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.