Stefanovic et al v. Old Heidelberg Corp. et al

Filing 73

MEMORANDUM OPINION AND ORDER re: 55 MOTION for Summary Judgment (Partial), Cross-Motion, and Opposition. filed by Danijel Mirkov, Bojana Novakovic, Uros Dukic, Andjela Stefanovic, 49 MOTION for Partial Summary Judgment < /i>. filed by Eva Matischak, Old Heidelberg Corp.., For the foregoing reasons, Plaintiff's motion for summary judgment on Counts Five, Seven and Eight against the Restaurant only, and as to the Counterclaim, is granted. Defendants' moti on for summary judgment is granted as to all claims arising under the FLSA prior to March 7, 2015, and is otherwise denied. This Memorandum Opinion and Order resolves docket entry nos. 49 and 55. This case remains referred to Magistrate Judge Will is for general pretrial management. The parties must promptly contact Judge Willis' chambers to request a settlement conference and to address what, if any, pretrial matters remain outstanding if settlement of all outstanding issues cannot be achieved. The final pretrial conference is adjourned to December 9, 2022, at 9:30 a.m. The parties shall confer and make submissions in advance of the conference in accordance with the Pretrial Scheduling Order (docket entry no. 43). SO ORDERED. ( Final Pretrial Conference set for 12/9/2022 at 09:30 AM before Judge Laura Taylor Swain.) (Signed by Judge Laura Taylor Swain on 8/31/2022) (tg) Transmission to Orders and Judgments Clerk for processing.

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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
-------------------------------------------------------x
ANDJELA STEFANOVIC, UROS DUKIC,
BOJANA NOVAKOVIC, DANIJEL
MIRKOV,
Plaintiffs,
-v-

No. 18-CV-2093-LTS-JEW

OLD HEIDELBERG CORP. d/b/a
HEIDELBERG RESTAURANT, EVA
MATISCHAK,
Defendants.
---------------------------------------------------------x
MEMORANDUM OPINION AND ORDER
In this action, Plaintiffs Andjela Stefanovic (“Stefanovic”), Uros Dukic
(“Dukic”), Bojana Novakovic (“Novakovic”), and Danijel Mirkov (“Mirkov”) (collectively,
“Plaintiffs”) assert claims for violations of the Fair Labor Standards Act (“FLSA”), 29 U.S.C.
sections 201 et seq., and the New York State Labor Law (“NYLL”) sections 190, 650 et seq.,
that allegedly occurred from March 2016 through April 2018. (Docket entry no. 12 (the “First
Amended Complaint” or “FAC”).) Old Heidelberg Corp. (the “Restaurant”) and Eva Matischak
(together, “Defendants”) answered Plaintiffs’ complaint, asserted several affirmative defenses,
and asserted a counterclaim (the “Counterclaim”), alleging misconduct by Plaintiff Mirkov and
invoking New York’s common law faithless servant doctrine. 1 (Docket entry no. 15.) The Court
has jurisdiction of Plaintiffs’ claims under the FLSA pursuant to 28 U.S.C. section 1331, and of
their claims under the NYLL and the Counterclaim pursuant to 28 U.S.C. section 1367.

1

The Court dismissed Defendants’ counterclaim under the faithless servant doctrine as
against Plaintiffs Stefanovic, Dukic, and Novakovic on August 8, 2019. (Docket entry
no. 26.)

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Defendants now move for partial summary judgment as to Plaintiffs’ claims for
unpaid overtime under the FLSA (“Count Three”) and the NYLL (“Count Four”), and as to
Plaintiffs’ claim for failure to pay “spread-of-hours” wages (“Count Five”) and provide accurate
wage statements at time of payment (“Count Eight”), as required under the NYLL. (Docket
entry nos. 49, 50 (“Defs. Mem.”).) Defendants also move for summary judgment as to the
Counterclaim (id.), and as to all claims under the FLSA arising from Plaintiff Novakovic’s
employment prior to March 7, 2015. (Id.) Plaintiffs concede that Defendants are entitled to
summary judgment as to all FLSA claims arising prior to March 7, 2015, but otherwise oppose
Defendants’ motion in its entirety, and cross-move for summary judgment, against the
Restaurant only, as to Counts Five and Eight, as to Plaintiffs’ NYLL-based claim that
Defendants failed to provide accurate wage notices at time of hire (“Count Seven”), and as to the
Counterclaim. 2 (Docket entry nos. 55, 56 (“Pls. Mem.”).)
The Court has considered the submissions of both parties carefully and, for the
following reasons, grants Plaintiffs’ motion in its entirety. The Court grants Defendants’ motion
only as to any FLSA claims prior to March 7, 2015, and otherwise denies Defendants’ motion in
its entirety.

