forty hours per week, with certain variations and exemptions set forth in § 207 of the

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statute. In contrast, state labor law does not set forth general overtime requirements. Instead, overtime provisions are generally contained in the various Wage Orders.2 Employees covered by overtime provisions must be paid at least one and a half times their regular rate of pay for all hours in excess of forty hours per week. In order to figure out if an employee has been paid the proper overtime, you must determine the "regular rate" of pay. This is easy if the employee is paid on an hourly basis, because that hourly rate is usually the regular rate. When employees are paid according to other methods (day rate, weekly rate, piece rate, etc.), the federal regulations specify how to calculate the "regular rate." 29 C.F.R. 778.108 et. seq. There are several exceptions or special circumstances which warrant further treatment:

(a) Weekly rates: Many employers pay a weekly rate to employees instead of an hourly rate. For example, an employer might pay $600 per week for 50 hours of work. Does this arrangement comply with the overtime requirement?

It does if there is an explicit agreement between the employer and employee that the weekly salary includes specified regular and overtime rates. In the absence of such an explicit agreement, courts do not deem weekly salaries to include the overtime premium for employees who work overtime hours. In the example above ($600 for 50 hours), in the absence of an explicit agreement, the approach taken by both the New York and United States Departments of Labor, as well as the courts, is to divide total wages by total hours to determine the "regular rate": here, the regular rate is $12/hour ($600 ÷ 50 hours) . Then the overtime rate is derived from the regular rate: here, the overtime rate is $18/hour ($12 × 1.5). In order to comply with minimum wage and overtime provisions while paying a set weekly salary the employer would have to pay $660/week instead of $600/week (40 regular hours × $12/hour, plus 10 overtime hours × $18/hour = $660). However, enforcement agencies and courts would not identify an overtime violation if there were an explicit agreement between the employer and employee that the set weekly rate included specified regular and overtime rates. Here, the employer would have to prove that there was an explicit mutual agreement that the $600 weekly rate was set by, for example, adding 40 hours at a regular rate of $10.91/hour, and 10 hours at an overtime rate of $16.365/hour for a total of $600.05/week. In addition, the employer would

2 The Domestic Workers Bill of Rights (effective November 2010) created a statutory right to overtime pay for domestic workers. It also created the right to a weekly day of rest; three paid days of rest annual after one year of work for the same employer; and protection from harassment under New York State Human Rights Law.

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have to prove that if the employee worked more than 50 hours in a week, the employee was paid an overtime rate for those hours over 50. The burden is on the employer to prove both the agreement and its terms. Many overtime violations are the result of employers wanting to pay weekly rates to overtime-eligible employees and neglecting to account for the overtime requirement in setting and/or communicating that employee's weekly pay. Although paying a weekly rate to overtime eligible employees is legally permissible, one certain way to avoid overtime violations based on weekly rates is to pay on an hourly basis instead of a weekly rate. The Hospitality Wage Order requires employers in that industry to pay an hourly wage, and not on any other basis. 12 NYCRR 146-2.5. Federal cases on this issue include: Overnight Motor Transp. Co, Inc. v. Missel, 316 U.S. 572; Martin v. Tango’s Restaurant, Inc., 969 F.2d 1319 (1st Cir. 1992); Wirtz v. Leon’s Auto Parts Company, 406 F.2d 1250 (5th Cir. 1969); Walling v. Stone, 131 F.2d 461 (7th Cir. 1942); Mumbower v. Callicott, 526 F.2d 1183 (8th Cir. 1975); Marshall v. Chala Enterprises, Inc., 645 F.2d 799 (9th Cir. 1981); Brennan v. Valley Towing Co., 515 F.2d 100 (9th Cir. 1975); Triple ‘AAA’ Company v. Wirtz, 378 F.2d 884 (10th Cir. 1967), cert. denied 389 U.S. 959 (1967). Some courts have gone further to specify that the burden of proof is on the employer to prove such agreement and understanding. Marshall v. Chala Enterprises, Inc., 645 F.2d at 801; Brennan v. Elmer’s Disposal Service, Inc., 510 F.2d 84, 88 (9th Cir. 1975).

(b) Less than complete overtime coverage: Some employees receive a lesser degree of overtime coverage. Specifically, live-in employees are entitled to overtime after they have worked 44 hours per week instead of 40. Also, under the Miscellaneous Wage Order, certain employees who are exempt from federal overtime coverage are still entitled to receive overtime in New York. However, in such situations, the overtime rate for those employees is one and a half times the minimum wage, not one and a half times the employee's regular rate of pay.

(c) Intersection of overtime and tip allowances: Some of the Wage Orders contain tip allowances (discussed in more detail in Section 5), which allow employers to pay a lower rate for employees who regularly receive tips. The Hospitality Wage order explains the appropriate methodology when workers who receive tips work overtime hours. Specifically, overtime pay is calculated first, and then the tip allowance is taken. The employer may NOT first subtract the tip allowance and then calculate the overtime rate, because this would result in the employer receiving a higher than allowable tip allowance for overtime hours. See 12 NYCRR § 146-1.4, example 2.

5. Allowances for Tips, Meals, and Lodging.

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(a) Tips The various Wage Orders contain allowances for tips provided by clients or customers, as well as for meals and lodging provided by the employer. These allowances permit the employer to pay a slightly lower minimum rate because the employee is getting additional compensation through the tips, meals, or lodging. Each wage order contains different allowances, so the individual wage orders should be carefully consulted when allowances might come into play. In general, tips may be considered a part of the minimum wage if:

• the particular occupation is one in which tips are usually given; • there is substantial evidence that the employee received in tips at

least the amount of the allowance claimed by the employer (e.g. a statement signed by the employee); and

• the allowance claimed by the employer is recorded on a weekly basis as a separate item in the payroll record. 12 NYCRR § 142-2.5(b)(1).

For non-hospitality jobs in which tips are customary (e.g., car washes, beauty salons), the Miscellaneous Wage Order sets forth the range of tip allowances which an employer may claim. See 12 NYCRR § 142-2.5 (b)(2). If the average of tips received per hour is…

Tip Allowance Cash Wage

Is less than $1.10 NONE Employer must pay the minimum wage of $7.25

Is between $1.10 to $1.75 $1.10 $6.15 Is $1.75 or more $1.75 $5.50 No allowance for tips is permitted for an employee whose weekly average of tips is less than $1.10 per hour. The tip allowances are maximum thresholds, and as such no allowance can be aimed in excess of these amounts, matter how high the employee's tips may be. For hospitality jobs in which tips are customary, the Hospitality Wage Order significantly changed the regulatory scheme governing tip credits. See 12 NYCRR § 146-1.3. Food service

workers Service employees Service employees

in resort hotels* Minimum wage $5.00 $5.65 $4.90 Maximum tip credit $2.25 $1.60 $2.35 Total minimum hourly wage employee receives

$7.25 $7.25 $7.25

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*if the tips received are at least $4.10/hour. This group includes chambermaids in resort hotels. Under federal law, the tip allowances are the same for all industries. (b) Meals and lodging In both hospitality and non-hospitality jobs, meals and lodging furnished by an employer to an employee may be considered a part of the minimum wage. 12 NYCRR § 146-1.9 (hospitality), 12 NYCRR § 142-2.5(a) (miscellaneous). Under the Miscellaneous Wage Order, the maximum meal allowance is $2.50 per meal, and the maximum lodging allowance is $3.10 per day. 12 NYCRR § 142-2.5(a)(1)(i). Under the Hospitality Wage Order, the maximum credit an employer may claim depends on the type of establishment. 12 NYCRR § 146-1.9. In restaurants, the maximum meal credit is $2.50 per meal, subject to two restrictions: an employer may not claim credit for more than one meal if the employee works less than 5 hours that day, and may not claim credit for more than two meals on any day. The maximum lodging credit is $1.50/day or$9.60/week for food service workers, and $1.75/day or $11.30/week for all other workers. In hotels open year-round, the maximum meal credits and restrictions are the same as those for restaurants. The maximum lodging credit is $0.35/hour. In resort hotels, for employees who receive both meals and lodging, an employer may claim a maximum combined credit of $13.75/day for food service workers and $16.25/day for all other workers. For employees who receives meal but not lodging, an employer may claim a maximum meal credit of $2.75/day for food service workers and $3.25/day for all other workers. For employees who receive lodging but not meals, an employer may claim a maximum lodging credit $0.35/hour. 6. Tip Regulations (a) Tip Appropriation Labor Law §196-d strictly prohibits employers from appropriating tips intended for employees. In this regard, the statute provides: "No employer or his agent or an officer or agent of any corporation, or any other person shall demand or accept, directly or indirectly, any part of the gratuities, received by an employee, or retain any part of a gratuity or of any charge purported to be a gratuity for an employee." In Samiento v. World Yacht Inc., 10 NY3d 70 (2008), the New York Court of Appeals settled the question of whether a charge that is not a voluntary payment by a customer

