Houston Restaurants Settle Overtime Claims

As described in the attached article, five Houston restaurants have agreed to pay $334,000 in back wages to 154 employees as a result of investigations by the United States Department of Labor. The investigations concerned the failure to pay overtime to workers.

Nobu Sushi To Pay $2.5 Million to Settle Tip Claims

Lawyers recently asked a court to approve a $2.5 million class action settlement on behalf of 500 current and former employees of Nobu in New York. The lawsuit alleged that Nobu improperly required servers to share their tips with sushi chefs and management employees,

Employment Law Issues Top List of Corporate Concerns

For the sixth consecutive year, labor and employment disputes topped the list of of legal worries for United States companies according to Fulbright & Jaworski's 2009 Litigation Trends Survey. The two biggest concerns were discrimination claims and claims under state and federal wage and hour laws.

Domino's Drivers File Suit Over TIps

Delivery drivers for Domino's Pizza have filed suit alleging that Domino's failed to pay them minimum wages. According to the complaint, Domino's paid drivers on the "tip credit" system. In other words, Domino's took a credit against the full hourly minimum wage that ordinarily would be paid to drivers on the theory that driver tips would make up the difference. This is legal under federal law and the laws of many states as long as certain rules are followed. In this case, the drivers contend that Domino's took the credit even when the drivers were performing work for which they did not receive any tips (e.g., car maintenance). An analogous example would be a restaurant server paid on the tip credit system for hours spent cleaning the restaurant.

Waitresses Sue Hooter's Over TIps

The orange-shorted waitresses of two Hooter's restaurants in New York have filed a lawsuit contending the restaurant misappropriated their tips and forced them to pay for uniforms. According to the suit, Hooter's illegally required waitresses to share their tips with kitchen staff. The waitresses also contend that Hooter's was required to cover the cost of uniforms because they were not "ordinary street wear."

World's Largest Strip Club Hit With Wage Suit

Attached is the initial complaint in a recently filed lawsuit against the Sapphire Gentleman's Club in Las Vegas, which bills itself as the world's largest strip club. As with other strip club cases discussed in earlier posts, the lawsuit contends that Sapphire misclassified its dancers as independent contractors. The dancers apparently worked only for tips and did not receive overtime. According to the lawsuit, Sapphire maintained so much control over how the dancers did their jobs that the dancers actually were employees not independent contractors.

Tip Pooling a Hot Topic at NYC Restaurants

The attached article discusses the wave of litigation against NYC restaurants relating to illegal tip pooling policies. Coming from a restaurant industry trade publication, the article has a distinct bias. As one would expect, the article attributes the litigation to lawsuit-happy lawyers rather than to law-breaking restaurants.

USDOL Files Amicus Brief in Cumbie Tip Credit Case

As discussed in earlier posts, Cumbie v. Woody Woo, Inc. asks whether an employer can take an employee's tips as long as the employer does not take a tip credit against the employee's minimum wage. The issue is on appeal to the Ninth Circuit Court of Appeals. The United States Department of Labor recently filed the attached "friend of the court" brief on behalf of the plaintiff in the Cumbie case. USDOL argues that tips are the property of the employee who receives them whether or not a tip credit is taken.

NELA Files Amicus in Cumbie Tip Case

Attached is a "friend of the court" brief filed by the National Employment Lawyers Association in the Cumbie v. Woody Woo, Inc. case pending before the Ninth Circuit Court of Appeals. As discussed in earlier posts, the appeal concerns whether the FLSA allows employers to divert employee tips if they do not take a tip credit against the minimum wage. In other words, is the general rule that employee tips belong to employees nullified if an employer pays the full minimum wage rather than the server minimum? The brief is of particular interest in that it provides a succinct overview of the development of the FLSA tip rules and the policy concerns behind those rules.

Owner/Officer Liability for Wage Violations

Under the Fair Labor Standards Act, anyone who is an "employer" of an employee can be held liable for failing to pay proper wages to that employee. Employers should be aware, however, that the FLSA defines the term "employer" broadly to include not just the immediate corporate entity for which an employee works but also others in control including individual managers, officers and owners. In other words, individuals cannot count on limited liability protections for corporations to shield them from liability. For example, as discussed in the attached article, even after a corporate bankruptcy, individuals in the corporate chain of command can be held liable for unpaid wages.

