Legislative leaders in fight over restaurant wages
Lawmakers plan to pursue a veto override impacting how workers are paid
Thousands of dollars sought by Connecticut waiters from restaurants now hang in the balance as state lawmakers plan to pursue a veto override on Monday of legislation impacting how restaurants pay their workers.
Hearst Connecticut Media identified at least seven lawsuits against Connecticut restaurants that would be affected by the new law if legislators vote to overturn Gov. Ned Lamont’s veto . One such lawsuit against six Chip’s Family Restaurants in Connecticut was class action certified in March and now involves over 300 servers who allege they were underpaid for their work.
The potential damages sought by these servers would be slashed to one sixth their value under current law if the vetoed legislation takes effect, said Richard Hayber, a New Havenbased employment lawyer, representing the Chip’s waiters.
But Speaker of the House Joe Aresimowicz, DBerlin, the primary champion for the bill, said the lawsuits must be neutralized to avoid restaurant closures and the loss of jobs.
“If these restaurants close as a result of these frivolous lawsuits, then we’re going to be a lot worse off than we currently are,” said Aresimowicz. “We’re going to have 1,000 workers without jobs.”
He held a news conference with restaurant owners and the House minority leader on Friday to advocate for a veto override. Aresimowicz needs the help of the Senate to override the veto — that chamber has remained purposefully silent on the issue.
Lamont repeated his opposition to the legislation Friday.
“These are lawsuits being brought by restaurant workers seeking to be made whole for wages they claim they are owed. These workers are entitled to their day in court,” Lamont said. “We all swear oaths to uphold the state and federal constitutions—and quite frankly this bill does not pass that test. It likely violates workers’ due process rights and other constitutional provisions.”
A three branch fight
The controversial legislation has already created a clash between the state’s legislative and executive branch — and if a veto override is successful, the battle is likely to extend to the judicial branch as well.
Aresimowicz directed the drafting of the bill after meetings with restaurant owners and lobbyists and the Department of Labor, he said. No workers participated in the meetings, which occurred behind closeddoors after the legislature’s committee and public hearing process concluded.
The bill passed the House and Senate unanimously on the last night of the legislative session.
Now, Aresimowicz, lawmakers of both parties and restaurant owners defend the bill, which would repeal state regulations regarding when restaurants can claim a “tip credit” and direct the Department of Labor to write new regulations, working with “representatives of the restaurant industry” and aligning the new regulations with the morebusiness friendly federal rules.
The effect of this regulation change would be to allow restaurants to pay their servers a “tip wage,” which is less than the minimum wage, more of the time – saving businesses money. The Connecticut tip wage for most restaurant service workers is $6.38 per hour, or $8.23 for bartenders, whereas the minimum wage is now $10.10.
Interestingly, if the veto effort is successful, there will be no state regulation regarding the “tip credit” for a period of time between the repeal and the creation of a new regulation. Federal law would continue to apply.
Bob Clark, general counsel for Lamont, said Friday this would create a period of “uncertainty” about which laws to follow for restaurants.
The legislation would also eliminate a penalty faced by restaurants when they break the rules dictating when servers should be paid each wage. Under the current state regulations, restaurants must pay workers the higher minimum wage for their entire shift, if workers can prove the restaurant failed to segregate their service and nonservice duties and pay the workers appropriately.
The bill would not only change the regulations for how waiters are paid in the future: It would also apply the new rules retroactively to all lawsuits pending on or filed after the day the law takes effect.
This provision — by far the most controversial of the 11page law that also contains unrelated workforce training measures — is what prompted Lamont’s veto. It allies the Lamont administration, unions and attorneys for restaurant workers in outrage, who call the legislation “unfair” and question its constitutionality.
“It do think it is likely not to be upheld (by the courts), which was a big of part the reasoning behind the veto,” said Clark.
But Aresimowicz and restaurant industry representatives claim the retroactive provision is fair because restaurant owners believed they were following the law, but received false information in a handbook by the state’s own Department of Labor from 2015 to December 2018. This handbook was then removed from the department’s website.
“This booklet really just codified common practice that we’d been doing for decades and this is what we followed,” said Rep. David Rutigliano, RTrumbull, who is a partner in a restaurant group that owns Southport Brewing Company, Local Kitchen and Beer Bar and the Sitting Duck Tavern.
Aresimowicz called the misinformation an “egregious” error by the Department of Labor.
Clark said DOL had the correct information on their website since June of 2015 and a dispute over DOL’s guidance should not “extinguish worker’s rights” to pursue litigation over wages.