2

Plaintiffs concede that they have not sought to demonstrate that Defendant Eva
Matischak was an “employer” under the FLSA or NYLL for purposes of summary
judgment, and that their summary judgment motion therefore pertains only to the
Restaurant. (Docket entry no. 65 at 1 (“Plaintiffs agree that the liability of individual
defendant Eva Matischak as Plaintiffs’ employer has not been established for purposes of
the [m]otions [for summary judgment] . . . all affirmative relief sought by Plaintiffs in
their [m]otion is with respect to corporate defendant [the Restaurant] alone.”).)

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BACKGROUND
Unless otherwise indicated, the following facts are undisputed. 3 Each Plaintiff is
a former employee of the Restaurant. Stefanovic was employed by the Restaurant from October
31, 2016, to November 5, 2017. (Docket entry no. 59 (“Pls. 56.1 St.”) ¶ 1.) Dukic was
employed by the Restaurant as a “server/bartender” from August of 2016 to October of 2017.
(Docket entry no. 51 (“Defs. 56.1 St.”) ¶ 23.) Mirkov was employed by the Restaurant as a
bartender from “March or April of 2016” to “in or around April of 2018.” (Defs. 56.1 St. ¶¶ 7,
15.) Novakovic was employed by the Restaurant as a “hostess/bartender/server” from “March or
April of 2012” to October of 2014, and again from Oct. 2, 2016, to December 5, 2017. (Docket
entry no. 58-3, Ex. C at 32-42.) When all four Plaintiffs began their employment at the
Restaurant, they were provided with a form labeled “Notice and Acknowledgment of Pay Rate
and Payday” (the “Wage Notices”), (Pls. 56.1 St. ¶¶ 2, 14, 26, 38; docket entry no. 58, at Ex. E),
on which a box was checked indicating that no allowances were to be taken against their wages. 4
(Pls. 56.1 St. ¶¶ 4, 16, 28, 40.) On each Wage Notice, a box indicating that a tip credit allowance
would be taken from Plaintiffs’ wages was also left unchecked. (Id. ¶¶ 5, 17, 29, 41.) Despite
this, the Restaurant took a tip credit against Plaintiffs’ minimum and overtime wages, and all
four were regularly paid at “tipped regular wage rate[s]” of $7.50 per hour for hours worked up
to forty per workweek, and a “tipped overtime wage rate” of $12.00 (in 2016) or $13.00 (in
2017) for hours worked in excess of forty per workweek. (Id. ¶¶ 6, 18, 30, 42.) Each Plaintiff,

3

Facts characterized as undisputed are identified as such in Defendants’ or Plaintiffs’
statements pursuant to SDNY Local Civil Rule 56.1 (docket entry nos. 51, 59, 64) or
drawn from evidence to which there has been no contrary, non-conclusory factual proffer.

4

The wage notice for which Plaintiff Novakovic brings a wage notice claim in this action
relates to her second period of employment at the Restaurant and is dated October 2,
2016. (Pls. 56.1 St. ¶ 14.)

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on at least two occasions, worked a shift in excess of ten hours, known as a “spread-of-hours
shift,” but was not paid an extra hour’s minimum wage. (Id. ¶¶ 11-12, 23-24, 35-36, 47-48.)
The Restaurant provided wage statements (the “Wage Statements”) to Plaintiffs that were
inaccurate, in that they rounded down the total hours the individual Plaintiff had worked in a
given workweek. (Id. ¶¶ 10, 22, 34, 46.) As an example, Stefanovic worked 34.74 hours
between July 10 and July 16, 2017, but the corresponding Wage Statement she received
indicated she had worked only 34 hours. (Id. ¶ 10.) In addition, the Wage Statements received
by each Plaintiff “did not indicate the per-hour tip credit amount taken as an allowance or the
total weekly amount of the tip credit allowance.” (Id. ¶¶ 7, 19, 30, 43.) In depositions, Plaintiffs
were unable to recall from memory the exact dates or pay periods when they were underpaid
because of these inaccuracies. (Defs. 56.1 St. ¶¶ 5, 17, 21, 24.) However, Plaintiffs have
proffered extensive payroll records as to each individual Plaintiff in support of their claims.
(Docket entry no. 58, Exs. A-I)
Beginning on October 15, 2016, Plaintiff Mirkov began a practice of
“overcharging customers of the Restaurant by entering a tip amount into the Restaurant’s pointof-sale system that was higher than the amount of the tip that the customer had indicated on their
receipt.” (Defs. 56.1 St. ¶¶ 8-9; docket entry no. 57 ¶ 9.) Over the next two years, Mirkov
altered tips from customers in the same fashion approximately twelve times. (Id. ¶ 10.)
Mirkov’s practice of altering customers’ tips caused the Restaurant to receive a poor review on
Yelp, a restaurant review website, on December 14, 2017. (Id. ¶ 12.) Following an internal
investigation, the Restaurant discovered Mirkov’s practice of altering tips, and he was fired “in
or around April of 2018.” (Id. 15.)