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can be a “charge purported to be a gratuity” within the meaning of the statute. The employer in that case was an operator of various dining and banquet cruises for which customers were charged a set 15-20% "service charge" that customers were led to believe displaced traditional tips for wait staff. In holding that these service charges must be paid to the service employees as tips, the Court held that a charge that is “represented to the consumer as compensation to [the employer’s] wait staff in lieu of the gratuity” is covered by § 196-d, and that the standard to be applied when determining whether a charge or fee is a “charge purported to be a gratuity” is the expectation of a reasonable customer, as this standard is consistent with the purpose of the section. If the employer’s agents lead a customer to believe that a price includes a fixed charge as a gratuity, then that percentage must be paid, in full, to the wait staff; an employer cannot be permitted to retain these monies. The Hospitality Wage Order addresses the issue of administrative charges (in the form of automatically added service charges for banquets, special functions, and package deals) in § 146-2.19. If such a charge is purported to be a gratuity or tip for service employees and food service workers, those charges must be distributed to those employees and not retained by the employer. However, if such a charge is not purported to be a gratuity or tip, customers must be notified clearly, such that they do not assume they are no longer obligated to pay tips to the wait staff separately. Notification can be in the form of a statement in the customer's contract, menu, or bill. (b) Tip-pooling and tip-sharing Tip pooling and tip sharing are addressed in the Hospitality Wage Order in 12 NYCRR § 146-2.14 - 2.17. Under the Hospitality Wage Order, tip sharing is the practice by which directly tipped employees (i.e., those who receive tips from customers without an intermediary) give a portion of tips to other service employees or food service workers who participated in providing service. Tip pooling is the practice by which directly tipped employees' tips are put into a common pool, then distributed among themselves as well as indirectly tipped employees. Neither tip sharing nor tip pooling is a violation of labor law. In addition, employers may actually require food service workers to participate in tip sharing or in tip pooling. If tip sharing is required, the employees must conduct those transactions themselves, and the employer must record the division and maintain those records for six years. If tip pooling is required, only food service workers may receive distributions from the pool. 7. Split Shift and Spread of Hours

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Depending on the wage order, there are two situations in which an employee must be paid one hour of the minimum wage of $7.25 in addition to regular minimum and overtime wages. The first is when the employee works a split shift. A split shift is a schedule of daily hours in which the working hours required or permitted are not consecutive. (A meal period of one hour or less cannot be considered an interruption of consecutive hours.) See 12 NYCRR § 142-2.4 for the split shift provision in the Miscellaneous Wage Order. The second is when the employee works a spread of hours over 10 hours. A spread of hours is the interval between the beginning and end of an employee's workday, which includes working time, time off for meals, and intervals off duty. Note that although the employee is not owed wages for proper meal breaks or for off-duty intervals, these times are included in the computation of total time worked for purposes of determining the spread of hours. See 12 NYCRR § 142-2.4 (Miscellaneous Wage Order), 12 NYCRR § 146-1.6 (Hospitality Wage Order). Note that the Hospitality Wage Order clarifies that the spread of hours requirement applies regardless of the employee's regular rate of pay, which was considered an open question and is still arguably open under the Miscellaneous Wage Order.

• Example 1: Employee works two shifts, one from 9am-noon and the second from 3pm-7pm. The employee must be paid for 7 hours of work, plus an additional hour at the minimum wage for the split shift.

Regular hours worked (7 hrs. @ $7.25) $50.75 Split Shift (1 hr. @ $7.25) 7.25 Total Wages Due $58

• Example 2: Employee works from 9am-9pm Monday through Thursday, with two 1-hour meal periods each day. On Friday, the employee works from 9am-1pm and from 6pm-9pm. The employee must be paid for 47 hours of work, plus $7.25 for each day on which the employee worked a split shift or a spread of hours.

Regular pay (40 hrs. @ $7.25) $290 Overtime pay (7 hrs. @ $10.88 76.16 5 split/spreads (5 hrs. @ $7.25) 36.25 Total wages due $402.41

In the above example, the employee worked both a split shift and a spread of hours on Friday. However, only one hour of additional pay at $7.25 is required for that day, not one hour additional pay for each.

8. Call-In Pay New York labor law provides that employees must be at least partially paid on occasions when they report to work only to find that the employer has to work for them that day.

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Generally, in miscellaneous industries, an employee who by request or permission of the employer reports for work on any day must be paid for four hours, or the number of hours in the regularly scheduled shift, whichever is less, at the minimum hourly wage ($7.25 per hour.). 12 NYCRR § 142-2.3. In the hospitality industry, an employee who reports for work must be paid according to shift-specific guidelines. See 12 NYCRR § 146-1.5. If the employee was scheduled for one shift, the employer must pay for three hours, or the number of hours in the regularly scheduled shift, whichever is less. If the employee was scheduled for two shifts totaling six hours or less, the employer must pay for six hours, or the number of hours in the regularly scheduled shift, whichever is less. If the employee was scheduled for three shifts totaling eight hours or less, the employer must pay for eight hours, or the number of hours in the regularly scheduled shift, whichever is less. For purposes of computing call-in pay, a regularly scheduled shift is a shift that is recognized by its repetitiveness and is one that the employee customarily, usually, or normally works.

Example: A retail store cashier regularly works 2.5 hours/day on Tuesdays, Wednesdays, and Thursdays and 8 hours/day on Friday, for a total of 15 hours weekly. During one week the cashier is needed for only 1.5 hours on Tuesday and is sent home on Friday immediately after reporting to work because of bad weather and slow business. In addition to paying the employee for all hours actually worked, the employer must also pay call-in pay of 1 hour for Tuesday (the lesser of 4 hours and the regularly scheduled shift of 2.5 hours), and 4 hours for Friday (the lesser of 4 hours and the regularly scheduled shift of 8 hours), each at the minimum hourly wage of $7.25.

9. Required Uniforms and Uniform Maintenance A “required uniform” is clothing worn by an employee, at the request of the employer, while performing job-related duties or to comply with state, city, or local law, rule, or regulation. It does not include clothing that may be worn as part of an employee’s ordinary wardrobe. 12 NYCRR § 142-2.22 (Miscellaneous); 12 NYCRR § 146-3.10 (Hospitality). Where an employee purchases a required uniform, the employer must reimburse the employee no later than the time of the next payment of wages. 12 NYCRR § 146-1.8 (Hospitality). Also, if the employee must launder and maintain a required uniform (i.e., if the employer does not utilize a laundry service or launder uniforms on-site), the employer must pay the employee, in addition to the minimum wage: $9/wk if the employee works > 30 hours weekly; $7.10/wk if the employee works 20-30 hours weekly; and $4.30/wk if the employee works < 20 hours weekly. 12 NYCRR § 142-2.5 (c)(5) (Miscellaneous); 12 NYCRR § 146-1.7 (a) (Hospitality).

