by Lillian Gahagan, in the Journal Opinion

BRADFORD—The owner of a popular Main Street restaurant defended its employment practices after the U.S. Department of Labor announced more than $300,000 in fines and damages against the business last week.  

According to a DOL news release, the Colatina Exit reached a settlement after an investigation.  The restaurant, a Bradford institution since the 1980s, paid $119,605 in back wages and an equal amount in liquidated damages to 43 employees affected by tip and overtime violations. Another $31,525 in penalties accrued for labor and tip violations over two years and, according to the press release, “illegal employment practices.”

During the labor department’s investigation, various payroll violations, mostly related to overtime and pooling tips between managers and servers, were revealed. The business was subsequently charged for associated damages, penalties, and fines. 

Total costs were “north of $300,000” according to Vinnie Wendell, who owns the restaurant with his wife Angela and a group of employees.

“It’s kind of behind us now,” said Wendell. But last week’s announcement revived the strains of spending eight months of coping with and correcting payroll procedures, and paying the penalties and costs related to the various allegations that were made by DOL.  

Wendell said the investigation and its aftermath began in July 2023 and concluded in January of this year.

According to the harshly worded DOL press release, a server at that restaurant will receive $50,000 in punitive damages and $829 in back pay after the investigation found that the “employer retaliated against them by terminating their employment for refusing to share tips with a manager.” 

Wendell reflected that the language used in the press release was “boilerplate” and a “poor reflection” of the investigation’s findings. He said it implied that Colatina was “exploiting workers.” It’s an implication he strenuously denied. He stands by how the restaurant’s workforce is treated.

“We feel good about how we take care of our employees,” Wendell said. For example, during the pandemic, the Colatina shifted to an exclusive take-out operation and continued to keep many members of their staff working.

Wendell disputed several points made in the press release, but said he did not want to make any excuses for what happened. 

“I can’t speak to the settlement,” Wendell explained, referring to the employee that triggered the investigation. 

Wendell, 64, has been part of the Colatina for 42 years. His family owned another longtime Main Street fixture, Hill’s 5&10, which was located where Space on Main is now. He said his focus has always been on the staff and community and creating quality jobs. Some of his employees have been at the restaurant for multiple years, with several who worked for the company for decades. 

“We spent 40 years building a business based on integrity,” Wendell said in an April 28 phone interview. “We were kind of naïve about [the investigation] and weren’t concerned. As this unfolded, we realized we were not in compliance with some of the regulations.”

Once he recognized that the business was out of compliance with federal labor laws, Wendell said payroll and related charges were corrected and resolved. He said he thought the business was supposed to operate under Vermont law, but came to realize that state rules were not in sync with some more stringent federal standards.

“We were following Vermont law because that’s what we thought we were supposed to do,” Wendell said. “But that didn’t check the box for federal overtime.” 

Wendell explained that because Vermont law does not require restaurants to pay overtime, the Colatina had designed pay packages for their employees that in almost every case far exceeded what the overtime compensation would have been. These included quarterly bonuses, ownership shares, health insurance, retirement fund contributions, discounts and vacations. 

“That being said, our plan was not in compliance with federal overtime,” Wendell wrote in a follow-up email. “I would like to note it is possible to not be in compliance and also not be exploiting employees. That was what I felt the spirit of the investigation reflected and where I believe the press release misses that point.”

Once these issues were discovered last July, a decision was made immediately to hire a payroll company with a human resources department, rather than completing payroll in house as had been previous practice. 

Among the corrections that had to be made were the way employees with dual responsibilities were paid, and whether they were entitled to tips. Bartenders receive tips and managers do not, even though some of their responsibilities might seem similar. Since the ruling, roles and responsibilities have been further separated and clarified. 

Because managers are not allowed to receive tips, that has meant that certain dual roles needed to be defined more clearly to comply with federal payroll laws by being tracked on an hourly basis. 

Wendell says he had thought they were able to have dual roles and still does not totally understand the “exact ruling on that.”

Wendell said it was disheartening to be cited by DOL because he always felt good about how employees were compensated for their service. 

The business has always mentored young people in the community. He and his wife have raised three sons and understand the impact of positive mentorship. The employees do, too.  

“Our whole team sees a responsibility of mentorship for first-time jobs,” Wendell said in the interview. “It’s one of the things that’s important to us. 

Wendell said hundreds of young people have worked at the restaurant over the years, and he feels proud to have provided a foundation experience for so many of them. 

When the restaurant was charged with mishandling tips and other payroll violations, Wendell said his response was to deal with it to correct the problems immediately and pay the penalties. 

Asked why he did not seek legal representation, Wendell responded with an email that “we were naïve and really believed we were doing things correctly. We were told that the investigation was primarily educational, to make sure that our procedures were correct. In hindsight, we would handle that differently.”

At this point, Wendell simply wants to accept responsibility and move on. He said what is important to him is his family, the community and “the way we live.”