Two of the highest-profile restaurant groups in Philadelphia reportedly failed to meet their obligation to pay out accrued sick leave to employees, according to the Inquirer.
Employees laid off by award-winning restaurant groups Starr Restaurants (Parc, Buddakan, El Vez) and CookNSolo (Zahav, Dizengoff) in the wake of COVID-19 mandated closures claim they had not been paid the sick leave they accrued — and are now owed money for that time, per the Inquirer, under a new expansion of local paid sick leave laws.
The city’s “Promoting Healthy Families and Workplaces Act,” which previously guaranteed paid sick leave to employees working for business with more than nine employees, was expanded when the city closed nonessential businesses on March 16; it covers employees’ use of accrued sick time during the pandemic for “mandated business closures, caring for children during school or childcare closures, official quarantine and self quarantine, [and] illness and treatment of an illness for yourself or a family member.”
There seems to be a disagreement between workers’ interpretation and the restaurateurs’ interpretation of whether laid-off employees can access this new protection. A spokesperson for the mayor’s office told the Inquirer that “employers must pay out paid sick time to employees who were laid off on that date [March 16th] or anytime after, since the new regulations went into effect then.”
There’s now a petition with over 1,000 signatures imploring CookNSolo to pay out the sick leave. According to the petition’s creators, on March 16, employees were informed of the restaurant closures, told to apply for unemployment, and informed that their accrued paid time off would be paid out. On March 18, employees were told that accrued paid sick leave would also be paid out; on March 20, the company said paying paid sick leave wasn’t financially possible.
CookNSolo co-founder Steve Cook describes the events of March 16 as “a blur.” Within six hours, he decided to shutter 16 restaurants out of concern for public health, and then initiated conversations with managers about how to disseminate information to the staff. “One question was about sick leave,” Cook told Eater. “If I had it to go back and do it again, I’d have taken more time. Our intentions were good. We did tell people we’d pay sick leave. That was me, on the spot, thinking it would be great to get the money into their hands.” Cook and Solomonov also decided that day to cover health insurance for all managers (about 40 people) as long as possible, at least through April.
That same day, the company launched what quickly became a successful fundraising drive involving selling gift cards and raised about $150,000 — including a $40,000 match donated by founders Cook and Mike Solomonov personally. Cook and Solomonov said they have worked with their lawyers to ensure the funds generated can be distributed as tax-free for employees. Employees are submitting applications now, with the group allocating funds based on need. The goal is for every employee who applies for funding to get at least some money. “We want it to help cover [the time] before unemployment kicks in,” Cook said. “The unemployment system is under strain; none of our people have gotten anything from unemployment yet. I hope they will in four weeks, but I’m not hopeful.”
Today, March 25, Cook and Solomonov told Eater that they would, in fact, be paying out accrued sick leave. Cook said they’re still doing the math to figure out where the funds will come from. “We legitimately want to do what we can to help,” Cook said. “We feel that we made promises we didn’t keep.”
Mike Solomonov, the group’s chef and co-founder, says the funding may well come from his and Cook’s own personal funds. “From an emotional standpoint, the moment that we realized it was irresponsible [for the business] to find funds for sick leave we immediately opened our checkbooks, $40K from Steve and myself,” Solomonov said, “and $100K in gift cards that are redeemable.”
On March 25, the Inquirer reported this sick leave pay out will reach some 400 hourly workers. An email sent to laid-off employees reportedly said:
You may be aware that the City introduced emergency regulations to provide additional coverage under its Paid Sick Leave law for COVID-19-related issues. These regulations do not mention or even hint at the idea of paying out accrued sick pay upon termination (in fact, the original regulations do not require this either). We do not think claims to the contrary are supported by the new regulations and we ultimately believe that they will not stand.
WHYY reported on March 20 that Starr employees were told “they could not use their vacation, sick or paid time off when business shut down in response to the governor’s orders.” The Starr group claims that it has been paying out accrued sick leave. On a call last night, March 24, the group’s founder, mega-restaurateur Stephen Starr, told Eater, “People did get and are getting paid for sick days that they didn’t use, but that was during the furlough period.”
A rep told Eater the morning of March 25 that there are “hundreds of thousands of dollars in the process of being paid out in sick leave.”
The Starr group’s furlough began in the days surrounding the mandated dining room shut down on March 16; then, on March 16, Starr made the decision to lay off the restaurant workers. “We thought it would be a two-week closure, especially in Philadelphia. And as a day or two or went by, we knew it wasn’t two weeks; it was going to maybe be two months, or more. We knew then we had to lay people off and pay the sick leave we owed. I wanted to also pay 100 percent of the insurance for employees who were signed up for it for the month of April. It was a big investment, and I was happy and proud to do it.”
Starr added that the group did “everything we were supposed to do by the letter of the law. I’ve had two different law firms look at it to make sure we did what we were supposed to do — and we exceeded it by paying the health insurance through April...
“And now the main thing I have to do for employees is make sure they have a job again…We want to make sure I can open the doors of all the restaurants and say to all the people who we laid off, ‘welcome home.’ We’re acting in good faith. We’re devastated — emotionally and financially.”
Starr’s rep said the group will also continue to take sick pay requests post-termination, sending word from Starr that “even post termination, we are attempting to arrange the financing through our lender M&T Bank to continue to fulfill any further sick pay requests that may come in.”
Cook and Solomonov described dual pressures of lacking cash flow and trying to stay solvent as the main concerns when thinking about reopening and having staff on payroll again. “Our houses are on the line for loans to support these businesses. And these businesses support 500 people. We’re looking at hard decisions with no information, all to crawl to the point where we can reopen,” Cook said. “We’re worried about working capital for reopening. The vendors will likely want cash-on-delivery because they’re hurting. It will probably be a slow roll, we won’t be at full capacity for a while. It requires cash to restart the engine and rehire people.”
Starr put it this way: “Restaurants operate at very small margins because of food costs and labor costs; there are so many rules and regulations. We can really only make between 5 and 9 percent profit on our sales. That’s great if you do a lot of sales,” Starr said. “I don’t want to complain about how hard the business is...I want to open my restaurants again, but I have to have enough money to last that long. And re-opening a restaurant is like opening a restaurant for the first time — you have to staff it, and train. And sadly, many restaurants will not open again.”
Even with larger groups paying out accrued sick leave, there remain countless restaurant workers in the city who find themselves without wages. It’s no wonder that workers will fight for every dollar they can when their future work prospects are so uncertain. “This situation has left many vulnerable workers behind,” the authors of the petition wrote.