Court Rules AALDEF Can Seek Over $100,000 for Unpaid Workers from "Parent" Corporation of Failed Chinatown Restaurant
Friday, Mar 23, 2012
The District Court of the Southern District of New York ordered TYT East Corp., owner of the failed Jin Hua Restaurant, to pay unpaid wages and overtime to Jin Hua's former staff of Asian immigrant workers. The Asian American Legal Defense and Education Fund (AALDEF), together with pro bono counsel Davis Polk & Wardwell LLP, is representing 22 members of Jin Hua's former staff, including waiters, waitresses, bussers, and dim sum workers, who had been denied minimum wage, overtime, and in some cases, their entire paycheck. AALDEF will be seeking over $100,000 in damages.
During the course of their employment at Jin Hua, the workers' wages fell below the state and federal legal minimum wage levels. TYT failed to pay the workers for several weeks, and then abruptly closed the restaurant and locked the workers out.
"In the current economic recession, it is not unusual for owners to close unprofitable restaurants. But that gives them no excuse to fail to pay their low-wage employees, who are often struggling far more than the owners," said Ken Kimerling, Legal Director at AALDEF.
In 2010, AALDEF filed a complaint on behalf of the workers to seek their unpaid wages and overtime pay. TYT responded to the lawsuit by saying it was not responsible, despite the fact that it had set up Jin Hua and hired the CEO to run the restaurant. TYT said that the workers could only seek money from the closed restaurant itself -- which had no money. The workers claimed that TYT was responsible for the restaurant and the corporation that ran it.
In an opinion on March 21, the court agreed with AALDEF and found that TYT and Jin Hua were operated as a single company. Its decision noted how Jin Hua neither established a separate board of directors nor held independent shareholder meetings. Moreover, TYT's own shareholders and officers managed different aspects of Jin Hua's business, and even paid the workers themselves in cash initially. The court held that both TYT and Jin Hua were jointly liable.
"Jin Hua was a separate corporation in name only," said Kimerling. "We're pleased the court recognized that TYT could not avoid paying workers who were in reality its own employees."
Image: Paul Lowry/Flickr