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For hospitality workers, there is a "wash and wear" exception to uniform maintenance requirements. 12 NYCRR § 146-1.7 (b). Under this exception, employers do not have to pay for maintenance if the uniforms can be routinely washed with other clothing, are supplied in sufficient number, and do not have any special cleaning or ironing requirements. 10. Unlawful Deductions From Wages Prior to September 7, 2012, Labor Law § 193 provided that no employer shall make any deduction from the wages of an employee, except deductions which:

• are authorized or required by law (e.g., for Social Security and income tax purposes); or

• are expressly authorized in writing by the employee and • are for the benefit of the employee (e.g., health insurance or pension

contributions). The prohibition against unlawful deductions applied to all employees regardless of wages earned or job category. In Angello v. Labor Ready, Inc., 7 NY3d 579 (2006), the Court of Appeals clarified the meaning of payments that are "for the benefit of the employee" as set forth in Labor Law § 193(1)(b). In that case, the court considered a situation in which the employer gave its employees the choice of being paid by a check which could be cashed anywhere, or by a cash voucher redeemable only from the employer for the full amount of wages less a transaction fee charged by the employer. (There was no question in that case that the election to be paid by check or voucher was purely voluntary.) In ruling that this transaction fee was an impermissible wage deduction, the Court found that a deduction from wages is "literally an act of taking away or subtraction," and that the deduction was equivalent to a "service fee," and not a deduction similar to those which, being supportive to the employee in some respect, are therefore "for the benefit of the employee." Rather, the only benefit to the workers was one of convenience, which the court held was not a benefit covered by the statute. Of note, the Court held that the legislative history of §193:

(M)anifests the legislative intent to assure that the unequal bargaining power between an employer and an employee does not result in coercive economic arrangements by which the employer can divert a worker's wages for the employer's benefit.

The Labor Ready Court gave guidance for interpretation of the term "similar payment" by noting that the deductions authorized by Labor Law §193(1)(b) are either monetary, meaning that they are investments of money for the later benefit of the employee (such as deductions for insurance premiums, pension or health and welfare benefits and payments for United States bonds) or are supportive, meaning that the deducted wages are used by

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someone other than the employee or employer to support some purpose of the employee (such as contributions for charitable organizations or payments for dues or assessments to a labor organization). Other examples of prohibited deductions from wages are deductions for:

• Spoilage or breakage • Cash shortages or losses • Errors on checks or unpaid checks • Fines or penalties for lateness, misconduct, or quitting by employee

without notice On September 7, 2012, Governor Cuomo signed A 10785, to take effect sixty days after signing, which, among other things, significantly increased the number and types of permissible deductions from wages, to include items such as discounted parking passes, fitness center dues, day care, and similar expenses. It also authorized the Commissioner of Labor to promulgate regulations related to deductions from wages. 11. Frequency of Payments Employers have some latitude in determining whether to pay a worker an hourly rate or a set weekly or biweekly salary. However, for certain categories of workers, New York Labor Law § 191 dictates how frequently those workers must receive their pay. Manual workers must be paid weekly and not later than seven calendar days after the end of the week in which the wages are earned. Manual workers for non-profit entities must be paid in accordance with their agreed terms of employment but not less frequently than semi-monthly. A manual worker is one who spends more than 25% of working time engaged in some kind of physical labor, which is interpreted broadly to include countless physical -- not necessarily taxing or difficult -- tasks. Clerical or other workers' wages must be paid in accordance with the agreed terms of employment, but not less frequently than semi-monthly. Commission salespersons' commissions (considered wages for the purposes of this section) must be paid in accordance with the agreed terms set forth in the written commission agreement, but not less frequently than once a month. Finally, § 191 does not apply to persons employed in a bona fide executive, administrative, or professional capacity whose earnings are in excess of $900 a week. (Definitions for all these categories are in the text of § 191.) For purposes of federal law, federal courts have held that the FLSA requires, by implication, that wages be paid promptly. 12. Notices of Pay Rate and Wage Statements (a) Notices of Pay Rate

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The Wage Theft Prevention Act, effective April 2011, amended Section 195 of the Labor Law to require employers to provide a Notice of Pay Rate to new employees upon hire and then at the beginning of every year of employment after that. The Notice of Pay Rate must contain: the employee's pay rate and designated payday; the employer's intent to claim allowances (such as for tips or meals) as part of the minimum wage; the basis of wage payment (e.g., pay by the hour, shift, day, week, piece); and any "doing business as" names that the employer uses. The Notice of Pay Rate must be given for signature to the employee in the employee's primary language. It must be signed upon hire, and then annually on or before February 1 of each year of employment. Like other payroll records, these Notices of Pay Rate must be kept on file for six years. Employers in the hospitality industry have additionally required to provide a new Notice of Pay Rate when a worker receives an increase in pay. 12 NYCRR § 146-2.2. Employers outside the hospitality industry, when a worker receives an increase in pay, do not have to provide a new Notice of Pay Rate as long as the employee's new wage rate is clearly shown on the next payment of wages, i.e. in a pay stub accompanying the worker's paycheck. The Wage Theft Prevention Act does not provide for any exemptions. As such, the Notice of Pay Rate requirements apply to professional, administrative, and executive employees. The penalty for not giving proper notice, to any employee, is $50 per week per employee. Sample Notices of Pay Rate (in English, Spanish, Chinese, Korean, Creole, Polish and Russian) are available on the DOL's website at http://labor.ny.gov/formsdocs/wp/ellsformsandpublications.shtm. (b) Wage Statements ("paystubs") The labor law also requires that employees receive wage statements with each payment of wages. The statement must list: hours worked, rates paid, gross wages, allowances claimed as part of the minimum wage, deductions, and net wages. The Wage Theft Prevention Act expanded wage statement requirements by adding information that must be provided on them. In addition to the items listed above, statements must show the name, address and phone number of the employer, as well as the beginning and ending date for the period covered by that payment. If proper wage statements are not given, an employer can be charged $100 per week per worker by the Department of Labor. The Wage Orders also contain provisions regarding required wage statements. See 12 NYCRR § 142-2.7 (Miscellaneous); 12 NYCRR § 146-2.3 (Hospitality). 13. Prohibition against Retaliation

16

Labor Law § 215 prohibits retaliation against employees for complaints about violations. Acts of retaliation include any adverse employment action against an employee for complaining, including discharging, threatening, penalizing, or “in any other manner discriminating against” the employee, including lowering the employee's wage rate; assigning the employee to a less desirable job duty or shift; demotion; and reducing the employee's hours. The prohibition against retaliation covers any employee who has complained to his/her employer, to the DOL, or to the OAG; has instituted or is about to institute a complaint proceeding for a labor violation; or has provided information or has testified in a labor investigation or proceeding. The prohibition also applies if the employer (or agent of the employer) believes the employee has complained to anybody about a labor violation. It is illegal for the employer himself/herself to engage in the retaliatory action, as well as for any other person (including the employer's agent, or someone associated with the employer or the corporation) to retaliate as well. The loopholes regarding who exactly would have to engage in the retaliatory action, and what actions constitute retaliation, were closed when the Wage Theft Prevention Act went into effect in the state in April 2011. The Wage Theft Prevention Act also expanded the remedies available to employees. Section 215 provides that the Commissioner can order "all appropriate relief," including enjoining the retaliatory conduct; where a violation has been found, the Commissioner can order rehiring or reinstatement of the employee, and award either lost compensation or front pay in lieu of reinstatement. The Commissioner of Labor can also impose a civil penalty of up to $10,000 for a retaliation violation, per employee who has been retaliated against. The statute of limitation in retaliation cases is two years. 14. Powers of the Commissioner of Labor Provisions of state law and regulations relating to wage and hour protections are administratively enforced by the Department of Labor’s Division of Labor Standards. The central office of the Division is located in Albany with district offices throughout the state. Locations and contact information for such offices can be obtained through the Department’s website, www.labor. ny.gov. Investigations may be conducted by the Division based upon complaints received from affected employees, employee advocates and others, or upon the Commissioner’s own initiative. The general powers and duties of the Commissioner of Labor are contained in Labor Law § 21. The Commissioner and her authorized representatives have expansive powers to enforce the labor law, including the authority to enter and inspect employers’ premises (Labor Law § 25); to examine employers’ books and records (Labor Law § 26); and to issue subpoenas (Labor Law § 39). If the Commissioner finds labor law violations following a Labor Standards investigation, the Commissioner issues an Order to Comply, itemizing the violations and setting forth the nature of violations found, amount of unpaid wages, and penalties and liquidated damages assessed. Employers can appeal Orders to

