Buffalo Chophouse paid $50,398 to NYS after investigation found employees were shorted wages, tips

Posted at 9:21 PM, May 08, 2019

BUFFALO, N.Y. (WKBW) — The Buffalo Chophouse paid $50,397.79 to the New York State Department of Labor after an investigation found that 149 employees at the high-end restaurant were shortchanged due to tip appropriation, improper bookkeeping, and/ or neglect to increase minimum wage.

The Department’s sweeping investigation analyzed credit card reports, employees’ nightly server reports, and their hourly wages from 2014 through January 2017. Documents obtained by 7 Eyewitness News through the Freedom of Information Law show that the Chophouse, owned by influential hotel and restaurant owner Mark Croce, unlawfully kept an excessive percentage of charged tips earned by wait staff.

It all started with a complaint to the Department in 2016 from former Chophouse server Rodney Walker. Shortly after he started working at the restaurant, he noticed that the Chophouse was taking five per cent of the tips he made from customers who paid by credit card. He knew that the “swipe charge” - a compensation for credit card fees - should have been less than five per cent.

“I brought it up to the in-house management and they said, pretty much, that’s just the way it is,” Walker told 7 Eyewitness News.

Walker took his complaint to the Department, which set off a two-year investigation into the Chophouse and its parent company Rhino Room, Inc.

New York State labor law allows an employer to make their servers pay only the “swipe charge”: transaction fees that process the tip. But the Department calculated that between 2014-2016, the Chophouse swipe charge should have only been between 2.4%-3.1% - considerably lower than the five per cent employees were on the hook for.

“The employee/servers are not liable for any other credit card fees or assessments. This includes the cost of the credit card terminal, fees for phone lines, surcharges or any similar added fee or charge,” senior labor standards investigator James Donohue wrote to a Chophouse attorney in July 2017.

In written letters to Donohue, the attorney representing the Chophouse disagreed with the Department’s estimation of what was an appropriate fee percentage. However, because the restaurant did not provide the Department with specifics to validate its repudiation, the Department concluded that workers were owed $38,182 in appropriated tips including liquidated damages.

The Department’s investigation also found that employees’ work hours were rounded down to the nearest hour, quarter or half hour. In November 2017, Donohue notified the restaurant’s attorney that during an audit of 158 paychecks issued during three random weeks, only three employees were accurately paid to reflect the hours they worked. In total, wages due to employees totaled $11,342 including liquidated damages.

Finally, the Department noted that some employees did not have their hourly rate raised in 2017 when New York State increased minimum wage for service workers. As a result, $872.94 was owed to employees.

In total, Croce owed $50,397.79. On August 3, 2018, the restaurant issued a check to the NYS Commissioner of Labor.

Documents show that 149 people were owed between $10 and $3,344, which would be distributed to them from the Chophouse’s lump sum payment.

When reached by phone, Croce claimed to not know particulars of the investigation.

“I don’t run the business day to day,” Croce told the I-Team before rushing off the phone. He did not return a subsequent call seeking comment.

In late summer 2018, dozens of Croce’s former employees received checks in the mail from the Department of Labor, with an explanation, “It was determined that the wages you were paid were below those required by the labor law.

This payment is the difference between what you were paid and what you were required to be paid.”

However, 7 Eyewitness News has spoken with two former employees named in the investigation who say they never received checks in the mail and did not know of this state investigation until reached by I-Team.

"At first actually I was really surprised," former food runner Isaac Torres said.

Torres is now in contact with the Labor Department to get the money he deserves.

If you believe you are owed money by the Buffalo Chophouse or another Rhino Room establishment, contact news@wkbw.com.