Tip & Fight
Famed Baltimore restaurant Sip & Bite on the hook for unfair labor practices
Published: August 21, 2013
Few Baltimore eateries are as revered as the Sip & Bite Restaurant, owned for three generations by the Vasiliades family and a Canton mainstay since 1948.
While a segment on the Food Network last year and regular Best of Baltimore awards from City Paper over the years have helped cement Sip & Bite’s place in Baltimore’s culinary constellation, perhaps the best measure of its cultural significance came in 2002, when the oddball syndicated comic strip Zippy the Pinhead published “Poetry in Formstone,” showing Zippy entering the restaurant while reciting an amalgam of Edgar Allan Poe and Robert Frost: “Once upon a midnight dreary . . . as I pondered weak & weary . . . I made th’ switch to Sip & Bite!! And that has made all th’ difference.”
Zippy’s happy ode, though, would ring false to some of Sip & Bite’s former servers, who’ve filed lawsuits saying they worked long hours for years with no wages, only tips—and their claims that this arrangement was illegal under the federal Fair Labor Standards Act (FLSA), which requires that minimum wage be paid, have gained traction in court.
Former Sip & Bite server Patricia Brager, for instance, in a lawsuit filed in June 2012, said she was “paid nothing” by Sip & Bite, where she was a waitress from April 2009 to October 2011. “She was allowed to retain only her cash tips left by customers,” the lawsuit continued—with emphasis in the original, to stress that she didn’t receive tips on credit-card transactions—and “if there were customer walkouts and cash register shortages, she was forced to repay” losses “out of her cash tips.”
According to a U.S. Department of Labor fact-sheet about the FLSA as it pertains to restaurant workers, an employer that grosses more than $500,000 annually “must not pay less than $2.13 an hour in direct wages” to its servers, “and make sure that the amount of tips received is enough to meet the remainder of the minimum wage,” which is $7.25 an hour. Under Maryland’s Wage and Hour Law, the hourly wage for tipped restaurant servers must be no less than $3.63. Deductions for cash shortages or customer walk-outs, meanwhile, are also illegal if they reduce the tipped employee’s wages to below the minimum wage.
In the Brager case, Sip & Bite claimed it is exempt from the FLSA because it generates less than $500,000 annually in gross sales. Last November, though, the restaurant agreed to settle Brager’s claims with a payment of $47,500, plus another $12,750 to her attorney, Howard Hoffman.
A few months later, two sisters—Stephanie and Ashley Selby, represented by Hoffman and another attorney, Bradford Warbasse—filed another FLSA lawsuit against Sip & Bite, saying they worked there for years, earning only for tips—“except for a single payment of $59.00” to Stephanie Selby, the lawsuit states.
The Selbys and their attorneys also alleged that Sip & Bite’s gross annual sales far exceed the $500,000 FLSA threshold. In making the argument, they pointed out that the restaurant “uses an old-fashioned manual cash register” and that “most of the checks were paid with cash,” but that they’d seen “end of shift reports” listing credit-card sales for the overnight shifts that totaled “between $2,000.00 and $6,000.00 per shift, depending on how busy the restaurant was.” Thus, they estimated annual gross sales—on overnight-shift credit-card sales alone—would be on the order of $1.5 million.
On top of that, though, the Selby sisters claimed “the Sip & Bite had other sources of cash income—they received cash from one or more poker machine(s) in the restaurant,” the lawsuit states, adding that “customers deposited money into a machine, and if they won, they would be paid in cash from the cash register.”
Sip & Bite’s attorney, Kevin McCormick, did not reply to City Paper’s request for comment on the case, but, in his court filings asking that it be dismissed, he pointed out that three years of the restaurant’s recent tax returns were submitted to the court as evidence that “the restaurant does not have an annual sales volume of at least $500,000.” In the face of that evidence, McCormick wrote, the Selbys and their attorneys “simply accuse Defendants of having committed tax fraud, and urge that the tax records should be ignored.”
After an Aug. 9 hearing on the dismissal motion before U.S. District Judge Marvin Garbis, though, the Selby’s lawsuit survived—and is now scheduled to be litigated further, including with depositions and discovery regarding Sip & Bite’s revenues. The reason Garbis denied the dismissal: At the hearing the defendants explained “that the corporate accountant had just advised them that the gross revenue of Sip & Bite . . . was in excess of $500,000” in 2012, so the FLSA rules would apply for that year, according to court documents.
Asked to comment on Garbis’ order and the case in general, Hoffman demurred, saying, “given the very nature of this dispute and the frank difficulties encountered and anticipated, we must decline a statement.”
Sip & Bite is not the only restaurant to have felt the burn of recent FLSA litigation brought by Hoffman and Warbasse. In March, they won a class-action settlement on behalf of employees of the Green Turtle chain of restaurants, in which 52 plaintiffs are to receive $240,000. And after a $25,000 settlement in March with the Pratt Street Ale House on behalf of one of its ex-employees, Hoffman and Warbasse are also seeking class-action status with another FLSA suit brought against the popular restaurant near Camden Yards.
“A lot of Johnny-come-lately lawyers, including personal-injury TV lawyers, are running TV ads for overtime cases now,” Hoffman says, “but Brad Warbasse and I are recognized in this field and have been fighting the good fight for victims of wage theft since back in the day.”
It’s fair to say that success breeds success for FLSA plaintiffs—as the Sip & Bite is starting to learn.
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