When Miguel Romero Lara quit his job as a milkman in Tlaxcala, Mexico, nearly 30 years ago and said goodbye to his pregnant wife and two young children, he went in search of better paying work to support his family. He thought he had found just the right position when he was hired as a dishwasher at the Waverly Diner, an all-night Greenwich Village fixture that was a favorite of the likes of Philip Seymour Hoffman and Patti Smith.

But over the ensuing decades, says Romero, the Waverly’s owner, Nick Serafis, systematically ripped off him and his co-workers. According to a lawsuit filed in federal civil court and a March ruling by the National Labor Relations Board, employees, mostly Mexican immigrants, were required to pull long shifts for as little as $25 for 12 hours on the job. The complaints submitted to the U.S. District Court Southern District of New York allege that Serafis illegally underpaid eight employees by hundreds of thousands of dollars each, taking advantage of their ignorance of the law, all while racking up profits that, according to court records, in some years topped half a million dollars.

“I thought it was normal,” Romero says of his pay, which ranged from $3.88 to $5.70 per hour during his 25 years of employment at the Waverly.

It’s a problem that plagues thousands of restaurant workers in New York City. According to New York City Health Department inspection records and court records, among the 371 eateries across the city that identified themselves as diners or coffee shops, workers have sued nearly one-quarter of them — 92 establishments — for underpayment during the last decade. (In comparison, the close to 2,000 pizzerias in the city have been hit with 283 lawsuits, a significantly lower percentage.) Of those suits, only 12 have been ruled on or settled, according to court documents, evidence of the lengthy legal process than can often deter workers from filing suits in the first place.

While lawsuits continue to stack up, another factor is compounding the problem: few workers actually end up getting paid, as owners are too often able to evade judgments against them by declaring bankruptcy, signing over assets to friends and relatives, selling their business, and other shifty business tactics, avoiding payments on more than $125 million in violations and settlements, according to a 2015 study.

Among recent wage theft claims:

Fifteen former servers and busboys of the Galaxy Diner in Hell’s Kitchen say they were paid between $2.50 and $3.50 per hour, including overtime.

A former employee at the D&D Coffee Shop in Borough Park says she was paid $20 per 8½ -hour shift.

Three former workers of the Tick Tock Diner on 34th Street in Manhattan says the restaurant’s owner only paid them for 30 to 40 hours of work each week, though they actually put in more than 60 hours, in order to evade paying the regulated overtime rate.

Labor experts say the number of offenders is likely much higher, as abuses often go unreported, and illegal practices do not always result in lawsuits.

“We do find that the employers sometimes threaten the employee [to stop them] from calling other agencies on them,” says Favio Escudero, an investigator with the New York Department of Labor.

“Diners are able to still pay under minimum wage because most [immigrants] are intimidated and afraid,” says Romero.

***

At the Waverly, Romero began working 12-hour dishwashing shifts, six days a week, without holidays or sick days. According to court filings, Romero claims he was paid $280 per week, or $3.89 an hour, which Serafis handed him in cash at the end of each week. (The state minimum wage for 1991, Romero’s first full year as a Waverly employee, was $4.25 an hour, with mandatory time-and-a-half over 40 hours per week.) He says he never received a pay stub.

Three years later, Serafis made Romero a delivery worker — and made him pay $400 to purchase a bicycle, Romero says. His new pay rate was $150 for the same 72-hour week, plus cash tips, court records state. In the best-paying years of his employment at the Waverly, Romero’s tips peaked at about $260 per week, he says, putting his total pay at no more than $5.70 per hour.

Listen to WNYC's Richard Hake discuss wage theft with journalist Scott Simone:

By 2007, Congress had raised the federal minimum wage to $7.25 an hour, plus mandatory overtime. If the Waverly had followed the law, Romero should have been paid about double what he was — just in overtime, he was owed more than $8,000 a year.

Other workers report similarly low wages. Delfino Tlacopilco, a cashier who worked with Romero at the Waverly starting in 1996, first as a dishwasher and then behind the counter, says he earned between $5 and $6 per hour. Waiter Jesus Delgado reports making $20 per 12-hour shift, plus tips, as did Justino Garcia. Busboy Miguel Gonzaga took home $150 per 66-hour work week.

During his first few years in New York, Romero lived with 20 other roommates in a three-bedroom house in Jackson Heights, for which he paid $300 a month in rent. Whatever he could save, he sent to his family in Mexico, until his wife joined him in New York a few years ago in their own apartment. His three children by then were grown, having only known him as a father via phone calls and a few visits to New York.

