Department of Labor wins damages in sushi restaurant case, settlement conference to be held

By Sandra Lane | Jul 31, 2018

PHILADELPHIA – Senior Judge Michael Baylson of the U.S. District Court for the Eastern District of Pennsylvania granted the U.S. Department of Labor's request for liquidated damages in a case regarding violations of the Fair Labor Standards Act allegedly committed by some Pennsylvania Japanese restaurants, according to a July 12 opinion.

U.S. Secretary of Labor R. Alexander Acosta filed a lawsuit against sushi restaurants Osaka Japan Restaurant Inc. and JHSK Inc., which are located in Philadelphia and Lansdale, respectively, as well as Kwang Bum Kim, the owner of both restaurants, and his son, James Kim, who manages the Lansdale location.

The opinion said the Kims paid a varied hourly wage to servers, hosts, bussers, bartenders and dishwashers, but kitchen chefs, sushi chefs and hibachi chefs were paid a daily rate. Bartenders and some servers were paid $2.83 per hour, and bussers were paid $5 per hour. Daily-rate employees were paid $80 to $160 per day.

The court said the defendants' employees alleged that 15 percent was deducted from their credit card tips, although credit card processing fees were only 4 percent. The employees alleged that the defendants did not reimburse them for the credit card tip deductions and deposited the deductions into a corporate bank account. 

U.S. Secretary of Labor R. Alexander Acosta   DOL

In addition, the employees claimed they were not paid for overtime.

The opinion said Kwang said he thought the hourly wage was $2.83 per hour, not the required $7.25 per hour, and that he only learned what overtime was after the investigation began.

Other alleged violations listed in the opinion included not recording employees' names, home addresses, monthly pay, hours worked and tips received. The court said Osaka threw away its handwritten records of tips received after one to two months because it did not think they were needed. 

On March 28, the defendants requested a settlement conference in response to the department's motion for summary judgment.

In his ruling, Baylson said the restaurant owners and managers admitted in their depositions they had made no effort to consult with either an attorney or state or federal authorities about whether their tipping, overtime and recordkeeping practices complied with the Fair Labor Standards Act.

“Plaintiff is therefore entitled to summary judgment on the issue of liquidated damages, the precise amount of which remains to be determined," the opinion said.

Baylson also ordered that the requested settlement conference be scheduled.

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