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DISCUSSION
Summary judgment is to be granted in favor of a moving party if “the movant
shows that there is no genuine dispute as to any material fact and the movant is entitled to
judgment as a matter of law.” Fed. R. Civ. P. 56(a). A fact is considered material if it “might
affect the outcome of the suit under the governing law,” and an issue of fact is a genuine one
where “the evidence is such that a reasonable jury could return a verdict for the nonmoving
party.” Holtz v. Rockefeller & Co. Inc., 258 F.3d 62, 69 (2d Cir. 2001) (quoting Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). To defeat a summary judgment motion, the
nonmoving party “must do more than simply show that there is some metaphysical doubt as to
the material facts.” Caladora v. Calabrese, 298 F.3d 156, 160 (2d Cir. 2002) (citation omitted).
The nonmoving party “may not rely on mere conclusory allegations nor speculation, but instead
must offer some hard evidence showing that its version of the events is not wholly fanciful.”
Golden Pac. Bancorp v. FDIC, 375 F.3d 196, 200 (2d Cir. 2004) (citation omitted).
The same legal standards apply when analyzing cross-motions for summary
judgment. Schultz v. Stoner, 308 F. Supp. 2d 289, 298 (S.D.N.Y. 2004). “[E]ach party’s motion
must be examined on its own merits, and in each case all reasonable inferences must be drawn
against the party whose motion is under consideration.” Morales v. Quintel Entm’t, Inc., 249
F.3d 115, 121 (2d Cir. 2001) (citation omitted).
Unpaid Overtime Claims under the FLSA (Count Three) and NYLL (Count Four)
Defendants move for summary judgment as to Plaintiffs’ claims for unpaid
overtime under the FLSA and the NYLL, arguing that Plaintiffs have not provided competent
evidence that they were underpaid. (See Defs. Mem. at 9 (“Defendants are entitled to judgment
on Plaintiffs’ claims for unpaid overtime as Plaintiffs have no evidence to support their claims

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that they were not paid for all of the hours that they worked.”).) The Court disagrees and
declines to grant summary judgment on that basis.
“Both the FLSA and the NYLL mandate an overtime rate of one and one-half
times the employee’s ‘regular rate of pay.’” Perez Garcia v. Hirakegoma Inc., No. 17-CV-7608SLC, 2020 WL 1130765, at *6 (S.D.N.Y. Mar. 9, 2020) (citing 29 U.S.C. § 207; 12 N.Y.C.R.R.
§ 142-2.2). “To establish liability under the FLSA [or NYLL] on a claim for unpaid overtime, a
plaintiff must prove that he performed work for which he was not properly compensated, and
that the employer had actual or constructive knowledge of that work.” Kuebel v. Black &
Decker Inc., 643 F.3d 352, 361 (2d Cir. 2011) (citation omitted). “At summary judgment, a
plaintiff must support his burden by first producing sufficient evidence to show the amount and
extent of that work as a matter of just and reasonable inference.” Velazquez v. Yoh Services,
LLC, No. 17-CV-842-CM, 2019 WL 1448716, at *8 (S.D.N.Y. Mar. 15, 2019) (quoting Kuebel,
643 F.3d at 361) (alterations omitted). “When the employer has kept proper and accurate
records, the employee may easily discharge his burden by securing production of those records.”
Shi v. TL & GC Inc., 19-CV-08502-SN, 2022 WL 2669156, at *6 (S.D.N.Y. Jul 11, 2022)
(quoting Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 687 (1946)) (alterations omitted).
“If an employee’s records are inaccurate or inadequate, ‘it is well settled . . . that it is possible for
a plaintiff to meet this burden through estimates based on [his or her] own recollection.”
Velazquez, 2019 WL 1448716, at *8 (quoting Kuebel, 643 F.3d at 372). “This burden is not
onerous.” Id. (quotation omitted). Once this burden is met, “[t]he burden then shifts to the
employer to come forward with evidence either to show ‘the precise amount of work performed,’
or to ‘negat[e] the reasonableness of the inference to be drawn from the employee’s evidence.’”

