Labor Department accuses restaurant operator of withholding overtime wages

STERLING HEIGHTS — The U.S. Department of Labor has been working to make its case that a co-owner and operator of four Leo’s Coney Island franchises allegedly failed to pay workers for overtime.

On July 15, a preliminary injunction was issued in the case Su v. Sterling Ponds Plaza LLC et al, which is in the U.S. District Court Eastern District of Michigan Southern Division. The individual defendant named in the suit is restaurant franchise co-owner and operator Kyriakos “Ken” Vlahadamis.

Department of Labor Acting Secretary Julie A. Su accuses Vlahadamis of not paying employees what they should’ve been paid – specifically overtime wages on labor beyond 40 hours per week. The department says Vlahadamis allegedly kept overtime hours documented on separate timecards that were then allegedly shredded.

The Labor Department specified that this case only affects four restaurants — which are located in Sterling Heights, Clarkston, Livonia and Dearborn — and not the other Leo’s Coney Island franchises statewide, which it estimated at over 70 total.

In a press release, the department also said that in 2018 the federal court already forbade Vlahadamis and Leo’s Coney Island in Sterling Heights from violating the Fair Labor Standards Act in the future by not complying with payroll or overtime responsibilities. “Our investigations have found that, despite agreeing to comply with a 2018 court order forbidding him from future federal wage violations, Ken Vlahadamis was again denying his employees their full wages by refusing to pay overtime and keep required payroll records,” Timolin Mitchell, the U.S. Department of Labor’s wage and hour division district director in Detroit, said in a statement.

“His actions and refusal to follow the law are harmful to the hard-working employees who are being shortchanged by his illegal actions.”

Government officials say they sought a temporary restraining order from the court July 8. Following that, a July 15 consent preliminary injunction, issued by U.S. District Court Judge Judith E. Levy, does a few things.

The injunction demands that the defendant parties keep and preserve “adequate records” of workers’ hours and wages from July 8, 2021, until now. The order also demands that the defendant parties not communicate with workers over matters pertaining to the case without a written disclaimer making clear that any communications are voluntary, and that the employer can’t retaliate for the decision to choose or refuse to communicate.

According to the injunction, the parties “disagree whether the willful destruction of timecards occurred,” and the injunction adds that agreeing to the injunction’s demands does not mean that the defendants admit to wrongdoing or liability.

In an email, Maureen Rouse-Ayoub, an attorney for the defense, called the Department of Labor’s press release “inaccurate.”

“Mr. Vlahadamis, Leo’s Coney Island Defendants and the Department entered into a Stipulated Court Order agreeing to comply with the Fair Labor Standard (Act’s) requirement,” Rouse-Ayoub said. “The Court did not hold a hearing and there has been no Court determination that Mr. Vlahadamis or the Leo’s Coney Island Defendants have engaged in any violations of the law.”

The attorney said the defendant parties voluntarily entered the preliminary injunction order solely to quickly move the matter forward so that the investigation can take place. She said that  “includes the opportunity for Mr. Vlahadamis and Leo’s Coney Island to establish that they did not engage in the conduct alleged in the complaint.”

Rouse-Ayoub added that the defendants deny shredding timecards, deny failing to pay overtime, deny the labor secretary’s allegations of wrongdoing and deny violating a previous consent judgment.

“Mr. Vlahadamis and the Leo’s Coney Island Defendants intend to vigorously defend against these baseless allegations,” she said, later adding, “Mr. Vlahadamis and Leo’s Coney Island Defendants look forward to proving that the allegations are false, that they value and respect their employees, and comply with applicable laws.”   

Find out more about the U.S. Department of Labor by visiting dol.gov.