Another Study Confirms Rampant Wage Theft Among Low Wage Workers

A study recently released by the UCLA Institute for Research on Labor and Employment examined the frequency of labor and wage abuses against low-wage workers in the Los Angeles area. According to the study, a substantial portion of Los Angeles County workers at the bottom of the labor market are the victims of wage theft and other workplace violations, which on average deprive workers of 12.5 percent of their weekly paycheck. Approximately 88 percent of those surveyed reported at least one instance of being paid less than the minimum wage, working overtime and not being paid for it, working off-the-clock for free, or other pay-based violations during the previous work week. More than 30 percent of those surveyed were being paid less than the legal minimum wage for California, or $8/hour. A complete copy of the study is here.

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.

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.

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.

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.

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.

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.

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?

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/