Sharing of Tips Between Workers: Appeals Court Upholds Limit

On Tuesday, a federal appeals court (9th Circuit Court of Appeals) ruled that businesses could not enforce a policy of tip sharing amongst workers even if their tipped employees are paid minimum wage. The ruling upheld a 2011 U.S. Labor Department rule in a 2-1 decision. In upholding the rule, the 9th Circuit noted that it was “reasonable” and appropriately consistent with the Congress’s goal to make sure that tips stay with employees who received them for their service.

 

Definitions to Know: What is “Tip Sharing Among Workers?”

 

When employers, supervisors or businesses collect tips that are left by customers for their waiters, casino dealers or other service employees that are then “shared” with backend support staff (i.e. dishwashers, bussers, hosts, etc.)

 

The 9th Circuit overturned district courts in both Nevada and Oregon. The ruling largely applies in those states where employers are required to provide workers with minimum wage in addition to any tips received: California, Washington, Oregon, Nevada, Montana, Minnesota, and Alaska. Previously, the labor department banned employers from using the distribution of “shared tips” to employees who do not normally receive tips (i.e. backend workers).

 

The basis for this legislation is that the tip received never belongs to the employer and therefore the employer does not have the authority or right to take it and redistribute it – it is not the employer’s money. Those in support of the rule prohibiting tip sharing urge employers to turn to higher pay for backend employees instead of using “tips” from other staff to subsidize a low pay rate.

 

While, the discussion of tip sharing is far from over, those in support of the 2011 U.S. Labor Department rule preventing enforced policies of tip sharing amongst workers, see this ruling as a move in a positive direction. Others question the effect that this movement will have on the pay of backend workers who depended upon the additional cash to supplement their income.

 

If you have questions regarding the legality of company policies such as tip sharing amongst workers, get in touch with the experienced southern California employment law attorneys at Blumenthal, Nordrehaug & Bhowmik.

The National Labor Relations Act of 1935 vs. Your Boss’s Request to Never Disclose Your Salary

It goes without saying that your boss doesn’t want you to talk about your pay with your co-workers. Why does it go without saying? Because…they’ve probably said it. The majority of American workers from fast food workers to administrative assistants to dental hygienists have been advised by their superiors/employers not to discuss their pay with their co-workers. It’s so commonplace that when employers make the request most workers don’t bat an eyelash or question the validity of their employer’s right to make such a demand.

If you consider this request in terms of employment law, any time an employer requests or demands that you keep your pay rate or salary a secret from your co-workers they are breaking the law. 

According to the National Labor Relations Act of 1935 (NLRA), all workers are provided the right to exhibit “concerted activity for mutual aid or protection” as well as to “organize to negotiate with [employers regarding their] wages, hours, and other terms and conditions of employment.” In six states, the law goes further and actually states that workers retain the right to discuss their payment rate.

Employers insisting that you not discuss your pay rate with co-workers are in violation of the law, regardless of whether the request/demand/threat was made verbally or in writing and regardless of what the consequences are of ignoring the often unspoken rule. Sometimes it results in firing, but sometimes consequences are more subtle, i.e. a cold shoulder from supervisors/management.

Gag rules are currently thriving in the American workplace. According to a recent study by the Women’s Policy Research, approximately 50% of the American workforce (across all industries) is not to discuss their pay with their co-workers (either explicitly prohibited or strongly discouraged). The percentage is higher in the private sector (closer to 61%). Gag rules violate fundamental labor rights and create workplace environments that support discriminatory pay structures. Reforms are necessary.

President Obama did recently sign two executive actions that address transparency and accountability in the workplace. These will assist those who work for federally contracted employers, but others are currently on their own. Another bill, the Paycheck Fairness Act, would address the situation for the rest of America’s workers, but it has not yet been passed.

If you have questions regarding the gag rule and wrongful termination, please contact the southern California employment law experts at Blumenthal, Nordrehaug & Bhowmik. 

