Running a successful restaurant is not for the faint of heart. Indeed, nationwide, most new restaurants close within their first year—industry experts put the failure rate at anywhere from 60 to 80 percent. And if you happen to be fortunate enough to own a successful New York City restaurant, you have an additional hurdle to overcome—the risk of being subject to a lawsuit by your wait staff. After all, NYC restaurants have become a frequent target of their disgruntled employees armed with ambitious attorneys alleging wage and hour violations.
While it is difficult to explain the exact reason for the rise in litigation in the restaurant industry, one possibility may be the power of the internet. Blogs, complaining about everything from rude customers to poor pay, are frequent draws on the internet. Not surprisingly, law firms have created websites for waiters with respect to their rights under New York’s wage and hour laws. One area that appears to be causing great difficulty for restaurant owners is New York’s spread of hours regulation for the hospitality industry. Read our prior blog on how that works.
In the month of August alone, class action lawsuits were filed in NYC alleging spread of hours violations against celebrity chef Daniel Boulard and Pret A Manger, a popular British chain restaurant. In addition, more than 100 current and former employees of Adrianne’s Pizza were certified as a class in their lawsuit alleging a spread of hours violation against this popular financial district hotspot. How costly can these lawsuits be? Recently, the East Japanese Restaurant agreed to settle a lawsuit that included spread of hours claim for $1.25 million dollars. This seven digit number does not include attorney fees or the amount of time and energy the owners had to spend to resolve the lawsuit.
Taking the time and energy to ensure compliance with New York’s spread of hours law (along with other wage and hour regulations applicable to the restaurant industry) is the most cost effective approach to counteract this rise in litigation.