Suit Claims Denny’s Cheats Its Managers


California’s 350 company-owned Denny’s restaurants have been sued for allegedly cheating managers out of overtime, the latest in a series of such suits against well-known companies.

The suit was filed by San Fernando Valley residents Arif U. Khan and Rosa Mares, who no longer work at company-owned Denny’s restaurants, said their lawyer, Clifford H. Pearson of Tarzana.

Khan and Mares each earned about $35,000 a year at their old jobs. The lawsuit, filed Tuesday in Los Angeles Superior Court, seeks certification as a class action to represent up to 1,500 similar Denny’s managers and general managers in California over the past three years.

It seeks actual damages of $30 million or more and punitive damages that could triple that amount.


State and federal laws generally require payment of overtime, even to salaried workers unless they spend at least half their time in genuine managerial duties, using their own discretion.

The suit contends the Denny’s “managers” had to work 58 to 65 hours a week, mainly on mundane tasks such as ringing up sales and busing tables. Any real managerial chores were done according to a rule book with no independent decision-making, the suit maintains.

Denny’s, which once had headquarters in Irvine, is run out of Spartanburg, S.C., where its parent, Flagstar Cos., is based. No stranger to high-profile litigation, the restaurant chain paid $54 million three years ago to settle accusations of discriminatory treatment of minorities.

Flagstar spokeswoman Karen Randall said Thursday that the company hadn’t been served with the lawsuit but believes that it complies with all federal and state wage laws.

She said managers are eligible for bonuses in addition to their salaries, adding that Denny’s compensation and benefits are “very competitive within the restaurant industry.”

Other nationally known companies to be named in class-action suits for alleged failure to pay overtime recently include the Motel 6 chain and PepsiCo Inc.'s Irvine-based subsidiary Taco Bell Corp.

Taco Bell was accused in an Oregon lawsuit last week of underpaying more than 5,000 workers. In the suit, two hourly workers at Portland-area Taco Bells claim they and other employees were coerced into working hours without pay.

They also contend the company falsely recorded overtime hours as non-overtime hours in other work weeks to avoid paying time and a half.


Company spokeswoman Laurie Gannon denied the allegations, saying, “That’s not the way we operate.” She said Taco Bell has offered to pay substantiated wage claims of workers, and may fire managers if they are found to have cheated employees.

Taco Bell also is seeking to overturn its loss last spring of an unpaid work lawsuit on behalf of 13,000 Washington state workers.

It also faces an overtime lawsuit involving more than 2,400 workers at company-owned restaurants in California. That suit, filed last year in Santa Clara Superior Court, contends the vast majority of duties performed by salaried general managers and assistant general managers were routine.

The Associated Press contributed to this story.