Exempt and Non-Exempt California Employees Affected by Increase in California’s Minimum Wage

On July 1, 2014, California raised its minimum wage from $8/hour to $9/hour. Both non-exempt and exempt salaried employees will be affected. An additional increase to $10/hour will take effect on January 1, 2016. Some employers view the change as inconsequential as they already have to meet local minimum wage requirements for their non-exempt employees, but there will in fact be a noticeable impact because the change applies to exempt status employees and commissioned inside sales employees.

To understand the potential changes the increase in minimum wage could have for exempt employees you must first consider the requirements for the exempt status. In order to be classified as exempt, an employee must meet certain requirements regarding the type of work they are performing. In addition, they must meet the minimum salary test. California law requires that all employees classified as exempt earn a monthly salary that is at least twice the minimum required by the state for a full time employee (working 40 hours per week). ) Prior to the increase in California’s minimum wage, this left the minimum monthly salary for a full time, exempt employee at $33,280. The change that took effect on July 1, 2014 bumps it up to $37,440. By 2016, this number will be even higher, bringing exempt employees’ minimum salary to $41,600 per year in order to meet the minimum salary test. 

In regard to commissioned inside sales employees, the new California minimum wage applies to overtime pay. California law dictates that an inside salesperson is exempt from overtime pay if they earn more than 1.5 times the state minimum wage and more than half of their income is commission pay. After July 1, 2014, an inside sales person must earn at least $13.51 per hour in order to be exempt from overtime pay. With the arrival of 2016, these employees will need to be making at least $15.01 per hour in order to retain exempt status.

Employers who disregard of delay the necessary adjustment of applicable employee pay rates and exemption statuses could face costly penalties and interest on back pay due employees, possible overtime premium pay (as a result of the loss of exempt status for some workers) and more. If you have questions regarding how the change to minimum wage law may apply to you, get in touch with Blumenthal, Nordrehaug & Bhowmik today. 

Work Off the Clock: Nurses Allege Wage and Hour Violations at Houston Methodist Hospital

Allegations have been made that the Houston Methodist Hospital requires nursing staff to work off the clock due to a payroll system that automatically deducts a 30 minute lunch break. A former nurse named Joy Corcione is seeking permission from a local federal court for collective action on behalf of over 5,000 workers from the facility. The lawsuit Corcione filed alleges that as a result of the automatic lunch break deductions the hospital owes back wages to the nurses, nursing assistants, patient care assistants, etc. Corcione explains that workers are required to respond to patient calls as well as meet with doctors and perform other duties as necessary during their so called “lunch breaks.” The lawsuit also alleges that sometimes nurses and other hospital employed caregivers don’t get to eat lunch at all, they are too busy.

The hospital has responded to the allegations made in the suit saying:

1. They make sure to pay workers appropriately even if their lunch is interrupted.

2. Hospital administration makes a great effort to ensure a fair compensation process as well as a fair work place environment.

3. The hospital will address claims otherwise during the process of litigation.

According to the Federal Labor Law, employers don’t have to pay employees during their lunch breaks if they are not working, but it’s been specified that if workers are still on duty (answering calls, going through emails, performing other work-related activities) during their lunch break then this time is considered work time even if they are eating, making personal calls or texts etc. while performing said duties.

It will be interesting to see what U.S. District Judge Gregg Costa has to say about the payroll system that automatically deducts the 30-minute break and the alleged discouragement of employees to manually correct the deduction of meal time and break time on their time sheets. The judge will need to decide whether or not to certify it as a collective action, but if he does, other nurses and patient care employees from the hospital can expect to receive notices regarding their chance to opt in – only employees who opt in can share in any eventual settlement.

If you have any questions about class action lawsuits or meal break violations, please get in touch with the experts at Blumenthal, Nordrehaug & Bhowmik. 

David Weil: Department of Labor’s New Wage and Hour Head

The Senate confirmed business school professor, David Weil, as the head of the US Department of Labor’s Wage and Hour Division on Monday, April 28, 2014 in a 51-42 Senate vote. Some regard the appointment as long overdue as President Barack Obama’s first two nominees did not make it through the process. David Weil is a professor for Boston University’s School of Management. He also serves as a co-director for Harvard Kennedy School’s Transparency Policy Project.

