Dean and Chris Papas acquired Plato’s Diner after years of hard work acquiring the skills to prepare food and manage a restaurant. They demonstrated a willingness to go through the process of growing a business from scratch. However, they were also more than willing to bend the rules to accomplish their goals. In many instances, the business owners’ law-breaking activities were both intentional and unintentional as they tried to balance the need to increase the restaurant’s revenue and help those who are in need. Aside from the financial and accounting aspect of the business, Plato’s Diner was in dire straits as a result of Chris and Dean’s less than ideal display of leadership and management capabilities. They were able to survive and thrive without getting in trouble until they were unable to resolve the conflict they had with a 60-year-old waitress named Martha Meade. After reviewing the case, Dean and Chris are left with no choice except to settle their differences with Martha, hire her back, follow the State of New York’s tax rules, and invest in improving the marketing and operational efficiency of Plato’s Diner to increase the profitability of the said business enterprise.
Resolve the Issue with Martha Meade
One can make the argument that a skilled lawyer’s defense or arbitration on behalf of Chris and Dean’s case must revolve around the Plato Diner’s positive impact on the community. There is no solid evidence to support any possible allegation that the business owners made a deliberate act to defraud the local government or the State of New York. In other words, Chris and Dean’s actions were never designed to enrich themselves at the expense of the government’s drive to collect taxes.
An overview of the case makes it difficult to ignore Chris and Dean’s great intentions and great love for the community. There were numerous examples cited in the diner case study. For example, there was the case of Paul, the underage worker. The owners’ decision to hire Paul was borne out of the desire to help him and her financially struggling mother. There was also the case of the illegal immigrant from Guatemala. The only dark spot in the community-building efforts of the business owners was the less than ideal treatment of a few workers. Thus, it is imperative to settle the issue with Martha to create a favorable solution for all parties involved.
To soften her stance, the counselors or the arbitration lawyers hired to solve this legal dilemma must persuade Martha to drop the age discrimination lawsuit against the Papas brothers. They may enlighten her with the facts starting with the revelation that she was not fired because of her age. They can also help her understand that the State of New York adheres to the “employment-at-will” principle making it possible for Chris and Dean to fire her using justifications that may seem unfair or arbitrary (New York State 1).
Embrace the State’s Tax Rules and Labor Laws
Asking Martha to drop the lawsuit is a temporary solution and weakens the future viability of the business enterprise. Chris and Dean are expected to shed off bad habits with regards to Plato’s Diner’s accounting and financial decision-making process. Hiring a third-party auditor is the first thing that they need to do to purge the system from the effect of Mr. Santoni’s influence.
Changing the way the brothers discuss and educate employees about the wage system is the next logical step. By the Fair Labor Standards Act or FLSA, only “tipped employees” are excluded from receiving the minimum wage (Whitfield Bryson & Mason LLP 1). However, employers are expected to meet certain conditions. For example, they are supposed to disclose that the minimum wage for the “tipped employees” is $2.13. They are also expected to reveal the fact that cooks and dishwashers are not part of the wage system that guarantees only $2.13, the amount that is augmented by earnings from tips.
Dean and Chris may have satisfied the law’s requirements with regards to proper disclosure. However, the failure to fill up the Internal Revenue Service’s Form 4070 and the Employee’s Report of Tips to Employer makes it impossible to satisfy other regulatory requirements (IRS 1). For example, it is through the information provided by the aforementioned forms that the employers can calculate the following: 1) employee’s income tax; 2) employee social security tax; and 3) employee Medicare tax (IRS 1). Also, to filing the correct forms, it is the responsibility of the business owners to inform all their employees that the “tip credit” is based on the minimum wage set at $7.25 (United States Department of Labor 1). Thus, the difference between the minimum wage of $7.25 and the $2.13 minimum wage for “tipped employees” is the acceptable limit that employers are allowed to get from the total tips collected. Thus, it eliminates the need for Chris and Dean to report deflated earnings. In other words, they do not need to go through that illegal process, because their employees are entitled to all the tips that they received. It has to be made clear that the employees have a way to offset the higher taxes that comes with the higher earnings from tips because they have the right to retain all the tips that were given to them.
