Leatherstocking Corp., owner of the Otesaga Resort Hotel in Cooperstown, has agreed to pay a $550,000 settlement in a federal class-action lawsuit brought by service workers, largely over the distribution of service-charge proceeds.
The workers alleged in the suit filed in Albany in 2010 that the hotel’s actions violated New York labor law the federal Fair Labor Standards Act.
In settling in the lawsuit, the hotel maintained that it did nothing wrong.
“After years of litigation, the hotel determined that the settlement was in the best interests of the hotel and its loyal employees,” the Otesaga said in a statement emailed to The Daily Star at the newspaper’s request last week. “The hotel remains committed to complying with its legal obligations.”
The lawsuit also alleged violations of overtime and minimum-wage standards, but the bulk of the case focused on a “service/gratuity” charge that the hotel charged guests and restaurant patrons, according to court papers. It also alleged that guests were not told that service charge was part of their bills. The amount of charge varied, depending on the service, the lead attorney for the plaintiffs said this week.
“My recollection (is) that in the dining room, standard meals were charged at a certain amount per diner whether it was $5 or $8 or whatever, per meal, and also that the lodging charges were per night,” said Leon Greenberg, a Las Vegas-based specialist in wage cases.
According to court documents, the hotel insisted that it properly distributed all of the service-charge money to employees. The dispute centered on which employees were paid, according to the documents.
The plaintiffs contended that management employees who were not legally entitled to a share of the payments nonetheless received them, while the hotel countered that that all of the people it paid were entitled to a share of the money.