Ex-employee sues chain over loss of gratuities

Shortly after the coronavirus pandemic began in Ohio, Kelsey Smith, then a bartender for Local Cantina, said a manager asked her to sign a contract guaranteeing her a weekly salary of $1,000.

In exchange, all of her tips would go to the central Ohio restaurant chain and she wouldn’t be eligible for overtime.

To Smith, that sounded like a violation of state and federal labor laws.

“I thought, ‘This isn't right, and I don’t think it's legal,’” Smith said. “But everyone was in a weird spot. If we didn't sign, we didn't have jobs anymore. And no one is hiring.”

Smith said she was asked to work up to 50 hours per week — without tips, that figured to be a cut in her wage when calculated by the hour.

Smith, who no longer works for Local Cantina, filed a lawsuit against the restaurant chain earlier this summer in the U.S. District Court for the Southern District of Ohio.

The case is an unusual one, labor attorneys said. Overtime cases generally revolve around whether or not an employee has managerial duties (managers are mostly exempt from overtime requirements), and wage complaints usually involve tips going to ineligible employees.

“I don’t know that I’ve directly seen anybody give waiters (or bartenders) a salary,” said Matt Miller-novak, a Cincinnati employment lawyer.

In a note posted on Local Cantina’s website, owner George Tanchevski said he was trying to strike a balance between keeping the lights on in his nine restaurants and paying his employees fairly.

The technical aspect of the payment system “needs to be corrected, but it is hard not to view this as a positive story,” said Charles Ticknor, an attorney representing Local Cantina. “It made it so the employees made more money than they ever made before.”

The chain plans to work with Smith and her attorneys to resolve the dispute, Ticknor said.

The payment scheme probably saved Local Cantina’s management time and energy, said Ann Marie Ahern, a Cleveland employment lawyer.

“They may have been motivated by good intentions, but those good intentions are not going to absolve them from liability,” she said.

In the note posted on the restaurant chain’s website, Tanchevski said the majority of employees make more under the new system than they did before the change.

Smith, however, is certain she would make more than $1,000 a week with overtime. But she also sees it as a matter of principle.

“The point is the gratuity … is supposed to go to the service worker,” she said. “(Customers) never assume that it's supposed to go to management or the owner.”

The law agrees with Smith, legal experts said.

A small percentage of tips can be pooled with hosts and bussers, and restaurants can use 3% of a server or bartender’s credit card tips to pay fees on those transactions. Outside of those exceptions, tips belong to the employee they were left for.

Restaurant workers must make at least $450 a week and have clear managerial duties to be exempt from overtime requirements, said Courtlyn Roser-jones, an assistant professor of law at the Ohio State University.

“Managerial professionals are the kind of jobs that have some kind of independent judgment,” she said. “It’s pretty well known that restaurant workers, besides the managers, they're not going to be fully exempted under the law.”

Less than a third of Ohio restaurants expect to turn a profit this year, according to a recent Ohio Restaurant Association survey, and many had to adjust to taking mostly carryout or delivery orders, requiring shuffling of staff and, occasionally, layoffs.

The unemployment rate for the leisure and hospitality industry — which includes restaurants — is over 25 %.

Even during normal times, employees are often reluctant to take their employers to court over wage and overtime violations, thanks to an expensive and lengthy litigation process, Columbus lawyer Fred Gittes said.

“That's multiplied hugely by the pandemic,” he said. “People can't take the risk of losing a job.” pcooley@dispatch.com @Patrickacooley