Restaurant's Wage Deduction for Broken Dishes Heads to Jury

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By Jon Steingart

July 1 — Waiters, bartenders and bussers may proceed to trial with their claim that a South Carolina restaurant violated its minimum wage obligation by making pay deductions for broken dishes, a federal judge ruled ( Alshehabi v. Hymans Seafood Co. , 2016 BL 211580, D.S.C., No. 2:14-cv-2724, 6/30/16 ).

Hyman's Seafood Co. admitted in case documents that its policy violated the Fair Labor Standards Act, Judge Patrick M. Duffy of the U.S. District Court for the District of South Carolina wrote in a June 30 opinion.

“Most Courts find that breakage fees for dishware impermissibly shift the restaurant’s cost of doing business to the wait staff,” Marybeth Mullaney, an attorney for the workers, told Bloomberg BNA in an e-mail July 1. “Generally, glasses, dishes and utensils are ‘tools of the trade' for restaurants and not something which may be credited against employees' wages,” she said.

The class of about 160 current and former employees will have the opportunity to persuade a jury that the violation was willful, which would expose the restaurant to a longer statute of limitations, he said, denying both sides' motions for summary judgment

Breakage Fee Each Shift

Class members were required to pay a few dollars per shift, irrespective of whether any breakage occurred, they said. They complained to Hyman's owner, Eli Hyman, about it.

The restaurant made efforts to follow and adhere to industry standards and trends for recipes and marketing, class members said. The company would have known that breakage deductions violate the FLSA if it had applied the same effort to its pay practices, they said.

A manager's research after they initiated their lawsuit quickly found breakage deductions aren't allowed, according to deposition testimony.

Hyman didn't consult an attorney or payroll expert regarding whether the policy was legal, he said in a deposition. “Courts have found similar actions sufficient to constitute reckless disregard for whether the policy violated the FLSA,” Duffy said.

Hyman's violation would be willful if the class members can show it “knew or showed reckless disregard” that a breakage policy violates the FLSA, Duffy said. The determination is a question of fact for a jury to decide, he said.

Bruce E. Miller in Charleston, S.C., and Marybeth Mullaney and Cameron Jane Blazer in Mount Pleasant, S.C., represented the class members. Alice Fountain Paylor and Lorene Stuhr Dukes of Rosen, Rosen & Hagood, LLC in Charleston represented Hyman's.

To contact the reporter on this story: Jon Steingart in Washington at jsteingart@bna.com

To contact the editor responsible for this story: Susan J. McGolrick at smcgolrick@bna.com

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