"Bad news for restaurant owners who don’t pay workers: You’re on the hook"
My News LA, November 30, 2017
By Christina Kelley
If you own a restaurant, you may now be personally on the financial hook for violating laws protecting workers’ wages and lunch breaks.
A new court ruling basically means that if you own a restaurant and you’re caught, you may still have to make up money owed out of your pocket instead of shutting down the eatery and forgetting what’s owed.
Appellate justices in Santa Ana have published a ruling, establishing it as legal precedent, holding an Orange County businessman personally liable for violating laws on wages and lunch breaks, according to records obtained Thursday.
The Fourth District Court of Appeal published the ruling Wednesday.
The ruling stemmed from trials in Orange County Superior Court in a class action dispute over wages paid to workers at Koji’s sushi restaurants in Orange and Hollywood.
The main complaint from workers was they did not receive lunch or rest breaks, their attorney, Bryan Schwartz, said.
“They were on their feet all the time, scarfing down a sushi roll in the back in between serving tables,” Schwartz said.
Also, the servers were forced to illegally share their tips with co- workers who were “outside the chain of service,” Schwartz said. That was done to supplement the wages of the workers who weren’t waiting or bussing tables, he said.
The restaurants were shut down when the workers rebelled, Schwartz said.
“The issue is if you go after a relatively small company for wage violations rather than pay what they owe they close up and try to walk away,” Schwartz said. “This decision says not so fast.”
Now owners can be held personally liable for damages, the attorney said.
“Owners, officers and directors can be personally liable — you can run, but you can’t hide,” Schwartz said.
Arthur Parent, the owner of Koji’s, was found to be liable by the appellate justices because “he had control over their wages and working conditions,” Schwartz said.
Parent, who owns a printing business in Buena Park, attempted to file for bankruptcy, but he was sanctioned $50,000 for a false claim, Schwartz said.
“He had at least $10 million” in personal assets at the time, Schwartz said.
At the beginning of 2015, Parent owed the workers in the class action $5.7 million, but the interest has gone up since then, Schwartz said.
“He may well wind up owing everything he has,” Schwartz said.
The most likely outcome of the ruling is that the case will be sent back to an Orange County Superior Court judge to correct faulty rulings by other judges, Schwartz said. Parent could file an appeal with the state Supreme Court.
A message left with Parent’s attorney, Stephen Madoni, was not immediately returned.
If the ruling stands it will send a message to business owners that they may risk money out of their own picket by violating wage laws, Schwartz said.
“This has the potential to help millions of Californians collect their wages,” he said.
Many workers lack the money to sue to get their wages, Schwartz said.
“I hope this will turn the tide, so workers can begin to recover and maybe even curtail the unlawful wage practices to begin with if corporate leaders know there is no easy out,” Schwartz said. “Another big benefit here is to all those businesses operating lawfully, all those businesses who pay wages according to the law who are being unfairly disadvantaged by these companies shortchanging workers and saving money.”
–City News Service