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2014-02-20

Former Bandera biz owner violates FLSA

By Judith Pannebaker BCC Editor

Banderans may recall businessman Jerry Reed as owner and operator of the bankrupted-and-now-razed-demolished-and-sold Old Texas Square complex in the 700 block of Main Street. Once under consideration for a new hotel, the site will now house a Dollar General store currently under construction on a portion of the property.
Also at this time, Reed, along with his business associate, April Robin (Inc.), own and operate Big Texas Inn on Sidney Baker Street in Kerrville, as well as KVHC-TV - aka Star Dreamz - a federally licensed television station in Kerrville.
On Wednesday, Jan. 15, Richard Ellison, an attorney in Kerr County, won a civil judgment against Reed and Robin for two former employees of Big Texas Inn. A jury, empanelled in the United States District Court, Western District of Texas-San Antonio Division, found Reed and Robin guilty of violating the Fair Labor Standards Act (FLSA).
In an email, Ellison wrote: "Reed makes his employees live on premises, and either doesn't pay them or pays them very little, in violation of federal overtime and minimum wage laws, which is what the jury found he violated in this case."
Ellison filed an amended complaint in federal district court in November 2012 on behalf of his clients, Melissa Morris and John Shawn Keeney. Complaints of a third plaintiff, Kenneth Woods, were subsequently separated from the case. Ellison has refiled Woods' complaint with a Kerr County Justice of the Peace.
Court documents state the complaints come under the Fair Labor Standards Act (FLSA), which prohibits a covered employer from denying overtime compensation for working in excess of 40 hours per work week and denying minimum wage compensation for all hours worked in a work week.
Robin employed Morris from July 1 through August 22, 2012 as a bartender, restaurant server, housekeeper and receptionist, registering guests and processing credit cards. She was expected to work a minimum of six days a week.
As compensation, Reed agreed to provide Morris with a furnished room with utilities at Big Texas Inn in addition to a food allowance, plus tips in the form of a check, for a total of $425 per week and tips. After two weeks, her salary would be $350 plus tips. Additionally, Morris was required to run errands for the business in her private vehicle.
However, according to the defendants' payroll and accounting records, Morris accumulated 495 hours of unpaid overtime during her tenure at Big Texas Inn. Using a minimum wage of $7.25 an hour, she requested a total of $2,610 in compensation.
Additionally, Morris never received the in-kind considerations promised. The complaint alleges that the room was "rendered unfit for human habitation by an infestation of cockroaches and other unsanitary conditions, and dangerous conditions caused by drug dealers and criminals that Defendants allowed to operate on the premises."
During the summer of 2012, Keeney worked at Big Texas Inn for three months as cook, bar and restaurant manager and cashier in charge of reconciling the accounts. He also worked in sales for KVHC-TV. His day typically lasted from 5 am until after midnight.
Keeney was to be compensated $150, plus room and board. According to Keeney, Reed also promised to pay off a lien on Keeney's truck, but instead allegedly orchestrated a ruse, which culminated in Keeney's termination, eviction and repossession of his vehicle.
For a total of 868 overtime hours, Keeney requested $9,426.
Both plaintiffs requested a jury trial, which began Monday, Jan. 13, at the federal district court in San Antonio. One day later, the eight-member jury returned a verdict against Reed and Robin in favor of Morris and Keeney on their FLSA claims.
Morris was awarded $1,158.72 for minimum wages due, $1,098.37 for overtime wages and $2,257.09 for liquidated damages. Keeney was awarded $1,299.20 for minimum wages due and $1,614.72 for overtime wages, as well as $2,913.92 for liquidated damages. Morris and Keeney will also collect post-judgment interest of .13 percent per annum on the judgment, plus all costs of the suit.
"In this case, the judge ruled that a reasonable cost to the employer of the room and food allowance couldn't be proven," Ellison explained. "The judge instructed the jury not to consider room and food as compensation."
On the other hand, the plaintiffs were awarded attorneys' fees of $21,080.35 for the civil trial and $15,000 for the appeal process. United States Magistrate Judge John W. Primomo signed the judgment.
Parenthetically, Reed continues to hawk Bandera's long-defunct Old Texas Square hotel-eatery complex at www.texassquare.com. The website is replete with resplendent images of the once-historic hotel, which included the Mesquite Grill Steak House and Tequila Ritas, "a gorgeous new cantina" featuring "Frozen Painkillers." Of course, the telephone number listed on the website, 830-896-1711, goes directly to Big Texas Inn in Kerrville.
The person answering the Courier's call in January freely admitted that the hotel complex had burned down "about a year ago" and prospective guests calling the number would be staying in Kerrville rather than the Cowboy Capital of the World.
When asked why the website was still viable after a year, the unidentified employee replied, "When Bandera gets booked up, (tourists) come here and we get a lot of business that way."
Caveat emptor.