http://www.labor.state.ny.us/

17

Comply to the Industrial Board of Appeals (IBA), and Orders which are not appealed may be entered as judgments in court. For wage and hour cases, the state statute of limitations is six years (Labor Law Sections 198.3 and 663). Under federal law, the statute of limitations is 2 years, or 3 years if the violation is found to be willful. Penalties available under Labor Law § 218 for violations of laws relating to payment of wages and the minimum wage law or a related rule or regulation are subject to interest at the statutory rate currently16%, a rate tied to the state banking law(§219(1)) and penalties. If there are previous violations, or the violation is willful or egregious, a penalty equal to 200% of the total amount found to be due is typically assessed. [Labor Law §218(1)]. Non-monetary violations are also subject to penalties of up to $1,000 for first violation, $2,000 for a second violation, and $3,000 for third or subsequent violation.. In assessing such penalties, the Commissioner may give consider the size of the employer’s business, the history of past violations, good faith of the employer, and the gravity of the violations. If an Order to Comply has been issued, then 10 days after the employer's appeal period ends, DOL can require the employer to post a bond and/or provide a list of assets. If the employer fails to do so, the Commissioner may impose a penalty of up to $10,000. Finally, the Wage Theft Prevention Act permits the Commissioner to add 15% in damages to a judgment if the employer fails to pay in full within 90 days of the final Order to Comply. In addition to unpaid wages and penalties, employers in violation are also liable for liquidated damages equaling 100% of an employee's underpayments,3 unless the employer demonstrates that the underpayment was based on a good faith mistake. Federal law also includes liquidated damages equal to 100% of underpayments. Public Notice of Violations: If an employer is found in violation of certain parts of the New York Labor Law, the DOL has the authority to post notice of such violations at the workplace for up to a year. 15. Burden Shifting in the Absence of Employer Records (a) Required Recordkeeping New York labor law requires employers to keep extensive payroll records and maintain those records for no less than 6 years. Generally, in all industries, employers must have records showing for each employee:

• name and address • Social Security Number

3 Liquidated damages were 25% prior to the effective date of the Wage Theft Prevention Act in April, 2011.

18

• wage rate • number of hours worked daily and weekly, including times of arrival

and departure • split shifts and spread of hours over 10 • [when a piece-rate method of payment is used] number of units

produced daily and weekly • amount of gross wages • deductions from gross wages • allowances [if any] claimed as part of the minimum wage • net wages paid

The record requirements are essentially the same for employers in the hospitality industry, with minor differences. All employers must make these records available for inspection upon the request of the DOL, including when those records are kept off-site or in another state. (b) Absence of records Labor Law § 196-a provides that, where an employee (or the recognized and certified collective bargaining agent acting on the employee's behalf), files a complaint regarding a wage violation the failure of an employer to keep adequate records will not operate as a bar. Rather, in such a case the employer in violation shall bear the burden of proving that the complaining employee was paid wages, benefits and wage supplements. In other words, the burden is on the employer to keep and maintain records adequate to show that he or she has complied with the law.

The public policy behind the burden of proof imposed by Labor Law §196-a was set forth by the court in Matter of Mid-Hudson Pam Corp. v. Hartnett, 156 AD2d 818, 821 (3rd Dept. 1989):

When an employer fails to keep accurate records as required by statute, the Commissioner is permitted to calculate back wages due to employees by using the best available evidence and to shift the burden of negating the reasonableness of the Commissioner's calculations to the employer ... In such a situation the amount and extent of underpayment is a matter of just and reasonable inference and may be based upon the testimony of employees ... The public policy of providing protection to workers is embodied in the statute which is remedial and militates against creating an impossible hurdle for the employee ... Were we to hold otherwise, we would in effect award petitioners a premium for their failure to keep proper records and comply with the statute. That result should not pertain here. (Citations omitted). (Emphasis added).

19

A similar but slightly different approach applies under federal law. The United States Supreme Court, in Anderson v. Mt. Clemens Pottery, 328 U.S. 680, 66 S.Ct. 1187, reh’g denied, 329 U.S. 822, 67 S.Ct. 25 (1946), clearly outlined the burden of proof in a situation where the Employer has failed to maintain required records:

[W]here the employer's records are inaccurate or inadequate and the employee cannot offer convincing substitutes, .... [t]he solution... is not to penalize the employee by denying him any recovery on the ground that he is unable to prove the precise extent of uncompensated work. Such a result would place a premium on an employer's failure to keep proper records in conformity with his statutory duty.... [W]e hold that an employee has carried out his burden if he proves that he has in fact performed work for which he was improperly compensated and if he produces sufficient evidence to show the amount and extent of that work as a matter of just and reasonable inference. The burden then shifts to the employer to come forward with evidence of the precise amount of work performed or with evidence to negative the reasonableness of the inference to be drawn from the employee's evidence. If the employer fails to produce such evidence, the court may then award damages to the employee, even though the result be only approximate.

Anderson v. Mt. Clemens Pottery, 328 U.S. 680, 687-8 (1946). See also, Reich v. Southern New England Telecommunications Corp., 121 F.3d 58, 66 (2d Cir. 1997), quoting Martin v. Selker Bros., 949 F.2d 1286, 1296-97 (3d Cir. 1991) (“When a defendant in a suit for lost wages under the FLSA fails to maintain employment records as required by the Act, an employee (or the Secretary on behalf of a group of employees) may `submit sufficient evidence from which violations of the Act and the amount of an award may be reasonably inferred.’" ) In practice, if the employer does not have contemporaneous, precise and accurate records, calculations of underpayments are based on the employee's credible testimony, even if it is approximate.

20

Comparison chart: federal and state wage and hour law NEW YORK FEDERAL Statute of Limitations 6 years 2 years; 3 years if willful Class action? Yes Only by opt-in Liquidated damages 100% unless good faith 100% unless good faith Retaliation Prohibited Prohibited Individual liability Yes Yes Tip allowance Depends on industry:

consult wage order Same for all industries

Source of overtime requirement

Regulation (wage orders) Statute

Split shift / spread of hours requirement?

Yes (See 12 NYCRR § 142-2.4 for misc. wage order)

No

Call-in pay requirement? Yes (See 12 NYCRR § 142-2.3 for misc. wage order)

No

Wash and wear exemption to uniform maintenance allowance?

Only for hospitality workers Yes

Frequency of payment requirement?

Yes No

Burden shifting in absence of employer payroll records

Set by statute (Labor Law § 196-a)

Case law (See Anderson v. Mt. Clemens Pottery, 328 U.S. 680 (1946) and progeny)

Promised wage enforcement by agency?

Yes No

Materials from the Defense

By Carolyn D. Richmond, Esq., Fox Rothschild LLP

ACTIVE 22880151v1 10/14/2013

FOX ROTHSCHILD LLP Carolyn D. Richmond, Esq. 100 Park Avenue, 15th Floor New York, NY 10017 Tel: (212) 878-7900 Fax: (212) 692-0940 ATTORNEYS FOR DEFENDANTS UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

JOHN DOE, individually and on behalf of all others similarly situated, Plaintiffs, - against – XYZ CORP., Defendants.

ECF Case No. XX-cv-XXXX

ANSWER AND AFFIRMATIVE DEFENSES

Defendants XYZ Corp., (“Defendants”), by their attorneys, Fox Rothschild LLP, hereby

answer the First Amended Complaint (“Complaint”) filed by John Doe, individually and on

behalf of all others similarly situated (“Plaintiffs”) as follows:

In response to all non-numbered paragraphs, and each and every substantive allegation of

the Complaint, Defendants deny that they violated the law and/or that it harmed Plaintiffs in any

way.

NATURE OF THE ACTION

1. Defendants deny the allegations set forth in Paragraph “1” of the Complaint,

except they admit that certain Plaintiffs worked at certain XYZ Corp. locations.


except they admit that certain Defendants operate certain XYZ Corp. locations.

3. Defendants deny the allegations set forth in Paragraph “3” of the Complaint.


except they admit that certain Plaintiffs worked as delivery workers.

2






except they admit that certain Plaintiffs worked as delivery workers.





except they admit that Plaintiffs may seek relief pursuant to the statutory provisions references in

Paragraph “14” of the Complaint. Defendants deny that they violated the law and further deny

that Plaintiffs are entitled to any damages.


except they admit that Plaintiffs purport to bring this action on behalf of a putative collective

pursuant to the statutory provision referenced in Paragraph “15” of the Complaint. Defendants

affirmatively deny the existence of any such collective.