California Ruling Doesn't Slow Starbucks Tips Suits

Recently, the California Supreme Court declined to review a Court of Appeals decision overturning a $105 million verdict against Starbucks relating to its tip policy. Starbucks has a policy of dividing tips between counter service "baristas" and supervisors. Based on the narrow facts of the case, the California Court of Appeals found the Starbucks system was not a violation of the California tips law. Since state tips laws vary greatly, however, the California ruling has had little impact on similar lawsuits filed around the country including in Massachusetts, New York and Minnesota.

Airline Skycaps Launch FLSA Suit Over Tips

Attached is a lawsuit recently filed on behalf of skycaps for United Airlines. The suit alleges that United's decision to start charging a $2 per bag fee for curbside check-in resulted in skycaps being deprived of tips they otherwise would have received. Since the skycaps apparently are paid on the "tip credit" system, federal law requires that they be allowed to keep all of their tips.

Yet Another NYC Tip Lawsuit

Servers at an upscale New York sushi restaurant have won class certification in a case alleging misappropriation of tips and gratuities. The lawsuit alleges that Masa forced servers to share with "back of the house" non-service employees.

"Donning and Doffing"

There presently are many class actions pending against food processing companies alleging failure to pay assembly line workers for time spent putting on protective gear and traveling to work sites. For example, attached is a copy of a lawsuit pending against Butterball relating to its turkey processing facilities. These cases have come to be known as "donning and doffing" lawsuits and seek compensation for unpaid pre- and post-shift work. Again, whether you are an employer or an employee, it is important to remember that workers must be paid for ALL work time.

Lowe's to Pay $29.5 Million to Settle "Off the Clock" Class Action

According to this article, after seven years of litigation, Lowe's finally has agreed to settle a class action lawsuit claiming it forced thousands of employees to work "off the clock." The suit alleged that Lowe's did not pay these employees for work they performed before and after their regularly scheduled shifts.

Another NY Restaurant Hit With Tip Pooling Lawsuit

Japonais restaurant in New York City has been sued over its tip pooling practices. In particular, the suit alleges that Japonais allowed management employees to share in server tips and failed to provide meal breaks. Apparently, the Judge in the case recently granted conditional certification of a Fair Labor Standards Act collective action. What this means is that the plaintiffs in the case now will be able to send notice to all current and former Japonais employees with potential claims so they can decide whether to join the lawsuit.

Tip Rules Also Protect Dancers

Recently, there has been a minor wave of litigation by exotic dancers claiming the nightclubs that employed them stole their tips. As discussed in this Boston Globe article, the suits generally argue that dancers are employees and not independent contractors and, therefore, are subject to the same wage and hour rules that protect other tipped employees such as restaurant servers. Many employers attempt to circumvent the law by misclassifying their workers as independent contractors, who are exempt from the Fair Labor Standards Act, rather than employees. At heart, the issue is one of control. If an employer has significant control over how a worker does his job, then that worker is an employee not a contractor.

Can Management Share in Automatic Gratuity Charges?

Here are articles regarding two recent tip-pooling cases, one involving the Maui Westin in Hawaii and one against the Sheraton Colonial Hotel & Golf Club in Massachusetts. Both concern so-called "automatic gratuity charges" applied to restaurant customer bills. The suits allege the resorts violated state tip-pooling laws by allowing management personnel to share in such charges rather than distributing them solely among service staff.

Overtime Lawsuits On Behalf of Loan Underwriters and IT Analysts

As mentioned in the overtime discussion on this website, there currently are a number of lawsuits regarding whether loan underwriters are exempt from state and federal overtime requirements. The issue here, as in many overtime lawsuits, is whether underwriters have real discretion in their job performance (in which case they may be overtime exempt) or whether they are more akin to clerical workers performing routine administrative tasks (in which case they are entitled to overtime). Here is an article about another loan underwriter class action brought against JP Morgan. Apparently JP Morgan attempted to circumvent the issue by writing job descriptions for their underwriters that bore no real relationship to the underwriters' actual job duties.

According to another article, a similar case against Lockheed has been brought on behalf of its network data communications analysts. Here, however, although the analysts apparently exercised significant discretion in their jobs, the lawsuit argues that they were in a production role and not a general administrative role. Generally, workers engaged in the production of a company's products, as opposed to those in charge of overall corporate administration, are entitled to overtime.

