Photo by thisisbossi

When Shaw’s Back Alley Waffles suddenly closed last month, owner Craig Nelsen painted the circumstances as something of a David vs. Goliath battle—his brief partnership with Groupon and its cutthroat practices had left him with no money to run the business or pay his employees, he claimed. The reality was a little more complicated—he didn’t have any of the required licenses to run a restaurant, for starters—but he’s right about one thing: he hasn’t paid his employees, and they’re pissed about it.

At least two of Nelsen’s former employees say they are filing complaints with the U.S. Labor Department this week alleging that he hasn’t yet handed over more than $1,500 worth of wages he owes them. They are also pursuing the matter in small claims court, and complain that he isn’t responding to emails demanding the money and didn’t pay out tips that servers should have received.

Under D.C. law, Nelsen was legally obligated to pay his employees every two weeks while he was open along with whatever they were owed within a day after he shuttered Back Alley Waffles in late July. To date, the employees say, he hasn’t.

One former employee who spoke to DCist on the condition of anonymity says that while she was paid for her first few weeks of work, she’s owed $645 for 45 hours worth of shifts in July. (Nelsen paid her $15 an hour.) Despite repeated attempts to negotiate with him—including an email in which she said she’d even take some of the restaurant’s equipment and supplies in lieu of payment—Nelson hasn’t responded since July 27. The employee also claims that Nelsen skimmed servers’ tips and never distributed tips that were added to credit card payments.

Another employee, Dimitri Alvarado, says he was never paid at all for the five weeks he worked. All told, he says that Nelsen owes him $978 in back pay. Alvarado, 26, came to D.C. for the summer while his girlfriend completed an internship. He said the closest he got to being paid was Nelsen handing him a personal check not to be deposited or cashed until Nelsen had sufficient funds in his bank account. That call never came, Alvarado says. In fact, Alvarado says, he was never told that Back Alley Waffles was on the brink—he only found out by reading Yelp after the restaurant shuttered.

In a text message to DCist, Nelsen didn’t dispute their claims: “I’ve said all along I owe back pay,” he writes today. In a subsequent phone call, though, he says that he didn’t believe that former employees were filing any complaints. “That’s a load…that’s a crock of shit,” he said. (Nelsen also disputes that the D.C. Department of Health had issued him a cease-and-desist notice, as we recently reported. The agency confirmed today that it did, and an Back Alley Waffles employee verified that the restaurant was visited by an inspector and told to cease operations.)

In emails to the employees in the waning days of the waffle shop’s short life, Nelsen seemed both apologetic and cognizant of the fact that he owed his staff their wages. On July 19, Nelsen pledged to pay his workers what they were owed—despite saying he did not have the money to do so. “I intend to honor my debts to you all, but, of course, you can’t pay the rent with good intentions. How? and when? I’m not sure.”

A week later, Nelsen wrote in an email that he was closer to getting his former employees their money. “I am in the process of securing funding that will allow me to pay everyone what I owe them. I give you my word that I will do that to the best of my ability and as quickly as I can.” He also wrote that he felt that Back Alley Waffles could survive, and thanked his employees for their words of support.

Some of the employees were legitimately on his side. Alvarado said that despite some misgivings he had with Nelsen’s management style, he liked the work. “I was rooting for it to work. I worked my butt off to make sure it could work,” he said.

On July 26, good news came—Nelsen wrote to say that he had finally received a $1,100 check from Groupon. But in a twist that he called a “sick joke,” his bank put a hold on the money, making it impossible to pay his employees until August 1. The next day, the first employee DCist spoke to emailed him back to ask when it would be best to pick up her pay; Nelsen never responded. She again emailed him on August 1, expressing concern that she had not yet heard back.

“You have stated in previous emails and phone conversations the you intend to pay, but you have not given me a time line or a set date,” she wrote. “I am starting to have reservations that you will not make good on your promises as you have not responded to my last email regarding unpaid wages…I would like to settle this amicably, and without the involvement of any authorities.”

Not having heard back again, she filed a complaint today at the Labor Department’s Wage and Hour Division office in Clarendon. Alvarado is planning on doing the same, and after speaking to a legal aide at Bread for the City, has opted to pursue the matter in small claims court. Additionally, one employee says, there were other former employees of Back Alley Waffles that may not have been paid, two of whom are said to be considering small-claims suits of their own.

Of course, the heart of Nelsen’s story was always Groupon’s business practices, but even that argument now sounds hollow to his former workers. It may also have been liberally employed by Nelsen, according to the emails provided to DCist. Those emails seem to show that Nelsen was keenly aware of how pinning the blame of Back Alley Waffles’ demise on Groupon—who he referred to as “shysters,” “cretins” and “charlatans”—could play to his benefit.

“Since I claim that it was (my decision to engage with) Groupon that forced us to close our doors, it helps my argument a great deal if I can show plausibly that, had I not engaged with Groupon, we would still be open,” he wrote to his former employees on July 26. “The strongest argument I have for that is the fact that, even though I owe you all money, you were willing to reopen and make it work. You, who were there every day in the trenches, still believe in the place. That speaks volumes (strategically, and personally).”

Nelsen’s argument against Groupon—which he outlined in detail here—still seems to have some currency, though: late last week CBS News broadcast a long segment on his travails, giving him ample opportunity to again speak out against the Chicago-based coupon service. Though Groupon chose not to comment for this story, spokeswoman Julie Mossler pointed us to prior comments she had made saying that the coupon service had already paid out two-thirds of those coupons redeemed and that Back Alley Waffles’ fate was Nelsen’s fault alone.

After their experience, Nelsen’s former employees seem to agree, saying that they think that Nelsen’s blaming of Groupon was a convenient way to deflect from his own role in Back Alley Waffles’ closing. “While he is portraying himself as a victim of circumstance and the press is portraying him as an unbridled cock-eyed enthusiast, Mr. Nelsen is just a man avoiding responsibility to his employees and culpability for his actions,” said a statement from the employees.

Worse yet, they said, the entire experience made them think that he was never in it for the long run. “My belief is that he never really intended to keep it open,” Alvarado says.

“Part of me feels duped,” says the other employee DCist heard from. “I don’t know if he’s a con artist, I don’t know if he just got himself in over his head. I just don’t know. I go back and forth on how I feel about it.”

UPDATE, 3:45 p.m.: We’ve spoken to a third employee who also filed a claim with the Labor Department today. She says she’s owed $895, and she confirmed the details shared by the two other employees we spoke to.