JURISDICTION AND VENUE

15. Defendants admit that Plaintiffs have invoked the jurisdiction of the Court under

the statutes referenced in Paragraph “16” of the Complaint. The remainder of the allegations in

Paragraph “16” of the Complaint are legal conclusions to which no response is required; to the

extent a response is required, Defendants deny the allegations.

16. Defendants admit that Plaintiffs have laid venue in this district. The remainder of

the allegations in Paragraph “17” of the Complaint are legal conclusions to which no response is

required; to the extent a response is required, Defendants deny the allegations.

3

THE PARTIES

Plaintiffs

17. Defendants deny knowledge and information sufficient to form a belief as to

Plaintiff Doe’s current residence. Defendants deny the remaining allegations set forth in

Paragraph “18” of the Complaint.


except they admit that Mr. Doe worked at a XYZ Corp. restaurant located at 123 Main Street in

Manhattan.






Manhattan.






Manhattan.





4


Plaintiff Lopez’s current residence. Defendants deny the remaining allegations set forth in




Manhattan.






Manhattan.

Defendants


30. Defendants admit the allegations set forth in Paragraph “31” of the Complaint.


except they admit that XYZ Corp. is a domestic corporation organized and existing under the

laws of the State of New York.








5



FACTUAL ALLEGATIONS

Defendants Constitute Joint Employers




40. The allegations in Paragraph “41” of the Complaint are legal conclusions to which

no response is required; to the extent a response is required, Defendants deny the allegations.


42. The allegations in Paragraph “43” of the Complaint are legal conclusions to which

no response is required; to the extent a response is required, Defendants deny the allegations.


except that they admit that the Corporate Defendants had a gross annual volume of sales that

exceeded $500,000.


Individual Plaintiffs


except they admit that Plaintiffs all worked as delivery workers.


except they admit that Plaintiffs purport to bring this action on behalf of a putative collective

pursuant to the statutory provision referenced in Paragraph “47” of the Complaint. Defendants

affirmatively deny the existence of any such collective.

Plaintiff John Doe


6


except they admit that Plaintiff Doe worked as a delivery worker.





52. Defendants deny the allegations set forth in Paragraph 53” of the Complaint.














Plaintiff John Doe




7




















Plaintiff John Doe






8
















Plaintiff John Doe










9









Plaintiff John Doe

















10



Plaintiff John Doe






















Defendants’ General Employment Practices

11









except they admit that Plaintiffs were delivery workers.


except they admit that Plaintiffs were tipped workers.


166. The allegations in Paragraph “4167” of the Complaint are legal conclusions to

which no response is required; to the extent a response is required, Defendants deny the

allegations.











12

FLSA COLLECTIVE ACTION ALLEGATIONS

177. In response to Paragraph “178” of the Complaint, Defendants do not dispute that

Plaintiffs purport to bring this action on behalf of a putative collective. Defendants deny that

Plaintiffs are entitled to proceed collectively.

178. The allegations in Paragraph “179” of the Complaint are legal conclusions to

which no response is required; to the extent a response is required, Defendants deny the

allegations.


FIRST CAUSE OF ACTION (VIOLATION OF THE MINIMUM WAGE PROVISIONS OF THE FLSA)

180. In response to Paragraph “181” of the Complaint, Defendants repeat and restate

each of the above responses as if fully set forth herein.







SECOND CAUSE OF ACTION (VIOLATION OF THE OVERTIME PROVISIONS OF THE FLSA)

187. In response to mis-numbered Paragraph “186” of the Complaint, Defendants

repeat and restate each of the above responses as if fully set forth herein.

188. Defendants deny the allegations set forth in mis-numbered Paragraph “187” of the

Complaint.


Complaint.

13


Complaint.

THIRD CAUSE OF ACTION (VIOLATION OF THE NEW YORK MINIMUM WAGE ACT)




Complaint.


Complaint.


Complaint.


Complaint.

FOURTH CAUSE OF ACTION (VIOLATION OF THE OVERTIME PROVISIONS OF THE NEW YORK LABOR

LAW)




Complaint.


Complaint.


Complaint.

FIFTH CAUSE OF ACTION (VIOLATION OF THE SPREAD OF HOURS WAGE ORDER OF THE NEW YORK

COMMISSIONER OF LABOR)

14




Complaint.


Complaint.


Complaint.

SIXTH CAUSE OF ACTION (VIOLATION OF THE NOTICE AND RECORDKEEPING REQUIREMENTS OF THE

NEW YORK LABOR LAW)




Complaint.


Complaint.

SEVENTH CAUSE OF ACTION (VIOLATION OF THE WAGE STATEMENT PROVISIONS OF THE NEW YORK

LABOR LAW)




Complaint.


Complaint.

PRAYER FOR RELIEF

15

210. In response to the paragraph and sub-paragraphs “a-s” that follow the phrase

“WHEREFORE, Plaintiffs respectfully request that this Court enter judgment against

Defendants” Defendants deny the allegations set forth in that paragraph and the sub-paragraphs

and affirmatively aver that neither Plaintiffs nor any individual or group who Plaintiffs purport to

represent are entitled to any of the relief requested or any other relief.

DEFENDANTS’ AFFIRMATIVE DEFENSES

FIRST AFFIRMATIVE DEFENSE

211. The Complaint, and each claim purported to be alleged therein, fails to state a

claim upon which relief can be granted.

SECOND AFFIRMATIVE DEFENSE

212. The Complaint, and each claim purported to be alleged therein, is barred in whole

or in part, by the equitable doctrines of laches, unclean hands, and/or avoidable consequences.

THIRD AFFIRMATIVE DEFENSE

213. To the extent Plaintiffs and putative collective and/or class action members have

received other benefits and/or awards attributable to an injury for which it seek compensation in

this case, such benefits and/or awards should offset, in whole or in part, any award it receive here

for the same injury.

FOURTH AFFIRMATIVE DEFENSE

214. At all times material hereto, the actions of Defendants were justified under the

circumstances and at all times material hereto Defendants acted in a manner that was proper,

reasonable and lawful and in the exercise of good faith.

FIFTH AFFIRMATIVE DEFENSE

215. With respect to some or all of the claims brought or allegedly brought by the

Named Plaintiffs on behalf of themselves and/or on behalf of any putative class or collective

action, Defendants affirmatively plead that any act(s) and/or omission(s) that may be found to be

16

in violation of the rights afforded by applicable law were not willful but occurred in good faith

and with reasonable grounds for believing that it were in complete compliance with applicable

law.

SIXTH AFFIRMATIVE DEFENSE

216. Plaintiffs cannot establish or satisfy the requirements necessary to proceed

collectively under 29 U.S.C. §216(b) because, inter alia, Plaintiffs are not similarly situated to

the putative collective.

SEVENTH AFFIRMATIVE DEFENSE

217. Plaintiffs’ claims are barred, in whole or in part, by the applicable statutes of

limitations, including but not limited to 29 U.S.C. § 255.

EIGHTH AFFIRMATIVE DEFENSE

218. Plaintiffs are precluded from recovering any amounts from Defendants where

Defendants have paid Plaintiffs all sums legally due under the Fair Labor Standards Act, 29

U.S.C. §§ 201 et seq., the New York Minimum Wage Act, N.Y. Labor Law §§ 650 et seq.,

Article 6 of the New York Labor Law, N.Y. Labor Law §§ 190 et seq., and all of their

implementing regulations (collectively “Applicable Law”).

NINTH AFFIRMATIVE DEFENSE

219. Plaintiffs may not recover liquidated damages, because: (1) Defendants and all of

their officers, directors, managers, and agents acted in good faith and did not commit willful

violation of Applicable Law; (2) Defendants and their officers, directors, managers, and agents

did not authorize any such willful violation with respect to Plaintiffs or any alleged member of

any purported class or collective action, the existence of which Defendants affirmatively deny;

and (3) Plaintiffs have failed to plead facts sufficient to support recovery of such damages.

TENTH AFFIRMATIVE DEFENSE

17

220. Plaintiffs are precluded from recovering any amounts from Defendants for failure

to pay compensation for hours worked because such time was worked without manager

knowledge or approval.

ELEVENTH AFFIRMATIVE DEFENSE

221. The Court should not exercise supplemental jurisdiction over the counts in the

Complaint that purport to arise under the New York Labor Law.

