Manhattan eatery forks over cash for wage theft

March 1, 2012

By Daniel Massey / Crain's New York Business

Veranda, a Greenwich Village restaurant and lounge that underpaid 25 workers and fired two employees who questioned pay practices, agreed to fork over $200,000 to settle an investigation by the state attorney general's office.

The settlement, announced Thursday by Attorney General Eric Schneiderman, includes $50,000 in restitution for damages, lost wages and penalties for illegally terminating the two workers. His office said $20,000 of the amount was made possible by a wage-theft prevention law that took effect in April.

“By scaring employees into silence, employer retaliation undermines basic labor law protections,” Mr. Schneiderman said. “Now Veranda will be held accountable for violating the laws that protect our state's most vulnerable workers.”

The Wage Theft Prevention Act created remedies for workers who experience retaliation, including liquidated damages of up to $10,000 per incident. Some business groups have complained that the act places burdens on companies that follow the law. The Veranda case is the first large-scale recovery of liquidated damages that the attorney general's office has achieved using the act.

“This is an instance where the Wage Theft Prevention Act provided new remedies that really helped us protect workers,” said Terri Gerstein, chief of the attorney general's labor bureau.

Mr. Schneiderman's investigation revealed that Veranda failed to pay many employees the minimum wage of $7.25 per hour and time-and-a-half for overtime and that the restaurant illegally distributed tips to the manager. It also found that Veranda fired two employees shortly after they sought help from community group Make the Road New York about the company shortchanging them.

“Veranda tried to cover its tracks by firing the workers who had the courage to complain,” said Deborah Axt, co-executive director of Make the Road. “This is exactly the kind of law-breaking that Make the Road was working to combat when we helped to pass the Wage Theft Prevention Act.”

The settlement bars Veranda, located at 130 Seventh Ave., from retaliating against employees who cooperated with the investigation or employees who won back wages. Mr. Schneiderman's office will monitor Veranda's employment practices for the next two years.

George Pauta, an attorney for Veranda, declined to comment on the settlement. The restaurant's website says Veranda was created by partners from the eastern Mediterranean and features “traditional Greek and Egyptian dishes with a modern twist.”

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