Improving the hiring protocols regarding minors and immigrants is the next major issue that requires the attention of both Chris and Dean. They violated labor laws when they had a 14-year-old working as a dishwasher. Labor laws made it illegal for Paul to work more than 8 hours on a non-school day (United States Department of Labor 1). In addition to the extended work hours, Plato’s Diner may face sanctions if authorities are going to discover that a 14-year-old employee was hired as a dishwasher. According to the labor department, 14 and 15-year-old workers are limited only to jobs like cleanup work and hand-cleaning of vegetables (U.S. Department of Labor 1). Thus, it seems as if Paul’s dishwashing responsibilities fall under this category. However, cooking and baking are some of the restricted jobs for this age range. Plato’s Diner must consult a legal expert on this one.
Hiring a Guatemalan immigrant was an illegal move regardless of the justifications made by the owners of Plato’s Diner. There are strict guidelines in place so that there are only a few exceptions to hiring someone without the legal requirements to work within the United States. The U.S. immigration department pointed out that it is not possible to hire immigrants if enough qualified American workers are willing to take on the said job (US Homeland Security 1). This legal feature alone made it unlawful for Dean and Chris to hire the said person.
Improve the Marketing and Operational Efficiency of the Diner
It is possible to highlight an emerging pattern characterized by the attempt to bend the rules as the result of a desperate need to improve the lives of the workers and to enhance the diner’s revenue-generating capability. In this regard, it is imperative to help Chris and Dean understand that there is another way to solve the diner’s legal and labor issues, and at the same time create a wonderful work environment that employees can earn enough to support their respective families. In other words, by increasing the number of customers they are also able to increase the earning capability of the diner, the workers, and the business owners.
Chris and Dean must realize the value of the adage that says it is important to spend money to generate money. Critical investment requirements are in the area of accounting tools and software. Due to Chris and Dean’s hectic schedules, they can’t handle the clerical work required to deal with the tax laws and labor laws. It is more prudent for them to acquire the appropriate software and biometric equipment for them to track employees’ workload and overtime. It is possible to combine accounting software with mobile technology so that the action of employees writing down the tips they received and hours that they spent working in the diner automatically creates digital information that goes straight into the accounting system. Therefore, at the end of the week, Chris and Dean can collate the needed information for accounting purposes.
It is also important to discuss the management and leadership structure of the diner. It is more prudent to elect Dean to handle personnel management types of issues that are plaguing the diner. He must handle the human resource aspect of the business as well. Chris must stay in the background and he must not be permitted to discuss personnel issues, because he needs to work on his people skills. The same thing applies to both parents, they are not allowed to make any executive type of decisions. They must resist the urge to issue orders if there is a lull in the business operation. Dean must handle all these issues and he must also consider handling the management aspect of the business because it seems more practical to hire a cook rather than to get in trouble with the IRS or the labor department.
It is also a good idea to accept credit card payments. They need to understand the losses that they incurred every time a customer decides to go to another diner because they cannot use their credit cards. It is easier to persuade Chris and Dean if there is a way to ascertain the number of out of town customers passing through or staying at a nearby inn.
Conclusion
Chris and Dean unwittingly broke the rules due to ignorance or sheer exhaustion. They need to change the diner’s management and leadership structure to focus on the critical aspects of the business, especially those related to taxes, labor laws, and wages. It is also important for them to make the necessary investments not only to comply with the laws of the land but also in the need to attract more customers. The ability to increase the number of paying customers allows them to generate a revenue stream that pays for the appropriate accounting and recording system to satisfy labor and tax requirements.
Works Cited
IRS. Reporting Tip Income – Restaurant Tax Tips. 2017. Web.
New York State. Wage and Hours. 2017, Web..
United States Department of Labor. Wage and Hour Division. 2016, Web.
US Homeland Security. H-2B Temporary Non-Agricultural Workers. 2017. Web.
Whitfield Bryson & Mason LLP. Just Because You Earn Tips Does Not Mean
Employers Can Deny You the Minimum Wage. 2017. Web.