TWELFTH AFFIRMATIVE DEFENSE

222. The Complaint fails to state a claim upon which relief consisting of compensatory

or liquidated damages or any other damages, interests, costs, or fees allowed by applicable law

may be granted.

THIRTEENTH AFFIRMATIVE DEFENSE

223. Plaintiffs cannot establish or satisfy the requirements for class certification

pursuant to Rule 23 of the Federal Rules of Civil Procedure and, therefore, the class certification

allegations of the Complaint should be stricken and dismissed.

FOURTEENTH AFFIRMATIVE DEFENSE

224. Plaintiffs’ claims are barred in whole or in part by the provisions of Section 10 of

the Portal-to-Portal Act, 27 U.S.C. § 259, because actions taken in connection with Plaintiffs’

compensation were done in good faith in conformity with and reliance upon written

administrative regulations, orders, rulings, approvals, interpretations, and written and unwritten

administrative practices or enforcement policies of the Administrator of the Wage and Hour

Division of the United States Department of Labor.

FIFTEENTH AFFIRMATIVE DEFENSE

225. Plaintiffs’ claims are barred in whole or in part to the extent that the work it

performed falls within exclusions, exceptions, or credits provided for in the Fair Labor Standards

Act, the New York Labor Law, and their implementing regulations.

18

SIXTEENTH AFFIRMATIVE DEFENSE

226. Plaintiffs’ claims are barred in whole or in part to the extent that some or all of the

disputed time is not compensable pursuant to the provisions of the Portal-to-Portal Act of 1947

and/or New York law.

SEVENTEENTH AFFIRMATIVE DEFENSE

227. Plaintiffs’ claims are barred in whole or in part by the doctrine of de minimis non

curat lex.

EIGHTEENTH AFFIRMATIVE DEFENSE

228. Plaintiffs’ and the putative class members’ and the putative collective’s claims are

barred by the doctrine of res judicata and collateral estoppel.

NINETEENTH AFFIRMATIVE DEFENSE

229. Defendants assert all affirmative defenses provided by Section 195 of the New

York Law and all statutory affirmative defenses to New York State record keeping requirements.

TWENTIETH AFFIRMATIVE DEFENSE

230. Defendants reserve the right to assert such other additional and/or affirmative

defenses that may become known to it through discovery.

DEFENDANTS’ PRAYER FOR RELIEF

231. Except as expressly admitted and alleged herein, Defendants deny each and every

allegation set forth in the Complaint and denies Plaintiffs are entitled to any relief whatsoever.

Further, Defendants deny the existence of any purported class or group of persons who Plaintiffs

purport to represent.

WHEREFORE, having fully answered and responded to the allegations of the Complaint,

Defendant respectfully requests that:

A. Plaintiffs’ individual claims be dismissed with prejudice in their entirety;

19

B. Collective and/or class action status be denied or, in the alternative, that all

collective and/or class claims be dismissed with prejudice;

C. Each and every request for relief in the Complaint be denied;

D. Judgment be entered against Plaintiffs and for Defendants;

E. Defendants be awarded its costs, including reasonable attorneys’ fees and

expenses in an amount and manner permitted by applicable law; and

F. Defendants be granted such other and further relief as this Court may deem just

and proper.

Dated: New York, New York FOX ROTHSCHILD LLP October xx, xxxx

By: __________________________ Carolyn D. Richmond

100 Park Avenue, Suite 1500 New York, New York 10017 (212) 878-7900

Attorneys for Defendant

ACTIVE 22879756v1 10/14/2013

CONFIDENTIAL ATTORNEY CLIENT PRIVILEGED

ATTORNEY WORK PRODUCT FOX ROTHSCHILD LLP

CONFIDENTIAL ATTORNEY CLIENT PRIVILEGED

ATTORNEY WORK PRODUCT FOX ROTHSCHILD LLP

M E M O R A N D U M TO: Clients

FROM: Carolyn Richmond

DATE: October 2013

RE: Employment Issues

The following is an overview of the significant overtime exemption requirements under federal and New York law. Application of the tests requires a very fact specific review for each individual job.

I. Exempt vs. Non-Exempt

A. Federal Wage and Hour Exemptions New York State employers must contend with applying the overtime exemption tests under both

Federal and New York State laws. Under the Fair Labor Standards Act (“FLSA”), employers are required to pay employees 1 ½ times the regular rate for each hour, or fraction thereof, worked in excess of 40 during any given workweek. The FLSA, however, contains specifically defined exemptions from its minimum wage and overtime provisions. The white-collar exemptions generally include executive, administrative, professional (including computer-related professionals) and outside sales employees. Revised in 2004, the United States Department of Labor (“DOL”) provides insight into these tests.

Under the FLSA, an employee who is paid on a salary basis, earns a salary of more than $455

per week (or $23,660 per year)(this rises to $543.75 under New York law at present, and will rise further with the January 2014 New York minimum wage increase), and meets the revised duty requirements of the executive, administrative or professional exemptions will be exempt from the FLSA’s overtime requirements.

1. Salary Basis

An employee must be paid on a salary basis, as well as meet the duty requirements of the applicable test. “Salary” means that the employee regularly receives a set amount of pay each pay period which is not subject to reduction because of variations in the quantity or quality of the employee’s work.

2 ACTIVE 22879756v1 10/14/2013

It is important to note that simply paying an employee a “salary” is not enough to pass the test—they must meet the minimum salary amount and the other components of this test. The employee’s compensation cannot be subject to deductions, which include: for absences occasioned by the employer or the operating requirements of the business; for lack of work if the employee is ready, able and willing to work; for employee absences of less than a day for personal reasons or for sickness or disability unless the deduction is made for absences of a day or more and is in accordance with a bona fide plan, policy or practice of providing compensation for loss of salary occasioned by sickness or disability; for absences caused by jury duty, attendance as a witness, or temporary military leave; or, for disciplinary reasons unless involving an infraction of a safety rule of major significance. Additional compensation besides the salary is not inconsistent with the salary basis of payment.

2. Executive Exemption

Another key white collar exemption is the “executive exemption”. In order to qualify for the executive exemption, an employee must: have a primary duty of managing the enterprise or managing a customarily recognized department or subdivision of the enterprise; customarily and regularly direct the work of two (2) or more other full-time employees or their equivalent; and, have the authority to hire or fire other employees (or make recommendations as to hiring, firing, promotion, or other change of status of other employees that are given particular weight).

To determine whether an employee’s suggestions are given “particular weight,” factors to be considered include, but are not limited to, whether it is part of the employee’s job duties to make suggestions and recommendations; the frequency with which such recommendations are made or requested; and, the frequency with which the employee’s suggestions and recommendations are relied upon. Simply making occasional suggestions will not suffice under this exemptions, but the employee at issue does not have to make the ultimate decision to meet the test.

Exempt executive employees also include any employee who owns at least a bona fide 20% equity interest in the enterprise in which the employee is employed and who is actively engaged in the management of the enterprise.

“Management” under the executive exemption definition includes activities such as interviewing, selecting, and training employees; setting and adjusting rates of pay and hours of work; directing the work of employees; maintaining production or sales records for use in supervision or control; appraising employee’s productivity and efficiency for the purpose of recommending promotions or other changes in status; handling employee complaints and grievances; disciplining employees; planning work; determining the techniques to be used; apportioning work among employees; determining the type of materials, supplies, machinery, equipment or tools to be used or merchandise to be bought, stocked, and sold; controlling the flow and distribution of materials or merchandise and supplies; providing for the safety and security of the employees or the property; planning and controlling the budget; and monitoring or implementing legal compliance measures.

The performance of concurrent non-exempt duties will not necessarily defeat the exemption of an otherwise exempt executive employee. Whether or not an employee still qualifies for the exemption when performing concurrent non-exempt work will be determined on a case-by-case basis. However,

3 ACTIVE 22879756v1 10/14/2013

caution is advised when evaluation employees who fall into this category. A “working supervisor” whose primary duty is performing non-exempt work but who also directs the non-exempt work of other employees, such as when the exempt supervisor is not available, will not qualify.

3. Administrative Exemption

Among the trickiest of exemptions to apply is the “administrative” exemption. Under the administrative test, the employee must: have the primary duty of performing office or non-manual work directly related to the management or general business operations of the employer or its customers; and, have a primary duty of exercising discretion and independent judgment with respect to matters of significance.

