Chickie's & Pete's expensive lesson
Other restaurant owners have 8.5 million new reasons to get clear on wage rules.
THE OIL REALLY hit the pan for Pete Ciarrocchi, didn't it?
Last Thursday, the U.S. Department of Labor announced that the Chickie's & Pete's sports-bar chain, which Ciarrocchi owns, would pay $6.8 million in back wages and damages to 1,159 employees for (among other doozies) taking a portion of their tips. On the same day, Ciarrocchi announced that he'd also pay $1.68 million to some current and former employees to settle a federal lawsuit alleging similar wrongdoings.
That's, like, 4 trillion crab fries.
Department of Labor Secretary Tom Perez described the Chickie's & Pete's case as "particularly egregious." The restaurant-industry practices that underpinned it, Perez said, left servers "vulnerable either to unscrupulousness or sloppiness on the part of their employers."
It's hard to decide which is more damaging to the company's "we're-just-regular-folks" image: That Chickie's & Pete's took money from the regular folks who keep its 16 outlets humming, or that the company actually has $8.5 mil to spare.
Ciarrocchi's spokesman, Kevin Feeley, wanted to "bring some balance" to the story when I called to ask, "What the hell . . . ?"
Perez's scathing statement, Feeley said, unjustly "vilified" Ciarrocchi, who made an "honest mistake" when he "misinterpreted" labor laws that are so befuddling, restaurant owners unknowingly violate them all the time.
That's hard to swallow. Ciarrocchi is a canny businessman who built his empire by paying attention to details. Lest we forget - this is the man who trademarked the term "crab fries" and has sued restaurants that try to use it.
"From the very beginning, when Pete realized what happened, he cooperated with the Department of Labor," Feeley said. "He acknowledged that he made a mistake and that there would be consequences for it. He wanted very much to make things right for his employees, and his negotiations with the department were always positive. He's not a victim, but to call his case 'egregious' is unfair. It doesn't at all characterize the tenor of their discussions."
But Perez wasn't referring to the tenor of the discussions. He was referring to what all those genial discussions were about.
Still, Chickie's & Pete's case, indeed, warrants exploration beyond the headlines. Have some mussels while I break it down for you.
In Pennsylvania, minimum wage is $7.25 per hour. But a restaurant owner is allowed to reduce that hourly rate to $2.83 - called a "tip wage." The assumption is that tips will bring the hourly pay up to the $7.25 minimum wage.
Also in Pennsylvania, the law allows restaurants to require their tip-wage servers to share their tips with front-of-house employees (like bussers and bartenders). Importantly, the law forbids management to dip into those tips themselves.
At Chickie's & Pete's, Ciarrocchi helped himself to the pool, anyway, big time. Of the 2 percent to 4 percent of the tips that tip-wage workers were forced to contribute to the pool, Ciarrocchi kept 60 percent of it, for which he was rightfully slammed.
Feeley says Ciarrocchi was confused because a different law does, indeed, allow management to take a cut of the tips - but only if employees are already receiving the higher $7.25 per hour (which wasn't the case at Chickie's & Pete's).
In Ciarrocchi's defense, other restaurant owners get the laws wrong, too, says New York attorney Louis Pechman, who runs a website called WaiterPay.com. He has filed more than 100 cases nationwide against employers for messing with employee compensation. "The laws are complex," says Pechman, who represented Ciarrocchi's servers in the settlements, which he calls "a home run for Chickie's & Pete's workers."
The home run is generating "a lot of buzz" among restaurant workers, says Fabricio Rodriguez, lead coordinator of the Restaurant Opportunities Center, a Philadelphia-based worker-advocacy group that has added 26 chapters since its founding just three years ago. "Workers are learning about other laws their bosses don't follow."
Like this one: If a tip-wage worker doesn't get enough tips in a week to bring his hourly pay up to the $7.25 minimum wage, employers are required by law to make up the difference.
"Hardly any server I've spoken with has had that happen," Rodriguez says.
If their bosses are misinterpreting the laws, I can think of 8.5 million reasons for them to get with the program.
On Twitter: @RonniePhilly