Najera et al v. 1443 York Gotham Pizza Inc. et al

Filing 209

OPINION AND ORDER #106623 : Four actions brought under the Fair Labor Standards Act (FLSA), 29 U.S.C. § 201 et seq., and the New York Labor Law (NYLL) were consolidated for purposes of trial. The claims of five of the seventeen plaintiffs were severed and tried before a jury from July 5 to July 8, 2016. During the trial, the defendants requested that the jury be instructed that the defendants are entitled to an offset or credit for breaks that they allowed the plaintiffs to take during t heir employment at Gotham Pizza. The defendants also requested that the jury be instructed that, if the jury determined that a plaintiff was paid a weekly rate of pay, then in converting that weekly rate of pay to an hourly rate of pay, the jury sho uld exclude any hours for which the plaintiff was on a paid break. The Court denied both of the defendants requests for the reasons stated on the record. This Memorandum Opinion further explains the basis of the Courts denial of the defendants req uests.....The defendants request to instruct the jury in this FLSA action that the calculation of damages owed the plaintiffs may be offset for paid meal breaks is denied. (Signed by Judge Denise L. Cote on 8/10/2016) (gr) Modified on 8/11/2016 (vj).

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
-------------------------------------- X
:
ELEUTERIO ALONSO, et al.,
:
:
Plaintiffs,
:
:
-v:
:
144 NINTH GOTHAM PIZZA, INC., (d/b/a
:
GOTHAM PIZZA), 852 EIGHTH GOTHAM PIZZA :
INC., (d/b/a GOTHAM PIZZA), 1443 YORK :
GOTHAM PIZZA INC., (d/b/a GOTHAM
:
PIZZA), 1667 FIRST GOTHAM PIZZA, INC., :
(d/b/a GOTHAM PIZZA), and MICHAEL
:
SHAMAILOV,
:
:
Defendants.
:
:
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APPEARANCES

12cv3133 (DLC)
14cv4563 (DLC)
15cv4069 (DLC)
15cv10062(DLC)
OPINION
AND ORDER

For the plaintiffs:
Joshua S. Androphy
Shawn Raymond Clark
Michael Faillace & Associates, P.C.
60 East 42nd Street, Suite 2540
New York, NY 10165
For the defendants:
Benjamin B. Xue
Xue & Associates, P.C.
1001 Avenue of the Americas, 11th Floor
New York, NY 10018
Joseph Martin Labuda
Milman Labuda Law Group, PLLC
3000 Marcus Avenue, Suite 3W8
New Hyde Park, NY 11042
DENISE COTE, DISTRICT JUDGE:
Four actions brought under the Fair Labor Standards Act
(“FLSA”), 29 U.S.C. § 201 et seq., and the New York Labor Law
(“NYLL”) were consolidated for purposes of trial.

The claims of

five of the seventeen plaintiffs were severed and tried before a
jury from July 5 to July 8, 2016.

During the trial, the

defendants requested that the jury be instructed that the
defendants are entitled to an offset or credit for breaks that
they allowed the plaintiffs to take during their employment at
Gotham Pizza.

The defendants also requested that the jury be

instructed that, if the jury determined that a plaintiff was
paid a weekly rate of pay, then in converting that weekly rate
of pay to an hourly rate of pay, the jury should exclude any
hours for which the plaintiff was on a paid break.1

The Court

denied both of the defendants’ requests for the reasons stated
on the record.

This Memorandum Opinion further explains the

basis of the Court’s denial of the defendants’ requests.
Discussion
Under Department of Labor regulations, “bona fide meal
periods” are “not worktime.”

29 C.F.R. § 785.19(a).

“Bona fide

meal periods” are breaks in which an “employee [is] completely
relieved from duty for the purposes of eating regular meals.”

The jury was instructed to convert a weekly rate of pay to an
hourly rate of pay “by taking the total compensation paid for
that week and dividing it by the total number of hours the
plaintiff actually worked during that week.” See 29 C.F.R. §
778.109 (“The regular hourly rate of pay of an employee is
determined by dividing his total remuneration for employment
(except statutory exclusions) in any workweek by the total
number of hours actually worked by him in that workweek for
which such compensation was paid.”).
1

2

Id.