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Gonzalez v. Masters Health Food Service Inc., No. 14-CV-07603, 2017 WL 3835960, at *16
(S.D.N.Y. Jul. 27, 2017) (quoting Kuebel, 643 F.3d at 352).
Here, Plaintiffs have presented payroll records in the form of pay stubs that
specify, for each individual Plaintiff, the number of hours worked by that Plaintiff in a given
week and their rates of non-overtime and overtime pay. (Docket entry no. 58, at Exs. F-I).
Plaintiffs have also provided “batch time records” which can be cross-referenced with Plaintiffs’
pay stubs, and which provide, inter alia, each Plaintiff’s dates worked, hours worked on each
day, time in and time out, and amounts received in tips. (See docket entry no. 59, at Ex. E.) For
instances in which Plaintiffs believe the payroll records to be inaccurate (for example, shifts
where Plaintiffs allege hours were rounded down by Defendants), Plaintiffs have used the batch
time records to demonstrate the scope of such inaccuracies. (See, e.g., Pls. 56.1 St. ¶ 46(a)
(alleging underpayment of Plaintiff Mirkov, where Mirkov’s pay stub for a given week indicated
that he worked 29 hours, but his batch time records indicated he worked 29.84 hours).) The
quality and volume of this evidence clearly satisfies Plaintiff’s initial burden of producing
“sufficient evidence from which violations of the [FLSA or NYLL] and the amount of an award
may be reasonably inferred.” Reich v. S. New England Telecomms. Corp., 121 F. 3d 58, 66 (2d
Cir. 1997) (citation and quotation omitted). The burden of challenging this evidence therefore
shifts to Defendants, who failed, in their papers, to address this evidence directly or attack the
reasonableness of any inference which may be drawn from it.
The Court therefore finds that Plaintiffs have provided sufficient and competent
evidence in support of their claims for unpaid overtime under both the FLSA and the NYLL,
such that both claims survive summary judgment. Accordingly, Defendants’ motion is denied as
to Counts Three and Four.

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Spread-Of-Hours Claim (Count Five)
Plaintiffs move for summary judgment, as to liability only, on their claims for
violations of the NYLL’s “spread-of-hours” requirement. The NYLL provides that employees
must receive one additional hour of pay at the basic minimum hourly rate for each day that their
spread-of-hours exceeds ten. 12 N.Y.C.R.R. § 146-1.6(a). The spread-of-hours is the “length of
the interval between the beginning and end of an employee’s workday.” Id. Defendants do not
dispute that each Plaintiff, on at least two occasions, worked more ten hours in a single shift and
did not receive an additional hour’s pay at the minimum wage. (Pls. 56.1 St. ¶¶ 11-12, 23-24,
35-36, 47-48.) Accordingly, Plaintiffs have established the Restaurant’s liability for spread-ofhours violations as a matter of law.
Defendants argue that summary judgment should be denied as to Plaintiffs’
spread-of-hours claims on the grounds that “Defendants attempted to, in good faith, abide by the
[NYLL].” (Docket entry no. 62 (“Defs. Reply”) at 13.) However, as Plaintiffs note, “good faith
measures to comply with [the NYLL] may serve as an affirmative defense to a claim for
liquidated damages – an issue on which Plaintiffs have not moved.” (Docket entry no. 65 (“Pls.
Reply”) at 3) (emphasis removed); see also NYLL § 663(1) (McKinney 2022) (“If any employee
is paid by his or her employer less than the wage to which he or she is entitled . . . he or she shall
recover in a civil action the amount of any such underpayments . . . and unless the employer
proves a good faith basis to believe that its underpayment of wages was in compliance with the
law, an additional amount as liquidated damages equal to one hundred percent of the total of
such underpayments found to be due.”). As good faith is an affirmative defense to liquidated
damages only, Defendants’ assertion does not alter the Court’s analysis of the Restaurant’s
liability for spread-of-hours violations. Because Plaintiffs have established the Restaurant’s

