## Facts

- Thirteen current and former employees of a Manhattan restaurant sued the restaurant entity and its principals under the FLSA and NYLL for wage-and-hour violations.
- Plaintiffs worked mainly as bussers, runners, barbacks, stockers, and a coffee preparer.
- The restaurant used a shift-pay system (flat amounts per lunch/dinner shift) and did not record actual start and end times, though it tracked which shifts employees worked.
- Defendants paid sub-minimum cash wages for tipped employees (about $4.60–$5.00 per hour) and claimed a tip credit for nearly all hours worked.
- The restaurant operated a tip pool distributing tips by position and set percentages.
- Plaintiffs in several roles performed substantial non-tipped work; bussers and runners spent more than 20% of lunch shifts on non-tipped tasks, and stockers/coffee preparer had only brief, sporadic customer interaction.
- The court found payroll records understated or failed to capture all hours worked; some employees were never paid for more than 40 hours in weeks where they worked more than 40.
- Plaintiffs alleged noncompliant NYLL wage notices and wage statements, and that they had to pay for uniforms and purchase “crumbers” used for table service.
- The parties stipulated spread-of-hours premiums were not paid before February 2011 but were paid after; evidence showed some workdays exceeded 10 hours in the earlier period.
- After a bench trial on liability, the court issued a liability decision and deferred damages to a later phase.

## Issues

1. Whether defendants could lawfully claim an FLSA/NYLL tip credit given alleged deficiencies in tip-credit notice and substantial non-tipped work performed by plaintiffs.
2. Whether defendants failed to pay for all hours worked, including overtime, under the FLSA and NYLL in light of incomplete or inaccurate timekeeping.
3. Whether defendants violated NYLL § 195 by failing to provide required wage notices and accurate wage statements.
4. Whether requiring employees to pay for uniforms and work tools (crumbers) unlawfully reduced wages below legal requirements under the FLSA/NYLL.
5. Whether defendants owed unpaid spread-of-hours premiums under NYLL regulations for pre–February 2011 workdays exceeding 10 hours.

## Decision

- The court found Starjem Restaurant Corp. and Anthony Scotto liable for violations of the FLSA and NYLL proven at trial.
- The court held defendants improperly claimed the tip credit for certain work because they did not establish entitlement to the credit for all hours claimed, including due to substantial non-tipped duties for some positions.
- The court held defendants failed to pay plaintiffs for all hours worked and overtime, relying on credible testimony and inadequate employer time records.
- The court held defendants violated NYLL § 195 wage-notice and wage-statement requirements.
- The court held defendants unlawfully shifted uniform and equipment costs to employees in a manner that could reduce wages below required levels.
- The court held defendants failed to pay required spread-of-hours premiums prior to February 2011 for qualifying long workdays.
- The court ordered the case to proceed to a damages phase with calculations to follow.

## Legal Principles

- An employer bears the burden of proving entitlement to the FLSA/NYLL tip credit; failure to satisfy tip-credit prerequisites results in liability for the full minimum wage without offset for tips.
- Under the “20 percent” framework applied by the court, when a tipped employee spends a substantial amount of time (more than 20%) on related but non-tipped duties, the employer may not take the tip credit for that time.
- For unpaid-hours and overtime claims, when employer records are inaccurate or inadequate, employees may meet their burden through credible evidence permitting a just and reasonable inference of the amount of uncompensated work; the burden then shifts to the employer to rebut.
- NYLL § 195 requires compliant written wage notices at hiring (including pay rates and tip-credit information, where applicable) and wage statements containing required pay details; noncompliance supports statutory liability.
- Employers may not require employees to bear uniform or required tool costs when doing so reduces compensation below minimum-wage or overtime requirements.
- NYLL spread-of-hours regulations require an additional hour of pay at the minimum-wage rate for each day the spread of hours exceeds 10.

## Conclusion

After a bench trial on liability, the court held the restaurant and one principal liable under the FLSA and NYLL for improper tip-credit practices (including substantial non-tipped work), unpaid hours and overtime supported by inadequate records, NYLL § 195 notice and statement violations, unlawful shifting of uniform and tool costs, and unpaid pre–February 2011 spread-of-hours premiums, with damages to be determined in a later phase.


Salinas v. Starjem Rest. Corp., 123 F. Supp. 3d 442 (S.D.N.Y. 2015)