A break is not a “bona fide meal period” if the employee is

required to perform any duties, whether active or inactive,
while eating.

Id.

An employer need not pay employees for time

spent on “bona fide meal periods,” but must pay employees for
“meal break[s] during which a worker performs activities
predominantly for the benefit of the employer.”

Reich v. S. New

England Telecommunications Corp., 121 F.3d 58, 64 (2d Cir.
1997).

Of course, an employer may elect to pay employees for

breaks even if not required to do so under the FLSA.
Here, the defendants contend that “every Plaintiff received
and was compensated for three (3) thirty (30) minute breaks per
day: one in the morning, one in the afternoon, and one in the
evening.”

The plaintiffs delivered pizzas by bicycle for Gotham

Pizza and performed many other tasks at the four Gotham Pizza
pizzerias in Manhattan, including cleaning the premises,
preparing food, and transporting supplies.

The owner of Gotham

Pizza, Michael Shamailov, testified at trial that he permitted
his employees to eat as much pizza as they wished and to take as
many meal breaks as they wanted throughout the day.

The

defendants argue that, because the wages they paid to their
employees covered any break periods the employees chose to take,
the defendants are entitled to offset any damages they must pay
for violating the FLSA and NYLL by the amount they voluntarily
paid for “bona fide meal periods.”
3

The Second Circuit has yet to address whether an employer,
after voluntarily paying for “bona fide meal periods,” may
offset its liability under the FLSA or NYLL by the amount it
paid for such breaks.2
issue.

Other Circuit Courts have split on this

In Ballaris v. Wacker Siltronic Corp., 370 F.3d 901 (9th

Cir. 2004), the Ninth Circuit held that an employer, who had
violated the FLSA by failing to pay employees for time spent
changing into uniforms, could not offset its liability for paid
meal breaks even if the employer was not required to pay for
such breaks under the FLSA.

The Ninth Circuit reasoned that

it would undermine the purpose of the FLSA if an
employer could use agreed-upon compensation for nonwork time (or work time) as a credit so as to avoid
paying compensation required by the FLSA. The Supreme
Court has held that in enacting the FLSA Congress
intended to guarantee either regular or overtime
compensation for all actual work or employment . . . .
Crediting money already due an employee for some other
reason against the wage he is owed is not paying that
employee the compensation to which he is entitled by
statute. It is, instead, false and deceptive
“creative” bookkeeping that, if tolerated, would
frustrate the goals and purposes of the FLSA.
Id. at 914 (citation omitted).

The cases relied upon by the defendants do not address to the
issue of offsets. See, e.g., Reich, 121 F.3d 58, 64 (2d Cir.
1997) (holding that requirement that employees remain on site
during lunch breaks to provide security and ensure safety
transformed otherwise uncompensable breaks into compensable work
periods).
2

4

The Eleventh Circuit came to the opposite conclusion,
holding than an offset is appropriate when an employer paid for
breaks that qualify as “bonda fide meal periods” under the FLSA.
Avery v. City of Talladega, Ala., 24 F.3d 1337, 1344 (11th Cir.
1994) (“If the meal break is not compensable time under the
FLSA, then the [employer] should be allowed to offset the amount
it pays for the meal break against any amount it owes the
plaintiffs for pre- and post-shift time at work.”).

Similarly,

the Seventh Circuit held that an offset is appropriate where an
employer paid for meal breaks but did not pay for “roll call”
time, which consisted of, inter alia, uniform and equipment
inspections.

Barefield v. Vill. of Winnetka, 81 F.3d 704, 711

(7th Cir. 1996).

The Seventh Circuit reasoned that

The FLSA sets a floor, not a ceiling, on compensation
that employees must receive . . . . The FLSA prohibits
an employer from failing to compensate for “work” in
excess of forty hours per week. The meal periods were
not “work.” Therefore, plaintiffs fail to establish
an FLSA violation.
Id.
Allowing an employer to treat meal breaks as compensable
time but then claim an ex post facto credit invites fraud and
undermines the goals of the federal and New York labor laws.
The law requires clear and complete notice of the terms of
employment to be provided contemporaneously to employees.

