Dead Freddies Island Grill Settles Unpaid Wages Class Action Lawsuit

After more than a year of litigation, OC Freddies LLC has settled an unpaid wages class action lawsuit for $630,000.

OC Freddies LLC runs Dead Freddies Island Grill, a pirate-themed restaurant and bar in Ocean City, Maryland, where the 26 plaintiffs worked and the alleged violations took place.

Plaintiffs will share a total of $395,000 for their claims; lawyers will receive $235,000 in fees.

Unpaid Wages Class Action Settlement Terms

The agreement doesn’t assign blame, nor does it seek an apology for the alleged wage claims. It makes no comment on the merits of the wage claims made by the employees.

The most any one plaintiff will receive is $61,000. Of that amount, $30,500 will be taxed as W-2 income because it represents unpaid wages. The other half will be treated as 1099 income at tax time.

The way the agreement was reached ensures that OC Freddies pays the necessary payroll taxes on the money.

Plaintiffs were divided into two groups: “back of the house” and “front of the house” employees.

Workers from the back of the house, including cooks, alleged they were paid salary and, as such, did not receive overtime pay no matter how many hours they worked.

Tipped employees were called front of the house workers, who claimed timecards were falsified to reflect fewer hours than actually worked.

In addition, servers accused Dead Freddies management of deducting 3.5 percent from tips paid by credit card under the guise of recouping processing fees.

According to court documents, the deduction was “excessive, did not reflect the actual business expenses in processing tips left on credit cards and was significantly more than what the defendants actually incurred in the course of their business.”

The unpaid wages class action lawsuit also accused Dead Freddies of penalizing employees financially when they failed to meet the 40-hour minimum for the week for any reason, including when the restaurant’s closure was a factor.

Pressure to Stay on the Job

Desmond Dale is the plaintiff who brought forth the initial unpaid wages class action lawsuit. He said three of his relatives passed away while he worked at Dead Freddies.

He ran to the funerals and rushed back to work for fear of missing a paycheck. He said he didn’t even take the time to change outfits.

The case was initially filed in federal court in Baltimore in August 2015. A number of wage and overtime violations of the Fair Labor Standards Act, Maryland Wage and Hour Law and the Maryland Wage Payment and Collection Law were listed at the time.

Dale said a lot of the workers were school kids who were afraid to stand up for themselves.

“I just thought about it. For about six months after I had the information I needed, I just thought about it. I was friends with one of the investors at Dead Freddies since I was 21 years old,” Dale said.

The unpaid wages class action settlement was overseen by Magistrate Judge Beth Gesner. The court will issue a notice to other “potential collective plaintiffs” to advise them to speak with an attorney and decide if a separate action from the agreement is in their best interest.

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