Suits: eateries serve up pay abuses

By Michelle Celarier
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Restaurant owners, you’ve been served.

From McDonald’s to Mario Batali, restaurant owners have forked over big bucks in recent years to settle lawsuits brought by workers who claimed they were illegally underpaid.

Darden Restaurants, which owns Olive Garden, Red Lobster and the Capital Grille eateries in New York and across the country, is the latest to be hit with a lawsuit alleging the type of pay abuses that critics say are rife in the industry.

Darden workers claim that they were forced to work before clocking in, received less than minimum wage without getting the commensurate tip income, and were not paid overtime when forced to work more than 40 hours a week.

“This kind of practice didn’t start with Darden, and it’s not new,” said David Lichter, the lawyer representing the restaurant workers in a suit filed last week in Florida seeking collective action status. “We brought the lawsuit to force them to change,”

With $8 billion in revenue and $477 million in annual profit, Darden claims to be the largest full-service restaurant group in the US with about 169,000 employees. Restaurant labor costs eat up about about 31 percent of revenue.

Lichter says the company could be forced to pay millions of dollars if the workers win, depending on how many get involved in the suit. So far, about 300 employees from around the country have contacted his firm.

Last year, Darden was sanctioned twice by the Labor Department and forced to pay more than $100,000 in back wages and penalties in cases involving 249 workers. Two other suits, filed separately in Chicago and New York, are also pending.

Right now analysts think the suit is unlikely to have a material impact on Darden.

“If there is a risk here, I think it will be in a one-time cash payment versus some sort of ongoing labor issue,” said Stephens analyst Will Slabaugh.

But other cases have been piling up. On Aug. 30, workers won a similar suit against Applebee’s, though penalties haven’t been disclosed. Mario Batali in May paid $5.2 million to settle a suit involving employees at his New York restaurants who claimed that he skimmed tips owed them. And an earlier 2008 class-action claim against McDonald’s over pay issues has also been settled for an undisclosed amount.

A Darden spokesman said the allegations are “baseless and fly in the face of our values and how we operate our business.”