Ignorance is no excuse for wage violations

Pleading ignorance is no defense if you are sued for violating the Fair Labor Standards Act. In fact, not bothering to learn the intricacies of wage-and-hour law may cost you even more than out-and-out cheating your employees does.

Recent case: When the Natural Tofu Restaurant was getting ready to open in New York City, the owners told applicants for server jobs they would be paid at set rates by the half day or full day. A half day was a seven-hour shift; a full day was 12 hours.

The three women they eventually hired received between $25 and $32.50 for each half day and between $50 and $65 for a full-day shift. They also received tips, but the owners didn’t keep track of them.

Nor did the owners track the exact hours worked, provide time records or perform any other mundane wage-and-hour tasks employers are required to handle.

The servers quit and filed a lawsuit alleging they had not been paid minimum wage or overtime.

Payroll Handbook D

The owners tried to argue that they simply didn’t know the rules and that it was impossible for small business owners to comply with the pay rules. They also tried to argue they should get a credit for all the tips the servers earned.

The court didn’t have much patience for their ignorance of the rules. It disallowed the tip credit and concluded that the owners had violated various wage-and-hour laws. It also found that the owner who managed the restaurant daily and made decisions could be personally liable for any damages. Now the court will try to calculate damages. (Wu et al. v. Natural Tofu Restaurant et al., ED NY, 2018)