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liability for spread-of-hours violations, as to all Plaintiffs, as a matter of law, the Court grants
Plaintiffs’ motion for summary judgment against the Restaurant as to Count Five.
Claims Under the Wage Theft Prevention Act (Counts Seven and Eight)
Plaintiffs and Defendants cross-move for summary judgment with respect to
Plaintiffs’ claims arising under New York’s Wage Theft Prevention Act (“WTPA”), an
amendment to the NYLL that became effective on April 9, 2010. See 2010 N.Y. Sess. Laws ch.
564 (McKinney). Plaintiffs’ first such set of claims arises under NYLL section 195(1), which
requires employers to “provide [their] employees, in writing, . . . at the time of hiring . . . notice
containing . . . the rate or rates of pay and basis thereof, whether paid by the hour, shift, day,
week, salary, piece, commission, or other; [and] allowances, if any, claimed as part of the
minimum wage . . . .” NYLL § 195(1) (McKinney 2022) (emphasis added). Pursuant to a 2014
amendment to the WTPA, an employer who either fails to provide such notices at the time of
hiring, or provides notices that are noncompliant with the WTPA, is liable to the employee for a
maximum of $5,000, accruing at a rate of $50 for each day not received. NYLL § 198(1-b); see
Adonias v. Al Horno Lean Mexican Kitchen Inc., No. 16-CV-07266-LTS-KHP, 2018 WL
4007643, at *10 (S.D.N.Y. Aug. 22, 2018).
Defendants do not dispute that the Restaurant failed to check the box on the Wage
Notices indicating that a tip credit allowance would be taken against each Plaintiff’s wages. (Pls.
56.1 St. ¶¶ 5, 17, 29, 41.) Instead, the Restaurant “checked the box on the wage notice indicating
that no allowances were taken against [each Plaintiff]’s wage rates.” (Pls. 56.1 St. ¶¶ 4, 16, 28,
40.) As prior courts have noted, failing to provide notice of the future taking of a tip credit on an
employee’s wage notice “is a clear violation of § 195(1).” Saigon Market, 2019 WL 4640260, at
*5 (finding an employer which had taken a tip credit against an employee’s wages liable under

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section 195(1) for checking, next to the question written on that employee’s wage notice of
whether any allowances would be taken, the box labeled “none”).
In their opposition to Plaintiffs’ motion, Defendants appear to concede that the
Wage Notices supplied to Plaintiffs at time of hiring were deficient, and they invoke the
affirmative defense of good faith efforts to abide by the NYLL. (Defs. Reply at 13.) The NYLL
addresses affirmative defenses to violations of section 195(1) as follows:
In any action or administrative proceeding to recover damages for
violation of paragraph (a) of subdivision one of section one hundred
ninety-five of this article, it shall be an affirmative defense that (i) the
employer made complete and timely payment of all wages due pursuant to
this article or article nineteen or article nineteen-A of this chapter to the
employee who was not provided notice as required by subdivision one of
section one hundred ninety-five of this article or (ii) the employer
reasonably believed in good faith that it was not required to provide the
employee with notice pursuant to subdivision one of section one hundred
ninety-five of this article.
NYLL § 198(1-b) (McKinney 2022).
The burden of demonstrating good faith under either the FLSA or NYLL is heavy,
and it falls upon the employer. “To establish the requisite subjective ‘good faith,’ an employer
must show that it took ‘active steps to ascertain the dictates of the FLSA [or NYLL] and then
act[ed] to comply with them.’” Barfield v. New York City Health and Hospitals Corp., 537 F.3d
132, 150 (2d Cir. 2008) (quoting Herman v. RSR Sec. Servs. Ltd., 172 F.3d 132, 142 (2d Cir.
1999)); see also Inclan v. New York Hospitality Group, 95 F. Supp. 3d 490, 505 (S.D.N.Y.
2015) (noting that “courts have not substantively distinguished the federal standard [under the
FLSA] from the current state standard [under the NYLL] of good faith”). “The Second Circuit
has observed that the employer’s burden is a difficult one, and has emphasized that double
damages [resulting from no finding of good faith] are the norm and single damages [resulting
from a finding of good faith] the exception.” Chichinadze v. BG Bar Inc., 517 F. Supp. 3d 240,