Cable Installer: Independant Contractor or Employee?

In a recent decision in Parrilla v. Allcom Const. & Installation Services, LLC, a federal court in Florida held that a cable installer was an employee and not an independant contractor and, therefore, was required to overtime compensation. In the decision, the court listed the following factors to be considered in distinguishing between employees and independant contractors: (1) the nature and degree of the alleged employer’s control as to the manner in which the work is to be performed; (2) the alleged employee’s opportunity for profit or loss depending upon his managerial skill; (3) the alleged employee’s investment in equipment or materials required for his task, or his employment of workers; (4) whether the service rendered requires a special skill;
(5) the degree of permanency and duration of the working relationship; and (6) the extent to which the service rendered is an integral part of the alleged employer’s business.

U.S. Government Report Focuses on Independant Contractor Misclassification

A report released this week by the United States’ Government Accountability Office (GAO), highlights the issues created when employers misclassify employees as independent contractors and calls for the DOL and IRS to step up enforcement measures to crack down on the abuses. A brief summary of the report is here.

Although exact figures are unknown, older studies indicate that millions of employees have been improperly classified as independent contractors by their employers. One major problem with this from a wage perspective is that independent contractors generally are exempt from the protection of federal and state wage and hour laws, including the Fair Labor Standards Act. Therefore, misclassified employees may be denied overtime and minimum wages.

Although more information can be found on this website, the basic distinction between an independent contractor and an employee is a the degree of control exercised by the employer. If your employer has significant control over your work, then you likely are an employee entitled to wage protection, even if your employer calls you a contractor.

In any event, to combat this rampant problem, the GAO report recommends a significant increase in enforcement. Specifically, the report states that, “[t]o assist in preventing and responding to employee misclassification, and to increase its detection of Fair Labor Standards Act (FLSA) and other labor law violations, the Secretary of Labor should direct the Wage and Hour Division (WHD) Administrator to increase the division’s focus on misclassification of employees as independent contractors during targeted investigations.”

If you have any questions about your classification as an independent contractor, please contact the firm.

Wave of Tip-Pooling Lawsuits in NYC

After learning of the Nobu lawsuit mentioned in my last post, I learned that there has been a wave of similar litigation against restaurants in the New York City area. According to this article, a number of the city's finest dining establishments have been sued over illegal tip-pooling practices and failure to pay overtime to staff.

N.Y. Celebrity Hot-Spot Sued Over Tips

The New York Times reports that Nobu, a sushi restaurant in NYC famous for its celebrity clientele has been sued for illegal tip pooling. The lawsuit contends that Nobu forced waiters to share tips with management employees. Apparently, Nobu tried to skirt the law by euphemistically titling the managers "floor captains."

Low-Wage Workers Are Often Cheated, Study Says

A New York Times article discusses a recent study of low-wage workers. The study, "the most comprehensive examination of wage-law violations in a decade", found systematic violations of wage and hour laws among thousands of workers studied. The study found that "68 percent of the workers interviewed had experienced at least one pay-related violation in the previous work week." If you would like a copy of the full study, please contact the firm.

Soapbox: The federal and state employee wage protection laws are crucial to protecting one of the most powerless segments of our society, low-wage workers. Unfortunately, government regulators are "spread too thin" to effectively police industries (e.g., restaurants) that employ such workers. This is why the Fair Labor Standards Act, and analogous Colorado state laws, contain incentives for private attorneys to take these cases.

Employers Don't Get to Decide the Length of a Week

According to this article, an employer in Alabama has been ordered to repay over $300,000 in backwages after a Department of Labor investigation revealed that the employer was calculating overtime based on a 14-day consecutive period instead of the required 40 hour workweek. The fact that the employees explicitly agreed to work under this system made no difference because employees cannot waive their rights under the federal and state wage laws.

"Whoever dares to sue, you're gonna die"

Here is an example of why workers need the protections of wage and hour laws (as well as attorneys willing to represent them). Workers at a restaurant in Maine have sued their employer claiming they worked 70 hours or more per week with no overtime pay, were paid only in tips and never received rest breaks. As can be seen from the quote above, the employer apparently threatened to kill any employees who dared to sue him. According to the article, the employees who filed the suit are immigrants who speak very little English.