“Every employer is subject to a whole universe of laws and regulations and it is incumbent on them to have the expertise to retain counsel or obtain guidance so they can confirm they are in compliance with all the applicable rules and regulations,” said William Madsen, an attorney who represents restaurant workers in a pending lawsuit.
Scott Dolch, executive director of the Connecticut Restaurant Association, argued the current regulation as written is “impossible” for restaurants to follow because it requires detailed records on how workers spend their time.
Federal law does not require these records to be kept and that could hinder workers’ ability in the future to bring wage and hour lawsuits, said James BhandaryAlexander, attorney for New Haven Legal Assistance.
Will lawmakers or courts decide?
In order to override the governor’s veto, Aresimowicz must win yes votes from twothirds of the House: 101 state representatives must vote yes Monday for the override bill to pass, even if many representatives are absent due to summer vacations. The bill would then move to the Senate and that chamber would also need a twothirds vote.
“It is my intention to proceed with the override,” said Aresimowicz. “It will pass the House.”
The House will vote on the bill regardless of whether it has the votes to pass the Senate, Aresimowicz said.
Senate President Pro Tempore Martin Looney, DNew Haven, said Friday he will not know if the Senate will support an override until they caucus the bill on Monday. Looney declined to provide his opinion on the legislation.
The legislation is strongly supported by House Republicans.
“In a session of one the most antibusiness sessions I have seen in my career, this at the very least needs to be done to show business in Connecticut we have your back,” said House Minority Leader Themis Klarides, RDerby, seated next to Aresimowicz in a rare bipartisan press conference. “This is a workers bill. We have lost track of the fact that you will not work unless you have a job and you will not have a job unless there is business.”
Aresimowicz could not name another situation in which the state revised its regulations or statute to influence the outcome of pending litigation. He called it a “simplistic view” to say that lawmakers are intervening to help companies prevail, but explained legislators are getting involved because they believe the Department of Labor was at fault.
Hayber promised his firm would file a pleading in court challenging the new law, if it is passed.
“Certainly I will raise as many arguments as I can that this legislative, retroactive, affirmative defense to my lawsuits is beyond the powers of our legislature and the judiciary should strike it down,” said Hayber, who has written letters to the governor and Aresimowicz about the legislation. “That will certainly happen.”
Legal challenges
Over 150,000 people — or 9 percent of employees in the state — worked in restaurant and food service jobs in Connecticut in 2017, the Connecticut Restaurant Association said. The new regulations produced after a possible veto override would affect most of those workers.
Several Outback Steakhouse, Ruby Tuesday’s and Denny’s eateries in Connecticut now face pending lawsuits in state court filed by servers who claim the restaurants improperly claimed the tip credit. Two Chicago Sam’s locations in Cromwell and Enfield also have pending suits, as well as the restaurant 85 Main in Putnam.
“It was not until we had been recently sued that we found out there was a gray area and inconsistencies we just didn’t even know about,” said Barry Jessurun, who owns 85 Main and other restaurants. “The fact that there is a law firm that can go after those inconsistencies and go after a small business like ours or any other small business in the nation or the state and go with class action lawsuits is reprehensible in my opinion.”
In federal court, a lawsuit brought by servers against Maine Fish Market, a restaurant and bar in East Windsor, would also be affected by the new legislation. Lawyers are seeking to have this case class action certified – allowing them to expand the case to include more workers who may have subject to illegal compensation practices as well.
Chip’s Family Restaurants is now the only class action certified restaurant wage case in the state, Hayber said. The restaurant is owned by George Chatzopoulos of Orange, court filings show. Chatzopoulos appeared at the press conference Friday, but declined to speak on the record.
In February, the Connecticut and National Restaurant Associations supported Chatzopoulos and Chip’s Family Restaurants with an amicus brief in their lawsuit.
“The (DOL) publication is the way we’ve been enforced forever,” said Dolch. “If we literally had to segment time every single minute that a server or bartender had to clock in and clock out, it is physically impossible. There is no other state that does that.”
Dolch worries that Chip’s will go the way of Vito’s by the Water, a Windsor restaurant that closed following a wagedispute lawsuit from employees who were represented by Hayber.
Hayber countered that businesses will not be forced to close as long as they follow the law.
“It is not difficult to implement,” Hayber said. “The fact that restaurants have been breaking this law and not paying their servers correctly is their problem. It is not the business of the legislature to solve that problem. They should have complied.”