“Directly related to management or general business operations” means work directly related to assisting with the running or servicing of a business, such as work in functional areas such as tax, finance, accounting, budgeting, auditing, insurance, quality control, purchasing, procurement, advertising, marketing, research, safety and health, personnel management, human resources, employee benefits, labor relations, public relations, government relations, computer network, internet and database administration, legal and regulatory compliance, and similar activities.

An exempt administrative employee also must exercise discretion and independent judgment with respect to matters of significance. Exercising discretion and independent judgment involves the comparison and evaluation of possible courses of conduct, and acting or making a decision after the various possibilities have been considered. The term “matters of significance” refers to the level of importance or consequence of the work performed. Employees can exercise “discretion and independent judgment” even if their decisions or recommendations are reviewed at a higher level. In addition, the fact that many employees perform the same type of work does not mean that they do not exercise discretion and independent judgment. However, discretion and independent judgment mean more than the use of skill in applying well-established techniques, procedures, or specific standards described in manuals or other sources. However, the 2004 regulations specifically provide that the use of manuals will not defeat an exemption where the manuals, guidelines or procedures contain or relate to highly technical, scientific, legal, financial, or other similarly complex matters and can be understood or interpreted only by those with advanced or specialized skills or knowledge. An employee does not exercise discretion and independent judgment with respect to matters of significance simply because the employer will experience financial loss if the employee fails to perform the job properly.

Executive assistants to business owners or senior executives, human resources managers, and purchasing agents, if they perform the types of duties as described in detail in the 2004 U.S. DOL regulations, generally meet the duty requirements of the administrative exemption. However, inspectors, comparison shoppers, and public sector inspectors or investigators typically do not exercise discretion and independent judgment are generally not exempt.

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4. Professional Exemption

In order to be exempt under the “learned professional” exemption, an employee must: have a primary duty of the performance of work requiring an advanced knowledge (defined as work that is predominantly intellectual in character and that includes work requiring the consistent exercise of discretion and judgment); the advanced knowledge must be in a field of science or learning; and, the advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction. Typically, doctors, lawyers and CPAs hired specifically for the use of those advanced degrees fall under this category. Moreover, the 2004 regulations allowed for chefs with 4-year culinary degrees (very few schools offer this degree) who were specifically hired into jobs requiring that degree to sometimes qualify under this exemption as well.

5. Computer Employees

To meet the new test for the computer employee exemption, the employee must: be compensated either on a salary or fee basis at a rate no less than $455 per week ($543.75 in New York) or, if compensated on an hourly basis, at a rate no less than $27.63 an hour; be employed as a computer systems analyst, computer programmer, software engineer or other similarly skilled worker in a computer field performing the duties described below; and, have a primary duty of:

- the application of systems analysis techniques and procedures, including consulting with users to determine hardware, software or system functional specifications; - the design, development, documentation, analysis, creation, testing or modification of computer systems or programs, including prototypes based on and related to user and system design specification; - the design, documentation, testing, creation or modification of computer programs related to machine operating systems; or - a combination of the aforementioned duties, the performance of which requires the same level of skills.

6. Outside Sales Employees

To meet the federal test for outside sales employee exemption, the employee must: have a primary duty making sales or obtaining orders or contract for services or for the use of facilities for which a consideration will be paid by client or customer and be customarily and regularly engaged away from the employer’s place or places of business. The salary requirements of the exemptions do not apply to outside sales employees.

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Work “that furthers the employee’s sales efforts” is considered exempt work, including writing sales reports, updating or revising the employee’s sales or display catalogue, planning sales itineraries, and attending sales conferences. Outside sales activity does not include sales made by mail, telephone, or the internet, unless these forms of contact are used “merely as an adjunct to personal calls.” Telephone or e-mail solicitations from any fixed site, whether home or office, is considered activity based at the employer’s place of business and, thus, non-exempt (inside) sales work. Sales activity from a hotel room during a sales trip or at a trade show, however, is not considered sales activity at the employer’s place of business and, thus, is considered exempt activity.

Promotional work that is actually performed incidental to and in conjunction with the employee’s own outsides sales or solicitation activity is exempt work. Promotional work that is incidental to someone else’s sales activity is not considered exempt outsides sales work. For example, a manufacturer’s representative who sets up displays, rotates stock, and rearranges merchandise on the store shelf is performing exempt work only if it is incidental to and in conjunction with his/her own sales or solicitations. In addition, the employee can be considered an exempt outside sales employee only if that employee’s “primary duty” is making sales.

7. Primary Duty

To qualify under the foregoing exemptions, an employee’s “primary duty” must be the performance of exempt work. “Primary duty” means the principal, main, major, or most important duty that the employee performs. Factors to be considered when assessing the primary duty of an employee include the relative importance of the exempt duties as compared with other duties; the amount of time spent performing exempt work; the employee’s relative freedom from other supervision; and, the relationship between the employee’s salary and the wages paid to other employees for the same kind of non-exempt work. While time spent performing work can be a useful guide, such time is not the sole test. Employees who spend less than 50% of their time performing exempt work may still satisfy the duty requirements of the applicable exemption.

Work that is “directly and closely related” to exempt work also is considered exempt work. “Directly and closely related” means tasks that are related to exempt duties and contribute to, or facilitate the performance of, exempt work.

C. New York Wage and Hour Exemptions

Certain employees are also exempt from the provisions of the New York Labor Law. While New York adopts the “white-collar” exemptions for executive, administrative, and outside salespersons, in some cases, as discussed below, they contain more stringent requirements than the FLSA.

Primary Duty Test:

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Like the federal regulations, New York’s wage and hour regulations set forth separate, detailed definitions for exemptions from state overtime requirements. See 12 N.Y.C.R.R. 142-2.14.1 However, it is important to note that under New York law, the mere fact that an employee is paid on a salary basis and has a certain title will not automatically qualify the employee for exempt status. Rather, the determinative factors are whether the duties, responsibilities, and salary of the employee comply with the applicable state requirements. See Scholtisek v. Eldre Corp., 229 F.R.D. 381, 391-392 (W.D.N.Y. 2005).

Salary Basis Test: There is a requirement that employees be paid on a salaried basis to meet the test for certain

exemptions. However, New York does not utilize a particular test to determine whether the employees are paid on a salaried basis.

Exemptions: Exemptions are narrowly construed by the New York State Department of Labor and courts, and

it is the employer’s burden to establish that an employee has been properly classified as exempt. 1. Executive Exemption An exempt “executive” employee is an individual who works in bona fide executive capacity

and:

(a) whose primary duty consists of the management of the enterprise in which such individual is employed or of a customarily recognized department or subdivision thereof; (b) who customarily and regularly directs the work of two or more other employees therein; (c) who has the authority to hire or fire other employees or whose suggestions and recommendations as to the hiring or firing and as to the advancement and promotion or any other change of status of other employees will be given particular weight; (d) who customarily and regularly exercise discretionary powers; and (e) who is paid for his/her services a salary of not less than $543.75 per week (will rise on January 1, 2014), inclusive of board, lodging, other allowances and facilities. 2. Administrative Exemption An exempt “administrative” employee is an individual who works in a bona fide administrative capacity and: 1 While New York classifies additional categories of employees as exempt (i.e. taxi-cab drivers, part-time babysitters, etc.), we have only addressed certain broad categories of relevant employees in this memorandum.

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(a) whose primary duty consists of the performance of office or non-manual field work directly related to management policies or general operations of such individual's employer; (b) who customarily and regularly exercises discretion and independent judgment; (c) who regularly and directly assists an employer, or an employee employed in a bona fide executive or administrative capacity (e.g., employment as an administrative assistant); or who performs, under only general supervision, work along specialized or technical lines requiring special training, experience or knowledge; and (d) who is paid for his services a salary of not less than $536.10 per week, inclusive of board, lodging, other allowances and facilities. 3. Professional Exemption

An exempt “professional” employee is an individual who works in a bona fide professional capacity and:

(a) whose primary duty consists of the performance of work: requiring knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction and study, as distinguished from a general academic education and from an apprenticeship, and from training in the performance of routine mental, manual or physical processes; or original and creative in character in a recognized field of artistic endeavor (as opposed to work which can be produced by a person endowed with general manual or intellectual ability and training), and the result of which depends primarily on the invention, imagination or talent of the employee; and (b) whose work requires the consistent exercise of discretion and judgment in its performance; or (c) whose work is predominantly intellectual and varied in character (as opposed to routine mental, manual, mechanical or physical work) and is of such a character that the output produced or the result accomplished cannot be standardized in relation to a given period of time.2

4. Outside Salesperson The term “outside salesperson” means an individual who is customarily and predominantly

engaged away from the premises of the employer, and not at any fixed site and location, for the purpose of:

(i) making sales;

(ii) selling and delivering articles or goods; or

(iii) obtaining orders or contracts for service or for the use of facilities. 2 Note unlike the executive and administrative exemption, there is no minimum salary requirement.