“It’s difficult to not see my children, but I sacrifice so that they can have a better life,” Romero says. “I do not want to see them mopping or washing dishes in someone else’s kitchen. I do not want them to go through what I have gone through. I work hard and support them so that they can go to college and have careers.”

Waverly workers say they were also denied sick days and personal days. “They’d tell us, ‘No, you’re not allowed,’” says Tlacopilco. “They’d call us donkeys because they worked us so much.” Romero says he was required to help in the kitchen, cutting fruit and preparing salads, and to clean the bathrooms and wash the outdoor façade, for no extra pay.

Serafis, who owns the building where the diner is located, relied on the Waverly staff to mop the apartment hallways. When a tenant moved out, his workers would be summoned to paint and repair the units. Residents became so accustomed to this arrangement that they’d come down to the diner to ask wait staff to install air conditioning units or replace light bulbs.

Other times, Serafis—himself an immigrant from Greece—ordered Romero to buy him cigarettes or Powerball cards, or to clean snow off his car and warm it up.



(Shutterstock)

“I’d ask, ‘Is this part of my job?’” Romero recalls. “I knew it wasn’t, but they were still making me do it.”

Multiple requests from Gothamist for comment went unanswered by Serafis and his lawyers. But in a 2016 videotaped deposition, Serafis admitted to paying the workers as low as $120 per 70-hour workweek. But, he said, they did this voluntarily: “They offered that to me,” he said. As for overtime, he claimed, “The waitstaff that was volunteering to work overtime in order to make the tips, I didn’t pay them overtime.”

Regardless of whether that is the case, it’s still illegal to pay employees below minimum wage and to not pay overtime, whether workers agree to it or not.

***

At one’s favorite coffee shop it’s not uncommon to find that the cooks, waiters, bartenders, and busboys all come from the same country, if not the same region or even town, as new workers learn of jobs through friends and relatives. Foreign workers are particularly important to New York’s $43 billion restaurant business, with immigrants comprising 64 percent of all industry workers in the city, according to a survey by the U.S. Census Bureau’s American Community Survey.

Yet out of 4,387 low-income workers in New York, Los Angeles, and Chicago, 63 percent of whom were Hispanic, who were surveyed for a 2008 study by the National Employment Law Project, 30 percent of tipped employees did not get paid their state’s minimum wage, and 12 percent had their tips stolen by an employer or supervisor. Of the one quarter of workers who put in more than 40 hours a week, 76 percent were not paid overtime. A 2017 Economic Policy Institute study concluded that 6.5 percent of undocumented workers nationwide — again, a majority of them Hispanic — reported being paid less than the minimum wage, nearly double the 3.8 percent of U.S.-born workers who said they were victimized by underpayments. That’s mostly due, experts say, to the fact that immigrants are more easily exploited, as they are less likely to know labor laws and rarely complain to authorities.

While labor laws apply regardless of immigration status, being uninformed about their rights and a fear of deportation combine to silence objections from undocumented workers.

“They're not educated on how to be paid,” says Escudero, the New York state labor investigator. “They accept their wages as the employer tells them, and that's how they go about their lives.”

Heidi Shierholz, director of policy at the Economic Policy Institute and the former chief economist at the U.S. Department of Labor, adds, “On average, immigrants are super vulnerable because they know that they could be retaliated against. They could end up in deportation.”

This is not an idle fear. In addition to immigrants who have been targeted at work — such as Pablo Villavicencio Calderon, the undocumented Ecuadorian who was taken into custody by ICE after he delivered a pizza to a U.S. Army base in Brooklyn, and the 21 7-Eleven workers arrested during an ICE sweep of 98 stores — federal authorities have been known to use underpayment disputes to identify and expel foreign-born workers.

In California, Immigration and Customs Enforcement agents have been showing up at wage violation proceedings, where workers must appear after filing complaints against owners. ICE also has asked California state officials for details about ongoing investigations into labor violations at construction sites in Los Angeles.

***

Three years ago at the Waverly Diner, the “tide began to change, and Nick really started to treat us like trash,” says Delgado. That’s when Waverly workers finally decided to take a stand against the diner owner.

When Tlacopilco and another employee were fired after missing a few days of work for personal reasons, he sought the advice of a lawyer to see if he had a case for wrongful termination. After a friend suggested he contact New York labor lawyer Lou Pechman, who also educates workers on their rights through his website WaiterPay.com, he learned that workers could sue for unpaid wages stemming from years of wage theft.

When the group filed suit in August 2015 in Manhattan federal court seeking back pay, the Waverly responded by slashing the workers’ hours, according to court documents. Garcia, who had consistently logged 72 hours per week, says he was cut back to 50 hours. Serafis, he was told, would give him $6,000 if he got the group to drop the lawsuit. When the workers rejected that offer, Garcia’s shifts were cut to three days a week.

