He Said, She Said: The Law of Labor

Julia Heyer

It saddened me to read recently that Lenny’s, a local NYC chain of sandwich shops with 13-plus outlets, recently agreed to the largest settlement in the history of New York State’s Department of Labor. The firm will settle labor violations — for not adequately paying overtime and minimum wages — by plunking down over $5 million in back wages, damages and penalties. I have encountered plenty of restaurateurs that — besides ignoring the moral aspect —think that shortcuts actually make sense economically. They are willing to ‘push the boundaries,’ pay less than they should to make some money and line their own pockets. Usually as an individual restaurant or two grows into a multi-unit operation, growing in sophistication and bringing on additional leadership and resources, such practices get squelched out, making room for proper business practices instead of exploitation. Or so one hopes. I opt for the positive, optimistically thinking that entrepreneurs and managers want to treat their employees right. The case of Lenny’s shows that this isn’t necessarily the case. Why, I wonder? Is it old-fashioned greed? The culture of an organization and maybe our industry? Is it a false sense of entitlement? What’s your take?

Vin McCann

The responses leap to mind faster than I can type. Ours is an industry full of poorly thought through concepts. Competition is rampant. Restaurants are a holdout bastion of mom and mom, “I have a dream” passionistas. It’s a fairly capital-intensive, low-margin business. Product costs continue to rise. Sales volume is invariably over-estimated. Occupancy costs make landlords senior partners. Bubble economics visit the biz like tropical storms. The industry is full of over-sized egos. The culture applauds entrepreneurs and “disses” labor. Greed is good and the government is bad. Throw all these issues in a blender and what do you get? A murky paste of “I can’t steal from my customer; so I guess, since I need the money to make my nut, I’ve got to screw the staff.” Sure there are plenty of legitimate, fair-minded operators, but in an industry of nearly a million businesses, there is an inordinate number of players frying and flying below the radar, doing whatever they can with the labor expense to get themselves to the end of the month. Is it sad? Of course, but the behavior stems from a business model that history has mangled over the past forty years.

Julia’s Response

“Erst kommt das Fressen dann die Moral” — a quote from Brecht’s Three Penny Opera — meaning, first comes the chow then comes the ethics, sums up your point, and it’s about as absurd to me as the flawed mentality of “It’s not personal, it’s business.” Business is always personal (you do business with people, not some unknown entity). When did having and operating with morals in interpersonal conduct become an optional endeavor? My take is know where you purchase your goods — food, fashion or otherwise.

Vin’s Final Word

Julia, survival and/or greed trump ethics with uncomfortable regularity and have done so for centuries. In business, small and corporate, when sales threaten to fail covering expenses, labor takes the first hit. Question to our readers: What personnel business practices have you seen, encountered and experienced in the industry, good or bad?