BUFFALO, NY – A decision made by the City of Buffalo, some believe, takes money away from some workers at a waterfront restaurant, which has prompted some former workers of that eatery to sue their former employer.
Buffalo's living wage ordinance applies whenever the city makes a contract for services in which it pays or receives more than $50,000 per year with an employer who employs more than ten people.
The law is therefore applicable to William K's (DBA Mollyworld), which shares a portion of its profits with the city under the lease that allowed it to open in late 2015, after the city provided nearly one million dollars to renovate the Hatch Restaurant into an indoor sit-down restaurant at Erie Basin Marina.
However, in late 2016, about a year after it opened, its owners were called before the Living Wage Commission, which discovered that instead of paying its wait staff the current living wage of $13.06, workers were being paid $7.50 instead.
According to a report filed by the commission, owner Molly Koessler explained that those workers got tips, and thought they could be factored into their overall wage.
The Commission admonished Koessler that there was no such provision under the law, as it then stood, to allow for that practice.
Specifically, the Commission found that:
1.) Tips are not wages.
2.) There was no provision in the city’s living wage law that distinguished tipped employees from other employees or to allow for a lower wage rate for tipped employees.
3.) Hence, Mollyworld must pay all its employees a living wage, which, for employees who do not receive health insurance from Mollyworld, is $13.06 per hour in 2016.
“She then took the initiative to get the law changed,” said Genevieve Rados, of the Community Justice Clinic at the University at Buffalo School of Law, which is representing the six former workers in their lawsuit which also seeks back wages.
Rados alleges that Koessler sought assistance from City Hall to obtain a carve-out to the Living Wage Law, which would allow tipped workers to be paid less, and have their tips count toward their salary
"We have documentation of Molly Koessler's attorney writing to City Hall asking the city to change the law. And then that summer in 2017, the law in fact did change," said Rados, noting that the subsequent change then allowed the restaurant to legally do what it had been told previously it could not. “Not all of us have the ability to call up City Hall and get laws changed,” Rados said.
Common Council Changed The Law
“It was not our intent to create a law to benefit the restaurant,” said Niagara District Council Member David Rivera, who sponsored the resolution which lead to the change. “We were under the impression we were protecting the workers, because the law would require that they receive a living by making sure that, even during periods where their hourly wages and tips did not amount to $13.06, they would be ensured that amount.”
However, by changing the law, the workers went from being entitled to $13.06 per hour plus tips, to $7.50 plus tips.
“It might appear to some that we were working to help the restaurant, but I don’t think we even met with the owners to go over their concerns... I don’t even know if it originated with the restaurant owners or not," said Rivera, who also conceded that lawmakers were unaware of the prior findings of the Living Wage Commission.
“Having information that we didn't have at that point begs for some questions and some answers… I don’t know if we dropped the ball, but we're going to go back and ask some questions and hopefully get some information that will clear this up," said Rivera.
A Special Case?
Despite its prior admonitions to the owners of the restaurant, the Living Wage Commission did not oppose the change in the law, according to its attorney Sam Magavern.
“The Koesslers, like anyone else, are free to petition for a change in law,” Magavern told WGRZ-TV.
The change as approved by the Common Council, and which now allows an employer subject to the wage ordinance to take a tip credit toward its compliance with the law (if a service employee receives enough tips to ensure tips plus total wages equals or exceeds the living wage) was crafted by the city’s law department, part of the administration of Mayor Byron Brown.
While many businesses entering into agreements with the city have been subject to its Living Wage Law throughout its nearly 20 year existence, City Hall sources believe William K’s represents the first one, which has several employees whose overall wages are tied heavily to tips.
"The Living Wage Commission thought that the provision regarding tipped workers was a reasonable solution to the issue, which weighed heavily on the City's decision to move forward,” said Brown’s spokesperson Michael DeGeorge in a statement. “No special treatment of any kind was given."