Your "US" Magazine Moment . . .

According to this blog post, Lisa Marie Presley has been sued by her former nanny who claims she was denied rest breaks and overtime pay.

Earl's Restaurant to Pay $500,000 for Illegal Tip Pooling

As discussed here, the Colorado Earl's Restaurants along with one location in Arizona will refund $500,000 to 234 current and former servers who were forced to participate in an illegal tip pool. Apparently, Earl's required servers to share their tips with managers and cooks and also required contributions to a customer walkout fund.

More on the Likely Minimum Wage Decrease

Here is another article discussing the likely decrease in the Colorado state minimum wage.

Casino Dealers Claim Wynn Tip Pool is Illegal

As discussed here, a group of dealers has sued the Wynn Casino in Las Vegas claiming that Wynn illegally required its dealers to share their tips with managers. One interesting issue raised in this lawsuit is whether the Fair Labor Standards Act imposes any requirements on a tip pool when the employer takes no "tip credit" against the minimum wage. The case is based, in part, on a Department of Labor opinion that, for the first time, takes the position that a tip pool can be invalid even if no tip credit is taken.

Servers Win Tip-Pooling Case Against Chili's

As discussed here, a federal jury in Texas has awarded $270,000 to 54 former Chili's servers forced to participate in an illegal tip pool. The lawsuit, filed against Chili's parent corporation Brinker International, alleged that Chili's violated the Fair Labor Standards Act by requiring servers to share their tips with "quality assurance" workers or "expeditors" who had little customer contact. Under the FLSA, workers forced to sue to convince their employers to pay minimum wage are entitled to recover attorney's fees and expenses incurred in fighting the battle. By all accounts, Chili's fought the lawsuit "tooth and nail" and, as a result, the Court is considering whether Chili's should pay over $2 million in legal expenses incurred by the former servers. Moreover, it is likely that Chili's spent much more than that on high-powered defense lawyers in order to fight the servers. Wouldn't it just be easier to pay a living wage?

Colorado Minimum Wage to Decrease in 2010

An article about a decrease (to $7.24/hour) in the Colorado state minimum wage for 2010 is here. For the first time since Amendment 42 passed, the federal minimum wage of $7.25/hour will be higher than the Colorado minimum wage.

USDOL Recovers More Than $600,000 for Tipped Employees in Kansas

The Wage and Hour Division of the United States Department of Labor, Southwest Region, has recovered more than $600,000 on behalf of 19 employees of a Kansas restaurant. Among other violations, USDOL established that the employees were paid solely in tips, without receiving an hourly minimum wage. An article about the case is here.

Workers Have a Friend in Obama

An article about President Obama's worker-friendly policies and priorities: http://www.msnbc.msn.com/id/29268009/

An Ounce of Prevention . . .

The firm just finished a review of the wage and hour policies of a national restaurant chain looking to expand into Colorado. Although the firm generally represents employees victimized by employers who ignore the law, our experience in that area makes us uniquely qualified to audit pay practices before they become a lawsuit. If you are a restaurant owner and would like to ensure full legal compliance, please contact us.

U.S. Steps Up Wage and Hour Enforcement

According to this Wall Street Journal article, Mr. Obama’s new Labor Secretary, Hilda Solis, is making good on her promise to reinvigorate the enforcement efforts of the United States Department of Labor. This is good news for employees.

Labor Agency is Failing Workers, Report Says

The United States Department of Labor is responsible for enforcing federal labor laws, including the Fair Labor Standards Act, which governs employ minimum wages and overtime. A recent report by government auditors found that that DOL may mishandle as many as 90 percent (90 percent?!) of the cases brought to it for enforcement.

This is not a reflection on DOL investigator competence, rather it is an issue of resources. When DOL is not properly funded, it cannot hire a sufficient number of investigators, which leads to employee complaints dropping through the cracks. Fortunately, both state and federal wage and hour laws are designed to supplement government enforcement through the use of “private attorneys general.” This term refers to private lawyers who are encouraged to take and prosecute employee cases. Because the wage and hour laws provide that employers may have to pay the fees of private lawyers who bring and win employee cases, the laws create a financial incentive for private lawyers to vindicate employee rights thereby supplementing the efforts of DOL.

Read the article: http://www.nytimes.com/2009/03/25/washington/25wage.html