“If you’re not happy, why do you insist on staying here?” Garcia recalls Serafis asking him in October 2015.

“If you don’t want me here, then I’ll leave,” Garcia answered.

“You cannot leave now,” was Serafis’s reply, Garcia says. “You have to wait for somebody to replace you.” Later that night, he says, Serafis fired him, saying, “I don't want to see you around my business.”

Romero says his schedule was reduced to just two four-hour shifts a week in late August 2015, so he left and found another job. Delgado quit after he was cut back to four days a week.



(Jake Dobkin / Gothamist)

The National Labor Relations Board found that the Waverly “discriminatorily discharged” the workers, and ruled that the diner must “offer them reinstatement to their former positions” and to “make them whole for any loss of earnings and other benefits resulting from their discharge.”

Serafis, though, was already planning his next move, putting in place a strategy to avoid having to pay for what he’d done.

***

Owners do face enforcement action in New York and, occasionally, hefty fines and settlements, such as the $200,000 that the Tick Tock Diner agreed to pay the three former workers who sued the restaurant.

The state claims that such results show New York is serious about holding violators to account. The state Labor Department, charged with investigating wage theft allegations, says employers have paid more than $258 million in back wages owed to 215,335 workers since 2011, including about $35 million to 36,446 workers last year.

Nationwide, the U.S. Department of Labor has investigated thousands of wage claims, of which 75 percent resulted in a determination of a finable violation.

But in some cases, owners have escaped with wrist-slap fines or settled with victims on favorable terms. Jimmy Giapoutzis, the owner of the D&D Coffee Shop, agreed before trial to a $30,000 settlement payment to Chelsea Andersen, the worker who claimed she’d been underpaid. Andersen’s lawyers agreed to the sum, which covers most but not all of the wages owed, accepting Giapoutzis’s purported “inability to pay a larger settlement sum,” court documents show, and to avoid a lengthy legal battle, says Andersen’s lawyer.

In fact, a 2015 study found that the amounts of payouts have continually declined in the last decade. On average, the settlement per plaintiff for wage violation cases was $5,742. But that was skewed by a small proportion of cases—approximately 5 percent—with settlements that averaged more than $25,000 per plaintiff. The median settlement per plaintiff was lower, at $2,576.

Other proprietors, including those fined by the state’s Labor Department, have simply ignored settlement agreements or judgments and not paid. Owners have shut down businesses, declared bankruptcy, or transferred ownership of establishments to a friend, partner or relative. A few have fled the country. In 2011, when five workers from Manhattan’s Charm Thai won a court judgment for $830,000 in federal court, the restaurant’s owners filed for bankruptcy, which gave them time to gather their assets and leave the country.

The aforementioned 2015 study, “Empty Judgments: The Wage Collection Crisis in New York”, found that New York employers have skipped out on more than $125 million in court-ordered restitution. Of that sum, $25 million stems from lawsuits against employers, with another $101 million in unpaid wages that the New York Labor Department determined employers owed to workers between 2003 and 2013.

But the study lays out a few guidelines for how New York can protect against these tactics. Currently, New York allows certain workers in the construction industry to apply a “mechanic’s lien” to the property on which they worked if they are not paid in full. Ten other states also allow other kinds of workers to put liens on employers’ property in connection with a wage claim. If New York were to expand its law similarly, it would ensure that workers would be able to enforce judgments against their employers. (Such a law was passed by the New York State Assembly in 2015, though it failed to pass the State Senate.)

***

Serafis’s first step in avoiding a judgment against him was to transfer the Waverly business to his daughter Christine, who lives in Greece. He also declared personal bankruptcy under Chapter 7, and filed Chapter 11 bankruptcy for the business. The filing means that although, according to Nick Serafis’ deposition, the father still runs the restaurant, “any judgment cannot be collected against him because he has no assets in his name,” says Pechman.

This has stalled legal proceedings as Serafis’ bankruptcy claims are still being worked out in court, and potentially protects the Waverly from paying more than $2 million in estimated damages to the workers, according to court filings.

The Waverly plaintiffs remain frustrated by the failure to bring Serafis to account. They are still waiting for the federal civil court to rule on their case — three years after their first filing. “After robbing us for so many years, he has the money to pay us,” says Garcia. “I feel defrauded.”

But the group holds out hope. “We came forward to get what is owed,” says Delgado. “But if our case doesn’t end up helping us, maybe it will help other workers experiencing this.”

Scott Simone reported on this story in collaboration with The Hatch Institute, a nonprofit journalism foundation where he is managing editor. You can see more stories from The Hatch Institute here.