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In addition, please note that in July 2007, the New York Labor Law was amended with regard to

compensation paid to “commission salesman,” which is defined under the Act as “any employee whose principal activity is the selling of any goods, wares, merchandise, services, real estate, securities, insurance or any article or thing and whose earnings are based on whole or in part on commission. The term ‘commission salesman’ does not include an employee whose principal activity is of a supervisory, managerial, executive or administrative nature.” N.Y. Labor Law § 190(6). The new amendment, which took effect on October 16, 2007, requires that the agreements of such salespersons be: (a) in writing; and (b) signed by both the employer and the employee. N.Y. Labor Law § 191(c). If you have employees who fall within the scope of this definition, we would be happy to provide you with assistance on the necessary legal content and requirements of the written agreement.

Faculty Biographies

Joseph Fitapelli

Mr. Fitapelli is a seasoned attorney with extensive experience in state and federal court. He represents individual employees, executives and companies in a full range of employment law related matters including claims of discrimination, harassment, retaliation, wrongful discharge and breach of contract. Mr. Fitapelli also frequently appears in the United States District Courts in single-plaintiff, collective and class action lawsuits for failure to pay proper wages, overtime and commissions.

In addition to employment litigation, Mr. Fitapelli also negotiates severance agreements, executive compensation packages and limited liability company agreements. He is frequently consulted by companies regarding their employment policies and procedures. Mr. Fitapelli’s litigation experience also extends to other complex, high exposure matters such as products liability, New York City Asbestos Litigation, toxic mold cases, chemical release events and lead exposure claims.

Mr. Fitapelli has represented countless individuals from occupations as varied as restaurant and hospitality workers, entertainers including an "A-List" actor and an Oscar winning director, financial services employees, construction workers and teachers. He has also represented Fortune 500 companies, internet companies, insurers, land owners and developers.

He has successfully authored and argued appellate briefs and summary judgment motions that have led to new interpretations of the law favoring his clients on issues such as expert preclusion, products liability and landowner liability. Mr. Fitapelli has achieved consistent favorable results at trial, arbitrations and mediations. His successes in handling high profile, complex cases have been featured on television, internet and print media including but not limited to: NY1, The New York Law Journal, various local newspapers and other legal publications. As a result, he is frequently consulted by members of the business and legal communities on an array of matters.

A New York Law School graduate, he is also a presidential scholar and cum laude graduate of St. Francis College with a B.A. in English. Mr. Fitapelli is a member of the American Bar Association, the American Bar Association’s Section of Labor and Employment Law, the New York State Bar Association and National Employment Lawyers Association (NELA) of New York. He is licensed to practice law in New York State, the United States District Courts for the Southern and Eastern Districts of New York and the United States Court of Appeals for the Second Circuit.

Mr. Fitapelli was named to Super Lawyers list of Rising Stars as one of the top attorneys in New York for 2012. Less than 2.5 percent of the lawyers in New York were selected to this list.

http://www.fslawfirm.com/pdfs/NYSLRS12_Fitapelli.pdf

BERKE-WEISS & PECHMAN LLP

ATTORNEYS AT LAW 488 MADISON AVENUE

NEW YORK, NEW YORK 10022 (212) 583-9500 · FAX: (212) 308-8582

WWW.BWP-LAW.COM Louis Pechman represents both employers and employees before federal and state courts and government agencies in all areas of workplace law, including employment discrimination, union-management relations, employment contracts, ERISA, non-competition agreements, independent contractor issues, and wage/hour disputes. As a practitioner for over twenty years in the labor and employment field, Mr. Pechman offers both individual employees and employers practical guidance on improving the employment relationship and, where appropriate, terminating that relationship. Prior to forming his partnership ten years ago with Laurie Berke-Weiss, Mr. Pechman has worked as a labor and employment attorney at three Manhattan law firms, as in-house labor counsel with the New York Daily News, and as a Field Examiner with the National Labor Relations Board. Admitted to the New York and New Jersey Bars, he is a graduate of the Cornell University School of Industrial and Labor Relations and the Fordham University School of Law. A frequent contributor to the New York Law Journal and other business and legal publications, Mr. Pechman often gives presentations on employment law topics, including the Americans with Disabilities Act, sexual harassment, and the development of human resource policies and procedures. He has lectured at the Fordham University School of Law, New York University, the Extension Division of the Cornell University School of Industrial and Labor Relations, and the American Bar Association. From 1994 through 1998, he was Chair of the New York County Lawyers' Association Committee on Labor Relations and Employment Law. Since 1996, Mr. Pechman has developed and moderated NYCLA's annual program on "How to Handle an Employment Discrimination Case."

Practice Areas

HospitalityLabor & EmploymentFranchising, Licensing & Distribution

Bar Admissions

New YorkNew Jersey

Education

J.D. New York Law SchoolB.S., Cornell University

Court Admissions

U.S. District Court, Southern, Eastern andNorthern Districts of New YorkU.S. District Court, District of New Jersey

Board of Directors

Member, President's Council of CornellWomen, Cornell UniversityAlumni Board of Directors, CornellUniversity, School of Industrial & LaborRelationsAdvisory Board, Center for HospitalityResearch, Cornell UniversityCounsel, New York City HospitalityAllianceBoard of Editorial Advisors, HospitalityLaw

Carolyn D. [email protected]

New York, NY212.878.7983

of representing and counseling employers in the hospitality industry, specificallyrestaurants, hotels, caterers, night clubs, lounges and fitness centers. In particular,Carolyn has extensive experience litigating wage and hour class actions, restrictivecovenants and employment discrimination cases. She also counsels clients extensivelywith respect to workplace issues such as the hiring process, diversity awareness training,union avoidance, employee handbooks and other policy initiatives.

Carolyn is also counsel to a number of employers in the retail, financial services,healthcare and manufacturing industries. She frequently provides union avoidance andsexual harassment training, and represents employers before a variety of state andfederal agencies.

Before Fox Rothschild

Carolyn also served as General Counsel to B.R. Guest Restaurants & James Hotels, where she was responsible forthe legal and business affairs for both expanding restaurant operations and the development of James Hotelproperties. This experience gave Carolyn an insider's perspective into both the business and legal needs of herclients.

Beyond Fox Rothschild

Carolyn is a prolific writer and often is a guest speaker at legal conferences and industryevents on various labor and employment-related topics. She is active in the communitywith several board appointments and memberships including:

Member of the President's Council of Cornell Women at Cornell University

Member of the Advisory Board for the Center for Hospitality Research at CornellUniversityMember of the Alumni Board of Directors for Cornell University, School of Industrial and Labor RelationsServes on the Board of Editorial Advisors for Hospitality LawServes as Counsel to the New York City Hospitality AllianceServes on Culintro's Culinary Trade Organization's Board of Advisors

Carolyn is also involved with the PENCIL Partnership, and is teamed with a New York City charter school to help link thebusiness community with the students. Carolyn has testified before the New York City Council and New York State Departmentof Labor concerning proposed changes to the law that would adversely affect New York businesses.

Client Resources

Restaurant Law Update Lately, the food service industry has been under increasing scrutiny from government, plaintiff groups and social justice groups.In this podcast, Carolyn discusses current issues in employment law affecting food service operators. Listen to the Podcast

Honors and Awards

Crain's Forty Under 40 class of 2009, honoring a diverse group of New Yorkers whohave excelled in their respective fields

News

Documents

How to Handle a wage and Hour Case - New York County ... Wage and hour BOOK 10.15.13.pdfInformation Regarding CLE Credits and Certification How to Handle a Wage and Hour Case October