The U.S. Department of Labor is auditing Alison Dance, owner of Cyprus Cafe, for possible violations of state and federal labor laws.
Three former employees say they have each independently filed a complaint against Dance for various labor violations, including allegations of manually adjusting employees’ timecards, refusing to pay overtime and violating state minimum-wage law by inadequately paying Cyprus waiters while using some percentage of their tips to compensate kitchen staff. The complaints were filed with the Colorado Department of Labor and Employment and the U.S. Department of Labor in the past year.
The U.S. Department of Labor’s Deputy Regional Director Juan Rodriguez confirmed the investigation. He would not comment further.
“We never confirm or deny whether somebody made a complaint, and that’s just policy to protect the innocent,” he said.
In an interview with The Durango Herald, Dance characterized the audit as “random.”
“No one ever wants to be audited,” Dance said. “It’s like getting pulled over by the cops. ... ‘Was I speeding?’ But I don’t have anything to be worried about. I’m honest, and my books are my books.”
Dance and four former employees said a Department of Labor investigator was in Durango a few weeks ago interviewing Dance, Cyprus staff and reviewing the restaurant’s books. The DOL investigator told Dance and the former employees that the agency expects to finish a report within weeks, at which point its findings will become public. The former employees spoke on condition of anonymity because they are concerned about their future employability in Durango’s restaurant business.
Dance said she expects to be fined for violating minimum-wage laws. She characterized the violations as inadvertent mistakes.
Colorado’s standard minimum wage in 2013 was $7.78 an hour, but “tipped employees” could be paid a lesser minimum wage of $4.76 an hour.
Dance paid Cyprus servers the lesser minimum wage for “tipped employees.”
But under a Colorado law known as Wage Order 30, establishments like Cyprus must pay waiters the state’s standard minimum wage – currently $8 an hour – if their tips are shared among the restaurant’s nontipped employees, as they were at Cyprus.
Dance said despite many decades in the restaurant business, she had no idea her restaurant’s policy of paying servers the lesser minimum wage while compensating Cyprus’ kitchen staff with a portion of servers’ pooled tips was illegal.
“It’s like any law,” Dance said. “It’s not an excuse not to know. So even though I feel like it’s unfair – it goes on, and it’s part of the restaurant culture ... It happens in almost every restaurant.”
Peter Meersman, chief executive officer of the Colorado Restaurant Association, said rules pertaining to tip pooling and minimum wage can be confusing because local, state and federal laws sometimes conflict as to precisely which groups of employees can legally be included in a tip pool.
“I’m not trying to defend any activities,” Meersman said. “But there is confusion about tip pooling. And this is an area where we’re hearing about more and more investigations being conducted, not just in Durango, but in other parts of the state, as well. Most of these investigations are driven by employee complaints.”
Jen Rylko, manager at Guido’s Favorite Foods, said she’s been in the restaurant business for 15 years. She said she has never worked at a restaurant that forced servers to tip out the kitchen.
“Once in a while, you do it, and throw them a few bucks. But that’s occasional. And at corporate restaurants, that would be unheard of,” she said.
Dance said she likely will face a large fine for this offense, but she did not know the amount. In such cases, restaurateurs must pay up to two years of back wages to every affected server at a rate of double the correct wage in place at the time of the violations. It could be about $15 for every hour that affected servers worked.
“I had no idea it was illegal. I’m like, ‘Crap!’ And (the investigator) is like ‘Oh, violation!’ So I got caught.” Dance said. “And not even caught, because I didn’t know. And it’s not a little bit of money that she’s talking about I’m responsible for.”
Dance said her situation is stressful.
“Restaurants are not profit centers,” she said.
David McClelland, who worked as Cyprus’ lead line cook for nearly two years until he quit in April, said the minimum-wage violations that Dance acknowledges are the tip of the legal iceberg.
He said he first contacted the U.S. Department of Labor about Cyprus Cafe in December 2013.
He said Dance for years had systematically skimmed employees’ hours by entering the restaurant’s point-of-sales system and manually adjusting the hours that employees reported working.
He said sometimes the skimming was conservative, with quarters of an hour shaved off employees’ time cards.
He said at other points more time was shaved. When servers forgot to clock out because they were working late, Dance would fill out the time card on their behalf, but McClelland said Dance would input the restaurant’s closing time – 9 p.m. – rather than the actual time that employees left the restaurant.
Other times, McClelland said, Dance’s adjustments were more brazen.
“Once I saw an entire day deleted from a Saturday shift, just gone,” he said.
Dance refused to listen to or respond specifically to McClelland’s allegations.
“I know exactly what you’re talking about,” she said.
Dance characterized McClelland as “disgruntled.” She said McClelland had never approached her personally about any of his allegations.
“I’ve been a fricking business owner and an employer in this town for 18 years,” Dance said. “Most (employees) come back to me over and over again. A few bad apples who feel wronged by me have decided – actually, just one – has decided to make a big, big storm out of something with no basis. It’s just hearsay.”
In an earlier interview, Dance said she discussed her bookkeeping with the DOL investigator.
“There were violations in that because I don’t keep all the little pieces of paper I should keep. I never thought to. Because they’re just little scraps of paper – memos from staff,” she said.
McClelland said once he became suspicious that Dance was changing his time card, he made a concerted effort to keep his pay stubs – a paper record of the exact times he checked in and out that all servers received at the end of the work week – and then compare them to the hours listed on his paycheck.
He said he was 10 hours short several times during the course of the two years that he worked there. He said he started confronting Dance about the discrepancy last fall. He said she became “overly argumentative and very defensive.”
McClelland said he again confronted her in April with a 10-hour discrepancy between his final paycheck – for 53 hours – and the 63 hours that the paper pay stubs he had collected documented him working.
He said the exchange was angry, and Dance told him he had been paid for the hours the computer said he should be paid.
McClelland said he didn’t know how many hours he worked without the pay he was entitled to. Four other former employees of Cyprus Cafe confirmed McClelland’s account of Dance altering employees’ timecards. Two of the four said they, too, experienced the timecard manipulation. The other two said they saw the results of the manipulation of other employees’ timecards.
McClelland also said that Dance violated the law by refusing to pay employees overtime. He said Dance was open with staff about this policy, and would tell employees that if they wanted to work extra hours, they could, but that they would be paid their usual hourly wage, not time-and-a-half, as state law requires.
Though McClelland said Dance failed to pay overtime to all employees, he said it likely hurt some more than others. Two former Cyprus employees said dishwashers at the restaurant, who primarily are Hispanic, sometimes worked seven days a week in the summer but did not punch in every day, instead taking payments in cash.
Asked why he was going public with accusations against Dance, McClelland said, “I’ve never been a stand-up person, or one to cause a ruckus, but I feel comfortable and confident in what I’m doing. What she’s been doing isn’t moral.”
cmcallister@durangoherald.com