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258 (S.D.N.Y. 2021) (quoting Barfield, 537 F.3d at 150) (internal quotation marks and
alterations omitted). Indeed, the Defendants do not provide, and the Court has not found, a
single case in which a good faith defense was successfully used to avoid liability for the wage
notice provision of NYLL section 195.
In support of their good faith defense, Defendants allege, and Plaintiffs do not
dispute, the following:
The Restaurant’s manager, Andreas Matischak[,] had conversations,
generally, once a year with his payroll company ADP, about compliance
with employment laws. The Restaurant also hired a woman named Angela
Hour to prepare payroll. Eva Matischak, the Restaurant’s owner[,] also
hired someone named Diana Klapach to ensure compliance with
employment laws, which included meetings with accountants and
attorneys, and that handled payroll before Angela was hired. ADP told the
Restaurant what was mandated in terms of employee pay and the
Restaurant did what ADP said.
(Defs. Reply at 13) (internal citations to record omitted).
The Court finds that, as a matter of law, Defendants have failed to satisfy their
burden. In Chichinadze, the court found that merely relying on a payroll company (incidentally,
the company in that matter was also ADP) “plainly does not qualify as an active step to ascertain
the dictates of the law and then act to comply with them.” 517 F. Supp. 3d at 258 (citation and
internal alterations omitted); see also Dudley v. Hanzon Homecare Services, Inc., No. 15-CV8821-JMF, 2018 WL 481884, at *5 (S.D.N.Y. Jan. 17, 2018) (finding that employer had not met
her burden of demonstrating good faith where she claimed that she used a “payroll service
provider” and “believed that [the provider] would have notified” her if she was not in
compliance with employment laws”); cf. Khereed v. West 12th Street Restaurant Group LLC,
No. 15-CV-1363-PKC, 2016 WL 590233, *6-7 (S.D.N.Y. Feb. 11, 2016) (finding good faith
burden met as to unpaid wages, for purposes of defeating summary judgment, when employer

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“retained counsel to advise him on wage-and-hours laws” and “an attorney reviewed the contents
of his employee handbook”). Defendants say that their manager “generally” had conversations
with the payroll company ADP, and “did what ADP said.” Passively following the dictates of a
payroll company does not constitute an “active step to ascertain the dictates of the law and then
act to comply with them.” Dudley at *5 (quoting Barfield, 137 F.3d at 150). Defendants’ other
proffers, that they hired “a woman named Angela Hour to prepare payroll” and “someone named
Diana Klapach to ensure compliance with employment laws,” without more, are far too vague to
frame a genuine issue of fact as to good faith, even under the favorable standard afforded to
nonmovants at summary judgment. See Saigon Market, 2019 WL 4640260, at *12 (granting
summary judgment despite defendants’ invocation of good faith defense when defendant “only
provided vague and imprecise testimony that she had hired a payroll company who would
answer her payroll questions and ‘tell [her] what to do’”). For these reasons, the Court finds that
no reasonable jury could find that the Restaurant acted in good faith when it failed to comply
with the wage notice provision.
As it is undisputed that each Plaintiff worked for at least one hundred days
following their receipt of the deficient Wage Notices considered in this section (Pls. 56.1 St. ¶
50), the Court finds that each Plaintiff is entitled to $5,000 in wage notice statutory damages
pursuant to NYLL section 198(1-b).
Plaintiffs’ second set of claims under the WTPA arises under NYLL section
195(3), which requires employers to “furnish each employee with a statement with every
payment of wages, listing . . . rate or rates of pay and basis thereof, whether paid by the hour,
shift, day, week, shift, piece, commission, or other; gross wages; deductions; [and] allowances, if
any claimed as part of the minimum wage . . . .” NYLL § 195(3) (McKinney 2022); see also

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Saigon Market, 2019 WL 4640260, at *3 (“The WTPA also requires employers to provide their
employees a ‘statement with every payment of wages, listing information about the rate and
basis of pay, any allowances and deductions, and the employer’s identity and contact details.”)
(quoting Canelas v. A’Mangiare, Inc., No. 13-CV-3630-VSB, 2015 WL 2330476, at *5
(S.D.N.Y. May 14, 2015)) (citing NYLL § 195(3)). Following the 2014 amendment to the
WTPA, an employer who fails to provide the required wage statement is liable to the employee
for $250 “for each workday that the violations occurred or continue to occur, but not to exceed a
total of five thousand dollars.” NYLL § 198(1-d).
Defendants move for summary judgment, arguing that “all of the plaintiffs have
testified that they received the requisite wage statements required by the NYLL.” (Defs. Mem.
at 11; Pls. 56.1 St. ¶¶ 2, 14, 26, 38.) In their cross-motion and opposition, Plaintiffs contend that
the Wage Statements were deficient:
The wage statements Defendants provided to Plaintiffs were deficient in
three respects: (1) they did not report spread-of-hours pay to which
Plaintiffs were entitled; (2) they did not accurately list total hours
Plaintiffs worked; and (3) they did not appropriately reflect the tip credit
(i.e., allowance) Defendants took against Plaintiffs’ wages.
(Pls. Mem. at 7.) Defendants do not dispute that the Wage Statements did not indicate that the
Restaurant was taking a tip credit against Plaintiffs’ wages, or the total amount of tips taken.
(Pls. 56.1 St. ¶¶ 7, 19, 31, 43.) Nor do Defendants dispute that, on at least two occasions for
each Plaintiff, Defendants rounded down the number of hours worked for purposes of calculating
compensation. (Pls. 56.1 ¶¶ 8, 20, 32, 44.) Previous courts have found that either of these
violations is, on its own, sufficient to establish liability for a wage statement violation. See
Chichinadze, 517 F. Supp. 3d at 259 (wage statements listing incorrect number of hours
worked); Salinas v. Starjem Restaurant Corp., 123 F. Supp. 3d 442, 475 (S.D.N.Y. 2015) (wage

