The U.S. Labor Department is suing a Saddle Brook, New Jersey, company that operates 17 metro area Houlihan's restaurants, including two on Long Island, alleging "pervasive skimming from employees' tips and wages," the department announced Tuesday.
The lawsuit against A.C.E. Restaurant Group Inc. covers 1,430 current and former Houlihan's employees, including 245 from the company's two Long Island locations -- in Farmingdale and Westbury, said Lindsey Rothfeder, one of the Labor Department lawyers handling the case.
The lawsuit, filed in New Jersey on Sept. 28, also names the company's president, Arnold Runestad, and A.C.E. Restaurant Group of New York. Runestad is part owner of both companies, the lawsuit contends.
A Long Island lawyer representing A.C.E. denied the charges.
The department said the restaurants illegally required servers and bartenders to contribute a percentage of their tips to non-tipped employees like kitchen staff and custodians, which is a violation of labor laws. The suit also says the company failed to pay overtime when employees worked more than 40 hours a week, and "routinely" deducted from employees' checks the costs of meals for which the employees had already been charged. The violations occurred over a two-year period beginning in 2013, according to the suit.
"The severity of these violations and the number of affected workers is such that restitution, we believe, could amount to millions of dollars," said regional solicitor of labor Jeffrey Rogoff.
Attorney Robert D. Lipman of Jericho-based Lipman and Plesur, who represents the company, said the allegations were false. He said tips weren't shared with non-tipped staff like custodians, as the Labor Department alleges, because Houlihan's doesn't employ custodians.
"It is just shocking to me that the U.S. Department of Labor would be so scurrilous in claiming that there was skimming of tips," Lipman said. "The company never pocketed any tips."
The department's Long Island office handled some of the investigation as part of its ongoing restaurant initiative.
"This is a significant case for us in that it is part of our effort to have an impact in this low-wage, targeted industry," said Irv Miljoner, who heads the Long Island office.