See,

e.g., N.Y. Lab. Law § 195(1)(a) (wage notice requirement); N.Y.

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Lab. Law § 195(3) (pay stub requirement).

If an employer has

not provided contemporaneous notice to its employees that their
break time is non-compensable time, then neither the employer
nor the employee has an incentive to monitor and record the use
of that time, or to take timely and appropriate action to
enforce the employer’s policy.

Allowing a damages award to be

offset by compensation that an employer voluntarily paid above
the minimum required by law, rewrites the terms of employment
under which the employer and employee functioned.

It also

introduces needless complexity into litigation since the
existence and extent of the ex post facto offset will rarely be
supported by contemporaneous records.
The instant litigation is an example of each of these
difficulties.

The evidence at trial showed, and the jury found,

that the defendants violated both the FLSA and NYLL provisions
requiring payment of a minimum wage and compensation for
overtime work, among other things.3

The plaintiffs were

generally paid at a flat rate of $250 to $350 per week for 60 or
The jury also found that the defendants (1) failed to pay
“spread-of-hours” pay required by N.Y. Comp. Codes R. & Regs.
tit. 12, § 146-1.6, (2) misappropriated the plaintiffs’ tips in
violation of N.Y. Lab. Law § 196-d, (3) failed to pay the
plaintiffs for the tools of the trade they were required to use
to perform their work in violation of 29 C.F.R. § 531.35 and
N.Y. Comp. Codes R. & Regs. tit. 12, § 146-2.7(a), (4) failed to
provide notice of the plaintiffs’ wages in violation of N.Y.
Lab. Law § 195(1)(a), and (5) failed to provide the plaintiffs
pay stubs in violation of N.Y. Lab. Law § 195(3).
3

6

more hours of work spread over six days.

There was no evidence

that any plaintiff was given a “bona fide meal period,” or any
notice that there would be a period of time each day, whether
thirty minutes or something else, when they were not on call to
perform work for Gotham Pizza.

Instead, the owner of Gotham

Pizza testified that he permitted his employees to take meal
breaks “as they please.”

This catch-as-catch-can opportunity to

grab and eat a slice of pizza cannot constitute a bona fide meal
period.

Moreover, the defendants provided no written notice of

any meal break credit, or notice that their “paid” meal breaks
would offset their overtime pay or make up for Gotham Pizza’s
failure to pay a minimum wage.
reflecting any meal breaks.

Finally, there were no records

The only reliable records that were

received into evidence were handwritten records showing the time
of day the employee began and ended work for some of their weeks
of employment.
Employees are entitled to be paid in compliance with the
FLSA and NYLL.

If an employer intends to pay for meal breaks in

lieu of paying directly for overtime work or paying the minimum
wage, it must, at a minimum, make this intention known to the
employee.

Because Gotham Pizza did not do so, it cannot now

offset its liability under the FLSA and NYLL on the basis of a
claim that it paid for employees’ meal breaks.

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For the same reasons, time in which an employee was on a
paid meal break shall not be subtracted in converting that
employee’s weekly rate of pay into an hourly rate of pay.
Moreover, Department of Labor regulations provide that
[w]here the parties have reasonably agreed to include
as hours worked time devoted to [activities which
would not be regarded as working time under the FLSA
if no compensation were provided], payments for such
hours will not have the mathematical effect of
increasing or decreasing the regular rate of an
employee if the hours are compensated at the same rate
as other working hours.
29 C.F.R. § 778.320 (emphasis added); see also Ballaris, 370
F.3d at 909 (applying § 778.320 to meal breaks).

It can be

inferred from this regulation that a subtraction for paid meal
breaks is not permitted in the absence of an agreement between
the employer and the employee to do so.

Because there is no

evidence that Gotham Pizza notified its employees that it
intended to offset paid meal breaks in computing employees’
regular rate of pay, much less that the employee agreed to that
offset, no subtraction for such meal breaks is permitted in
calculating an employee’s hourly rate of pay.

8

Conclusion
The defendants’ request to instruct the jury in this FLSA
action that the calculation of damages owed the plaintiffs may
be offset for paid meal breaks is denied.
Dated:

New York, New York
August 10, 2016
__________________________________
DENISE COTE
United States District Judge

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