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Buffalo lowers restaurant workers' living wage at urging of William K's owner

In mid-December, during a radio interview, Gov. Andrew M. Cuomo declared his opposition to New York's lower minimum wage for restaurant workers and said it exploits immigrants and women.

A month later, in his State of the State address, Cuomo followed up by ordering public hearings into the so-called "tip credit" and suggested again it was an issue of "fairness and decency."

But while Cuomo was doing that, lawmakers at Buffalo City Hall were taking a far different path.

At the urging of a waterfront restaurant owner, the Common Council voted to create a new, lower minimum wage for restaurant workers who were previously entitled to the city's much higher living wage.

Even more important, perhaps, the lower hourly wage – it dropped from $13.06 to to $7.50– was adopted as some of those same workers sought the higher living wage from their employer, William K's restaurant, which contracts with the city.

Six of those workers are now suing the restaurant and its owners, Molly and William Koessler, in Buffalo federal court.

Lawsuit accuses William K's restaurant of wage violations

"I naively sat around and waited for her to make it right," said Katie Lane, a former server at William K's. "I also thought, 'What can I do?' "

Lane and five other workers are suing the Koesslers in an effort to collect $75,000 in back pay they believe is owed to them. The workers claim in their civil suit that, as a contractor for the city, William K's was required to pay Buffalo's living wage, but never did.

"I wasn't even making as much as the kid scooping ice cream next door," said Chris Keroack, a former server at the Erie Basin Marina restaurant near The Hatch.

Keroack and Lane said they knew nothing about the higher minimum wage until the city's Living Wage Commission alerted them to discrepancies in their pay.

The commission also informed the Koesslers of their obligation to pay the higher minimum wage of $13.06 an hour and reminded them that, unlike state law, there was no "tips" exemption in Buffalo's living wage ordinance.

William K's restaurant is located at the Erie Basin Marina. (Derek Gee/Buffalo News)

Workers say the restaurant didn't budge and, in December 2016, Molly Koessler appeared at a commission hearing and told members she had asked Mayor Byron W. Brown for "assistance."

Two weeks later, with the dispute still unsettled, the commission recommended the Koesslers make restitution to their workers. The panel also warned them that, if they failed to do so, it would recommend that City Hall end its contract with the restaurant.

The city's response was to change the law, not enforce it.

"The State of New York is moving to protect restaurant workers and the City of Buffalo is moving backward," said Nicole Hallett, director of the Community Justice Clinic at the University at Buffalo School of Law.

Hallett doesn't know why the Council did what it did, or if the Koesslers' played a role in influencing Brown or the Council. The mayor declined to comment.

"It wasn't intended to hurt anyone," said Niagara Council Member David Rivera. "The whole idea was to make sure everyone earned a wage they could live on."

Rivera, who sponsored the legislation that led to the lower minimum wage, expressed surprise when told about its impact on workers at William K's.

He also wasn't aware of Cuomo's proposal to do away with the tip credit – which allows a lower minimum wage for workers who earn tips – and he left the door open to adopting a similar change in Buffalo's ordinance.

Some restaurant workers say they'd lose money if Cuomo changes tip system

"There's no perfect law," he said. "If there's a better way to protect the workers, I'm open to it."

Despite its enforcement actions against William K's, the Living Wage Commission took no position on the creation of a new lower minimum wage for restaurant workers covered by the ordinance.

The commission, in a statement explaining its position, said the changes were viewed "as a reasonable way to resolve the question of how to handle tipped workers – something that the original drafters of the law were not likely to have considered, as it is an unusual situation for a living wage law to apply to tipped workers."

The civil suit filed by the six former workers at William K's is not the only federal court case against the Koesslers.

A class action suit by about 25 former banquet servers at Acqua and other Koessler restaurants claims the owners charged a 20 percent "service charge" on all banquet bills but did not share the money with servers.

In 2016, U.S. Magistrate Judge Leslie G. Foschio denied the Koesslers' motion to dismiss the case. In their motion, the Koesslers argued that the 20 percent fee was a service charge, not tip income for the servers.

Their lawyers also said in court papers, “Documentary evidence also shows that the named plaintiffs were paid an hourly wage well in excess of the amount required under New York minimum wage law.”

Lawyers for the Koesslers declined to comment further on the two suits and the Koesslers did not respond to requests for comment..

The latest William K's lawsuit came on the heels of Cuomo's announced opposition to continuing New York's tip credit.

In his State of the State, the governor referred to widespread abuses by tipping-related businesses such as restaurants and car washes. He also noted that 70 percent of all tipped workers are women and that African-American workers are tipped less than white workers.

Advocates for a change in the law also point to research showing that tipping practices lead to a higher rate of sexual harassment in the workplace.

"There's a lot of abuse in the restaurant business," said Hallett.

She said the UB clinic took on the William K's suit because of those well-documented abuses. She also thinks it raises questions about the city's priorities – workers or business – and how it spends taxpayers' money.

The lawsuit claims the city, which leases the site to the Koesslers, invested $900,000 in the waterfront venue over the years. In return for that investment and a contract to operate there, there was an expectation the owners would pay a living wage, not the lower minimum wage, Hallett said.

"By making it lower for servers, the city took a step in the wrong direction," said Genevieve Rados, a law student representing the workers.

Lane and Keroack said they never knew they were entitled to the higher living wage and that it's clear now that the Koesslers kept that from them.

"I've always been a waitress and always earned $7.50 an hour," said Lane. "I didn't question it."

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What do Buffalo's restaurant workers earn an hour?

Year                                                              2017         2018      2019      2020       2021     2022

Living Wage restaurant workers*          13.06          7.50      7 .50      7.85        8.35      TBA

General minimum wage workers           9.70        10.40      11.10      11.80      12.50     TBA

Non-tipped food service workers         10.75         11.75      12.75     13.75       14.50    15.00

Tipped food service workers                   7.50           7.50       7.50      7.85         8.35     TBA

 

* Work for businesses that contract with the city.

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