Restaurant News

Golden Margarita Loses its Luster as Former Employees File Lawsuit to Recover Pay

Former Golden Margarita employees filed a lawsuit in the U.S. District Court in Arizona in May alleging that the bar and nightclub violated the Fair Labor Standards Act.
Former Golden Margarita employees filed a lawsuit in the U.S. District Court in Arizona in May alleging that the bar and nightclub violated the Fair Labor Standards Act. Elias Weiss
A couple of months after The Golden Margarita closed, an ongoing legal battle is raging between the business's former staff, who claim they are owed unpaid wages, and its owners, Saraj Gem Ray and his unnamed wife.

Two former employees filed a labor suit against the business in the U.S. District Court in Arizona on May 6, alleging that The Golden Margarita violated the Fair Labor Standards Act by failing to pay employees their wages.

The popular Roosevelt Row Mexican restaurant and party bar abruptly announced on Instagram that it had closed its doors on May 9. During less than two years in business, the bar faced down community safety complaints, nearby shootings, and a months-long battle with the city of Phoenix over its liquor license.

Drama still plagues Ray's business. Chauncey Alexander, a bar manager and human resources administrator at The Golden Margarita from August 2020 to April 2022, and Megan Krajewski, who worked as a server at the business for three months before also leaving in April, joined 18 other former employees in pursuing unpaid wages.

The unpaid wages include overtime pay, owed tip credits to make up for subminimum wage for tipped employees, and a deduction of 25 percent of credit card tips that was redirected to the business owners. Former employees also claim they are owed reimbursement for customer walkouts, cash shortages, or inadvertent employee mistakes, which became the financial responsibility of employees.

This was all amid a "practice of failing to pay timely, or at all, their regular paychecks," according to the lawsuit, the plaintiffs of which are being represented by Clifford and Christopher Bendau of the Bendau Law Firm in Phoenix.

When employees were paid on time, "such paychecks would often return as having nonsufficient funds," the suit says. Other former employees, named in the lawsuit as "tipped collective members" or "non-tipped hourly collective members" can join the action to recover unpaid wages.

Cliff Bendau is unsure of exactly how much is owed to former employees, citing "a consistent failure to pay paychecks just about every week."

"A lot of the employees I have spoken with have said their payday custom was racing each other to banks to be able to cash their checks before funds ran out," he said.

Ray, who also owns a concierge company called Scottsdale Nights, which books high-end bottle service at night and day clubs in Scottsdale and Las Vegas, filed a counterclaim in the U.S. District Court in Arizona on June 17.

It alleges that former employee Alexander "was improperly managing payroll" as a payroll coordinator and that "Ray approved payments to Golden Margarita's employees in accordance with Alexander's payroll practices." It also states that Krajewski, a lead server, "supported and/or participated in Alexander's improper conduct."

Asked about the suit, Ray said in a text message that "The Golden Margarita closed three months ago," without elaborating or commenting on unpaid wages or the lawsuit.

Alexander could not be reached for comment on the counter-suit.

Adriel Torres, who is not currently part of the lawsuit, worked at The Golden Margarita as a bar back from March through May of 2022. The 22-year-old estimates that the business still owes him at least $400 in unpaid wages, including hourly pay and credit card tips.

He struggled to collect regular pay during his time working at the restaurant and bar, while management kept kicking the can down the road, telling him that he would be paid soon. Torres said he collected about $120 in cash tips but never received a paycheck while employed at The Golden Margarita. He just learned of the suit against the business on Tuesday and plans to join.

During its time in business, The Golden Margarita was decidedly different from other RoRo bars, with $1,000 table reservations, live rappers, televised mixed martial arts fight nights, and alcohol served by "bottle girls" in sultry attire — all things more aligned with the party atmosphere of Old Town Scottsdale. But beside the loud music and unorthodox approach to the arts district, the nightclub on the ground floor of the Roosevelt Row Apartment Homes at East Roosevelt and Third streets earned itself a dire reputation.

There were multiple reports of gun shots around the property, including a January 2 incident that occurred just after last call at The Golden Margarita, and a history of community complaints about noise and fights on bar property.

The bar went back and forth with the city of Phoenix for months about its liquor license, with the city council recommending that it be revoked repeatedly, citing a "history of noncompliance related to prior liquor licenses held by the applicant, including failure to meet the required percentage of food sales and the presence of an employee intoxicated while on duty," in a July 1, 2021, city council meeting.

The bar remained open on an interim liquor permit. But about three weeks before it shut down in May, employees heard murmurings that it would soon close its doors, Torres said. A manager spoke with employees to address the issue.

"I know you guys have been hearing rumors that we're going to close down, but as of right now, that's not true," Torres recalled the manager saying.

Employees felt somewhat reassured after the talk, though rumors continued to swirl, Torres said, prompting many to quit or walk out during The Golden Margarita's last couple of weeks in business.

"They never actually officially told us that they were closing down," he said. "I had no job to fall back on because of that."

Torres is still trying to recover pay from business owner Ray, who wrote in text messages that his first priority was to pay the employees "that stayed," next, to pay employees that "gave their two-week notice or longer," then to pay former employees, and that "all the employees that walked out/quit/no-show will be the last ones paid." The text went on to say that "As always, everyone will be paid, but it's going to be a process."

It's not as if The Golden Margarita was Ray's first rodeo. He owned Three Wisemen, a bar in Old Town Scottsdale, from February 2018 to early 2020. The noncompliance with previous liquor licenses cited in the Phoenix City Council meeting referenced Three Wisemen, which operated under Cactus Hospitality Group, a limited liability corporation owned by Ray. In addition to Scottsdale Nights, Ray also owns Ardor Concepts, which is listed as a defendant in the pending lawsuit against Ray, his wife, and The Golden Margarita.

In a July 22 Instagram video from the business account that promotes Scottsdale Nights, Ray points and flashes a peace sign at the camera, smiling and seemingly partying inside a popular Old Town Scottsdale nightclub.

But when it comes to Ray's former downtown Phoenix business, Cliff Bendau simply wants his clients to be paid what they are owed. "We allege that Golden Margarita and Gem Ray violated the Fair Labor Standards Act and the associated Arizona wage law. They viewed their employees as expendable numbers and just decided not to pay them," he said.

The firm will send a notice to others who were affected by The Golden Margarita's failure to properly pay its employees. Bendau wants all employees to understand that, while employers may seem like the ones in power, workers have avenues to protect themselves.

"Employees should know that when they're taken advantage of by their employers, when they're not paid and they feel helpless and like they have no power, the law is on their side," he said. 
KEEP PHOENIX NEW TIMES FREE... Since we started Phoenix New Times, it has been defined as the free, independent voice of Phoenix, and we'd like to keep it that way. With local media under siege, it's more important than ever for us to rally support behind funding our local journalism. You can help by participating in our "I Support" program, allowing us to keep offering readers access to our incisive coverage of local news, food and culture with no paywalls.
Natasha is a dining reporter who loves to explore the Valley’s culinary gems. She has covered cannabis for the New Times, politics for Rolling Stone, and health and border issues for Cronkite News in conjunction with Arizona PBS, where she was one of the voices of the podcast CN2Go.
Contact: Natasha Yee