In the Weeds: Cugino Forno comes under fire from DOL, locals

Featured photo: Bailey Park is the crowning jewel in the revitalization of downtown Winston-Salem currently. (photo by Owens Daniels)

The specially imported ovens from Naples fire up. Outside, the Coal Pit has already beckoned a rambunctious crowd that forms a line entering the revitalized power plant. It’s Saturday, and to many people in the suburbs and small, strip-mall towns surrounding downtown Winston-Salem, this is as close to a metropolitan experience that a 30-minute drive will allow: a strategic, concrete playhole that shields the unassuming suburban public from the “poors,” the hustlers, skateboard punks and other unmentionables that might contaminate this shiny oasis surrounded by a sea of uncertainty. This is Bailey Park, the current crown jewel of downtown renewal efforts.

On a sunny day, you can expect to see people lounging on blankets across the lawn, enjoying cocktails on the porch of Fair Witness, and children chasing each other in the enclosed coal pit while their parents catch up over lunch or dinner. While the crowd mingles outside, the workers are hard at it inside selling beer, coffee, Tex-Mex, and front-and-center: the pizza.      

Despite the popularity of Cugino Forno, the Neapolitan pizza chain based in Greensboro, the owners have come under scrutiny in recent weeks after a June 15 press release by the Department of Labor stated that the chain “paid as little as $1.19 per hour as a cash wage to workers, which forced them to rely almost entirely on tips for their income.” The investigation revealed that the owners collected tip money left for workers by customers and used them to pay wages for other employees. It was also determined that employees were not paid the required overtime rate when doing so. Ultimately, the owners of Cugino Forno paid back a whopping $276,048 to the 63 employees.  

Co-owner Joseph Ozbey, named one of the Triad Business Journal’s “40 Under 40” in 2021, claimed in an interview with the Winston-Salem Journal that it was merely a “miscalculation” and that the employees were compensated.

From the article: “Instead of telling (employees) they were going to be paid $2.13 per hour and tips, we promised them $10 [an hour],” Ozbey said. “We used the tips that were collected and paid them, and on top of that we paid from the company if tips weren’t enough to reach $10 an hour…. That’s where the miscalculation came.”

For those unfamiliar with how the service industry works, this does not mean that the workers made $1.19 an hour while working at Cugino Forno. If this were the case, who would work there? A measly $1.19 doesn’t buy a cup of coffee, much less a pitchfork. Tips are part of the job, even though there’s no table service. Ultimately, it’s a newer concept that owners have utilized to save money on labor. But people still tip, and it’s illegal for owners to pocket them. 

The racist origins of tipped workers were not taken into account when the job classification was omitted in the establishment of the Fair Labor and Standards Act (which established the Federal Minimum Wage) in 1938. 

In 1966, in one of many responses to the Civil Rights Movement, Congress finally set a standard for tipped workers. It established that employers of tipped workers were supposed to pay half of a worker’s minimum wage and that tips would cover the rest. For 30 years, tipped minimum wage stayed mostly parallel to the Federal Minimum Wage. In 1996, the $2.13 tipped wage was that standard to the $4.75 Federal Minimum Wage. All’s well, right?

Enter the National Restaurant Association, then led by Godfather’s Pizza owner, future presidential candidate, COVID denier and eventual COVID victim, Mr. Herman Cain. Cain’s aggressive lobbying led to an agreement with Congress that the tipped minimum wage would thereafter be frozen and not be at the whim of the steadily rising minimum wage. 

It has remained at $2.13 for the past 26 years and even outlived Cain himself. Where the tipped minimum wage was, on average, 50 percent of the standard minimum wage, it stands at a mere 29 percent today. Why am I telling you this? Tipped employees have a poverty rate that is twice that of non-tipped workers. There are rarely benefits, and the average pay for most tipped workers is still among the lowest in the country. If we want to break it down even more,      female tipped workers report twice as much sexual harassment and even lower pay. 

When it comes to Cugino Forno, the $276,048 is a big “whoops, my bad” to pay back. They claimed to have paid their employees, just not what they were entitled to, according to the DOL.  But they were also the recipient of federal money as well. The Greensboro and Winston-Salem LLCs both applied for and received two federal PPP loans during the pandemic that totaled $382,423, and wouldn’t you know it, all four were forgiven. 

How many of their employees relied on the COVID unemployment payments? From January of 2020 to April 2020, NC saw a drop of almost 240,000 workers in the Leisure/Hospitality Industry alone. Many had to go on unemployment.  How many had auditors coming around to claim it back?

This is one restaurant in an ocean of bad actors in the industry. How many are still swimming around, avoiding capture?