Cavalier Hotel and Crab Shack Sued by U.S. Dept. of Labor Over $160,000 in Unpaid Wages

An art deco hotel on South Beach is locked in a battle with the federal government over the kind of accusations that have gotten the 99 percent so riled up recently. The U.S. Department of Labor says the Cavalier Hotel and Crab Shack on Ocean Drive owes its employees $160,000 and that owner Ralph Abravaya skirted taxes by paying his employees in tips and refusing them overtime pay. Abravaya admits wrongdoing, but is hardly apologetic.

"Yeah we screwed up," Abravaya admits to Riptide. "Alright, so slap me in the hand. But don't tell me you are going to destroy the business or fine me $300,000. That's bullshit."

According to the lawsuit, the hotel and restaurant broke the Fair Labor Standards Act.

Will Garnitz, district director for the Department of Labor's Wage and Hour Division, says a two-year investigation revealed Abravaya had dodged taxes by paying employees entirely in cash. He also underpaid them by denying them overtime when they worked more than 40 hours per week, Garnitz adds.

"Most of the investigations that we do that find underpayment of wages, we manage to settle administratively," Garnitz says. "But this proprietor falsified his records in order to mislead us."

If Abravaya loses in court, he will have to pay a total of $320,000 in fines and unpaid wages, plus court costs.

The hotelier admits that a manager did falsify records in an attempt to escape investigation. But Abravaya says he fired the employee as soon as he learned of the deception. He insists that when he took over the hotel and restaurant in 2009, he simply continued the policy set by the previous owner and paid the employees $6 an hour plus their tips -- more than they were owed by law.

Abravaya admits to owing taxes, but calls the DOL's allegations "bullshit."

"I thought it was normal procedure (to pay them in cash)," he says. "Either way, all of them got paid. And they signed affidavits saying that they got paid."

Both sides are scheduled to meet at a settlement conference in April. But the prospects of an amicable deal seem slim.

"The Department of Labor came to me saying, 'By law, blah blah blah.' So I said, 'Oh screw you,'" Abrayaya says. "So yeah, they don't like me. But I paid the damn money. I'm not going to say: 'Oh, I'm so sorry. Please forgive me.' Screw that."

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Michael E. Miller was a staff writer at Miami New Times for five years. His work for New Times won many national awards, including back-to-back-to-back Sigma Delta Chi medallions. He now covers local enterprise for the Washington Post.