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statements failing to indicate that employer was taking tip credit allowance). 5 Defendants assert
good faith as an affirmative defense, but the Court finds that defense unavailing for the reasons
stated above. See supra at 12. The Court therefore grants Plaintiffs’ motion for summary
judgment against the Restaurant as to Count Eight, and finds the Restaurant liable to each
Plaintiff for violations of NYLL section 195(3). Defendants’ motion for summary judgment as
to Count Eight is denied.
As it is undisputed that all Plaintiffs worked for at least twenty days while these
violations “occurred or continued to occur,” see NYLL § 198(1-d), the Court finds that each
Plaintiff is entitled to wage statement statutory damages in the amount of $5,000.
Faithless Servant Counterclaim
Plaintiffs and Defendants cross-move for summary judgment as to the
Counterclaim against Plaintiff Mirkov. The Counterclaim against Mirkov alleges a breach of
fiduciary duty under New York’s faithless servant doctrine. Under New York law, “[o]ne who
owes a duty of fidelity to a principal and who is faithless in the performance of his services is

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Defendants argue that, “while the Plaintiffs point to certain instances . . . where the
Defendants purportedly rounded hours down, the Plaintiffs fail to point to other instances
where the Defendants actually rounded up in paying Plaintiffs.” (Defs. Reply at 13)
(citing to a week in which Stefanovic’s batch time record indicates 31.89 hours worked,
and her pay stub indicates payment for 32 hours). This argument does not alter the
Court’s analysis, because it does not support an inference that a reasonable jury could
find that the Wage Statements accurately recorded the number of hours actually worked
and that Plaintiffs were paid according to that number of hours. See Campos v. BKUK,
No. 18-CV-4036-JGK-KHP, 2021 WL 3540243, at *10 (S.D.N.Y. Aug. 10, 2021)
(awarding damages at summary judgment for wage statement violations where, “when
paystubs were received, they were not accurate insofar as they did not accurately reflect
the hours actually worked”), report and recommendation adopted, 2021 WL 3863198
(S.D.N.Y. Aug. 30, 2021); see also Pierre v. Hajar, No. 15-CV-02772-ENV-RLM, 2018
WL 2393158, at *6 (E.D.N.Y. Mar. 28, 2018) (noting that, in interpreting section 195(3),
“[c]ourts in this district have held that the furnishing of accurate information is the
legislative objective”) (citation omitted).

