City denies responsibility in Whitby employee suit

The city denies responsibility for all damages sought by current and former Whitby Castle waiters and bartenders in their December 2013 lawsuit. File photo

The city denies responsibility for all damages sought by current and former Whitby Castle waiters and bartenders in their December 2013 lawsuit. File photo

The city has denied responsibility for all monetary damages sought by employees of Rye Golf Club’s Whitby Castle restaurant in a lawsuit, fallout from last year’s financial scandal at the city-owned club.

The city argues it should bear no responsibility for any of the alleged wage-related violations that may have been committed by former club manager Scott Yandrasevich‑who is also named in the suit‑since the city did not directly employ the workers, but contracted with them through RM Staffing.

Yandrasevich, a city employee, allegedly used RM Staffing, one of several shell companies he created, to steal hundreds of thousands of dollars in club membership dues by submitting falsified invoices to the city manager. RM Staffing is also named in the lawsuit, which was filed on Dec. 23, 2013.

Such allegations were reported in February 2013 by Brune & Richard, an investigation firm hired by the city to look into suspicious accounting records at the club.

In its response to the employees’ complaint, the city states that, since it delegated some elements of the castle’s operations to Yandrasevich, the city is not the “operator” of the restaurant in the legal sense, though the city acknowledges it “owns, manages and exercises municipal oversight over the club’s operations.”

According to the city, although Yandrasevich’s delegated duties included oversight of the club’s policies concerning hiring and firing of employees, pay and working hours, Yandrasevich used RM Staffing, an independent contractor, to hire employees. Thus the employees, who allege they are owed unpaid overtime and had their tips withheld, are those of the staffing company, not the city.

The city asserts it does not have enough information to determine whether Yandrasevich, who it admits is affiliated with RM Staffing, was the chief “operator” of RM Staffing.

Morris Yacht Club in the Bronx, which also employed some workers through RM, is also named in the lawsuit.

The city further argues that, New York Labor Law dictates it cannot be considered the complainants’ employer as it is a governmental agency or a municipality. While the city argues it cannot be held legally responsible for alleged wrongdoing by independent contractors, other government agencies and related institutions in the state have often been held liable in wage disputes, according to attorney for the plaintiffs Brent Pelton.

“New York City has certainly been liable for police officers who don’t get paid, hospitals that have governmental aspects are routinely held to be liable. Here, I just don’t think [the court’s holding the city responsible] is going to be an issue,” Pelton, of Pelton & Associates, an overtime litigation firm in Manhattan, said.

The plaintiffs are attempting to have the suit declared a class action, which is when a group of people sues another group of people or persons.

The city’s response, filed on April 25, argues the plaintiffs will not be able to bring together at least 40 “similarly situated” participants required by law for the court to classify the suit as a class action.

If the judge determines that not to be the case, the plaintiffs will have the authority to send out notices to other current and former Whitby waiters and bartenders who are eligible to join the suit.

Pelton said the suit, once accepted as a class action, has the potential to garner millions of dollars in damages. It was originally brought by Rvin Reyes, Israel Cortes Cruz and seven other Whitby waiters and bartenders and filed pursuant to the Fair Labor Standards Act and the New York Labor Law.

On May 2, the plaintiffs’ attorneys filed an amended complaint adding an allegation the city violated a 2011 state law requiring employers to provide wage statements and wage notices at the time of hiring and by Feb.1 of each year.