Ex-employees of Sagano Japanese Bistro and Steakhouse one step closer to $487k settlement

Four former Brighton restaurant employees, as well as an undetermined number of additional workers, are one step closer to a nearly $500,000 settlement with Sagano Japanese Bistro and Steakhouse in a lawsuit over an illegal tip pooling system the company used.

The restaurant chain now has locations in Fenton, Flint, Warren and Clarkston. Its Brighton location closed on Jan. 23, three days after the motion for settlement was filed in federal court.

Crystal Martin, Jessica Jones, Suzette Reynolds and Renee Van Hook worked at the Brighton location prior to its closing, according to a 2017 complaint. Martin also worked at the Flint location.

The former employees filed a class action lawsuit on behalf of workers at all locations of Sagano Japanese Bistro and Steakhouse franchise in 2017 alleging the restaurants violated the Fair Labor Standard Act (FLSA) and the Michigan Workforce Opportunity Wage Act (MWOWA).

"Defendants engage in illegal use of a tip credit and tip-pooling depriving plaintiffs and similarly situated employees, known or unknown, of fair compensation for their labor," Keith Flynn, one of the women's attorneys wrote in the complaint.

The former employees are asking U.S. District Court Judge Judith E. Levy to approve the settlement agreement, providing a lump sum payment of $487,500.

A hearing is scheduled to take place in Ann Arbor on March 31 to discuss the motion.

The proposed settlement states $179,000 would go to attorney fees and costs. Each of the named plaintiffs would receive $20,000. The remainder will be split among the other class action members who respond to settlement offers, according to the motion. Any money not claimed by other members of the class would be returned back to and split amongst the named plaintiffs.

The final number of participants in the settlement will be determined by who responds to the settlement offer.

Neither parties' attorney returned a call for comment.

This proposal is a significant decrease from the original $1 million in damages originally requested, but the parties are worried about additional delays due to COVID-19, according to the motion.

"At the time of filing this motion, more than four years have passed since this lawsuit was filed," Flynn wrote in a motion to the judge earlier this month. "A trial is not currently scheduled, and, given the realities that the judicial system is dealing with over the COVID-19 global pandemic, it is unlikely that this matter will be resolved any time soon barring voluntary resolution.

The four plaintiffs worked at the Brighton location for varying periods of time between 2014 and 2021.

At that location, management used a tip credit to pay their servers less than the minimum hourly wage, according to the original complaint.

The restaurant failed to comply with state and federal guidelines "by not providing notice of the tip credit to their employees and engaging in tip-pooling practices that invalidate the use of the tip credit," Flynn wrote.

Because of the system, the servers were not paid at least minimum wage.

"Defendants have a policy at each of their four locations to share the tips of their servers. Three percent of the tips of each server goes to the busboys. Defendants calculate 5 percent of each server’s total alcohol sales and distribute that amount to the bartenders. Half of the remainder goes to the chefs. At certain locations, servers have even more of their tip deducted based on seniority," Flynn wrote.

The complaint alleged that the franchise violated FLSA and MWOWA because it did not tell employees it used a tip credit, failed to pay the difference when tips did not allow workers to make minimum wage, and gave tips to employees who do not customarily or regularly receive tips, such as managers.

Additionally, more than half of servers’ tips were contributed to the pool, Flynn wrote.

The former employees informed the franchise that their policies violated guidelines, the lawsuit said, but none of the policies were altered.

This article originally appeared on Livingston Daily: Ex-employees of Sagano restaurant one step closer to $487k settlement