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generally disentitled to recover his compensation, whether commissions or salary.” Phansalkar
v. Andersen Weinroth & Co., 344 F.3d 184, 200 (2d Cir. 2003) (citation omitted). In New York,
courts “continue to apply two alternative standards for determining whether an employee’s
conduct warrants forfeiture under the faithless servant doctrine.” Carco Grp., Inc. v. Maconachy,
383 F. App’x 73, 76 (2d Cir. 2010). “The first standard requires [that] the misconduct and
unfaithfulness substantially violates the contract of service such that it permeates the employee’s
service in its most material and substantial part.” Doe v. Solera Capital LLC, 18-CV-1769-ER,
2019 WL 1437520 (Mar. 31, 2019), vacated on other grounds, 2020 WL 11027792 (S.D.N.Y.
Dec. 16, 2020) (internal quotation marks, alterations, and citations omitted). The second
standard is less exacting, requiring only “misconduct . . . that rises to the level of a breach of a
duty of loyalty or good faith.” Phansalkar, 344 F.3d at 202. Here, the Court need not attempt to
reconcile the two standards, as it finds that, under either standard, Plaintiffs are entitled to
summary judgment dismissing the Counterclaim.
Courts in this circuit have generally found that minor misconduct does not
constitute the type of “persistent pattern of disloyalty that courts have found necessary to bring
conduct within the confines of the [faithless servant] doctrine.” Doe, 2019 WL 1437520, at *10
(internal quotation marks omitted). “The duty of loyalty has been limited to cases where the
employee, acting as the agent of the employer, unfairly competes with his employer, diverts
business opportunities to himself or others to the financial detriment of the employer, or accepts
improper kickbacks.” Grewal v. Cuneo, No. 13-CV-6836-RA, 2016 WL 308803, at *7
(S.D.N.Y. Jan. 25, 2016) (quoting Farricker v. Penson Dev., Inc., No. 07-CV-11191-DAB, 2010
WL 845983, at *2 (S.D.N.Y. Mar. 4, 2010)) (internal quotation marks omitted); see also Doe,
2019 WL 1437520, at *10 (noting, while dismissing a faithless servant counterclaim stemming

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from improper use of a firm’s credit card totaling $224.20, that “the faithless servant doctrine
doesn’t apply on the facts of this case because Defendants have not cited, and the Court has not
found, a case where the doctrine was applied to the type of garden-variety, petty pilfering by an
employee as alleged here"); Torres v. Gristede’s Operating Corp., 628 F. Supp. 2d 447 (S.D.N.Y.
2008) (“Nor can it be, as Gristede’s apparently supposes, that every routine termination for
sexual harassment or credit card fraud necessarily raises faithless servant claims.”); cf. Salus
Capital Partners, LLC v. Moser, 289 F. Supp. 3d 468, 481 (S.D.N.Y. 2018) (confirming
arbitration award based on finding of faithless servant claim based upon “manipulation” of
“roughly $100,000” in invoices); Sansum v. Fioratti, 128 A.D.3d 420, 421 (App. Div. 1st 2015)
(granting summary judgment for employer against employee found to have embezzled $100,000
over a two year period).
Here, Plaintiff Mirkov admits to altering tips from customers approximately
twelve times over two years. (Defs. 56.1 St. ¶ 10.) Defendants do not allege a total dollar
amount stolen. However, while Mirkov’s misconduct is certainly improper, even considering
this misconduct in the light most favorable to the Defendants, the Court concludes that it is, on
the record before the Court, far more akin to the “petty pilfering” identified in Doe and Torres
than to the large-scale fraud considered in Moser or Sansum. Defendants argue that “it is of no
moment that Mirkov is a minimum wage employee because it is not a requirement for a claimant
in a faithless servant action to show that the employee against whom the claim is brought
attained a minimum income threshold.” (Defs. Reply at 2.) Defendants’ argument errs in
focusing on the income of the employee rather than the scope of the misconduct. Regardless of
the income or position of a given employee, “petty pilfering” of the type considered here has
repeatedly been found insufficient to support a faithless servant claim.

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For these reasons, the Court grants Plaintiffs’ motion for summary judgment as to
the Counterclaim. Defendants’ summary judgment motion as to the Counterclaim is denied. 6
CONCLUSION
For the foregoing reasons, Plaintiff’s motion for summary judgment on Counts
Five, Seven and Eight against the Restaurant only, and as to the Counterclaim, is granted.
Defendants’ motion for summary judgment is granted as to all claims arising under the FLSA
prior to March 7, 2015, and is otherwise denied.
This Memorandum Opinion and Order resolves docket entry nos. 49 and 55. This
case remains referred to Magistrate Judge Willis for general pretrial management. The parties
must promptly contact Judge Willis’ chambers to request a settlement conference and to address
what, if any, pretrial matters remain outstanding if settlement of all outstanding issues cannot be
achieved. The final pretrial conference is adjourned to December 9, 2022, at 9:30 a.m. The
parties shall confer and make submissions in advance of the conference in accordance with the
Pretrial Scheduling Order (docket entry no. 43).
SO ORDERED.

Dated: New York, New York
August 31, 2022
__/s/ Laura Taylor Swain ______
LAURA TAYLOR SWAIN
Chief United States District Judge

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As the Court has granted Plaintiffs’ motion for summary judgment regarding the
Counterclaim, the Court declines to address Plaintiffs’ arguments as to whether the
faithless servant doctrine is preempted by the FLSA.

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