While David Weil was President Barack Obama’s third nomination for head of the Wage and Hour Division, he was the first to make it through the process and become the Senate-approved administrator. As such, David Weil will be responsible for enforcing the Fair Labor Standards Act and the Family and Medical Leave Act as well as other laws. Lorelie Boylan, President Obama’s first nominee withdrew her name as a result of Republican opposition. The White House pulled the second nominee, Leon Rodriguez, from consideration.

At a Senate HELP Committee on December 10, 2013, Weil stated that one of his priorities would be to make sure that employers skirting or disregarding the law don’t gain an unfair advantage over their competition. Mr. Weil intends to expand the legal liability of companies who employ subcontractors. The issue of liability of holding companies for their franchisees’ wage and hour violations has also been discussed. It can be argued that holding companies (like 7-11 and Subway) that have thousands of franchises to which they dictate the smallest details of day to day functionality (use of certain ingredients, particular menus, employee dress code/uniforms, etc.) should be held more accountable (and liable) for violations due to their intense involvement in day to day franchise activities and policies.

For more information on how David Weil’s priorities as the US Department of Labor’s Wage and Hour Division Head could affect the workplace, get in touch with the experts at Blumenthal, Nordrehaug & Bhowmik today. 

Warehouse Wage Theft Case Results in $21 Million Settlement

Walmart and their most prominent import distribution subcontractor, Schneider Logistics, Inc. will pay an historic $21 million settlement for wage and hour violations (federal and state level) in connection to case Carrillo vs. Schneider Logistics et al. Violations were committed at a warehouse facility in Riverside County, California. According to the terms of the settlement, Schneider is to pay the full settlement awarded for unpaid wages as well as interest and penalties for multiple wage and hour violations that occurred over the process of a decade. The facility was dedicated to Walmart operations, but the settlement agreement doesn’t indicate whether or not Walmart will be contributing to the settlement payment as a part of a behind the scenes agreement. Walmart did receive a complete release alongside Schneider in the settlement.

The settlement will go to over 1800 workers employed between 2001 and 2013 at three different distribution centers in Mira Loma, California. All three facilities were dedicated 100% to Walmart distribution. Together, the three facilities function as the largest Walmart distribution center in the western United States.

Allegations made in the suit included major wage theft over the course of 10 years against “lumpers.” Lumpers are workers who are paid to load and unload boxes by hand from shipment containers arriving on site onto trailers waiting to be loaded for Walmart delivery. Workers often worked double shifts (meaning 16 hours/day), seven days per week. There were no mandated, required breaks and no overtime premiums. The work they completed was often done for wages lower than the federally mandated minimum wage. Payment rates were based on an elaborate piece rate system that was changed quickly after the suit was filed in November 2011. (It was found to be illegal).

For additional information on wage and hour violations and how to identify them in the workplace, contact Blumenthal, Nordrehaug & Bhowmik, the wage and hour theft experts. 

Workers are Filing Wage and Hour Lawsuits at a Record Pace

Experts are noting that federal wage and hour lawsuits were filed at record rates throughout 2013-2014. (According to data collected by the Washington-based Federal Judicial Center, the education and research agency for the federal court system).

While the full range of data is extensive, there are some interesting pieces of information included in the analysis that can provide a clear summary of recent filing activity related to wage and hour allegations:

8,126 federal wage and hour lawsuits were filed between the dates of 4/1/13 and 3/31/14.

This was almost a 5% increase in comparison to the year previous in which only 7,764 cases were filed

Since the year 2000, the number of cases has risen 438%

Many experts predict that the wage and hour litigation epidemic will continue and even expand in the upcoming year. The rise in the number of cases is shocking, but doesn’t even take into account the number of suits filed in state courts regarding state pay practices. The number of cases is expected to continue to accelerate in the coming months as a result of multiple factors: the tightening of federally mandated standards for class certification, the possibility of an increased minimum wage, the President’s directive to the Secretary of Labor to complete revisions for regulations on white-collar exemptions, etc.

Wage and hour issues are a common problem in many workplaces. If you feel pressured to work more hours than you are paid for or if you feel that your pay is inadequate in relation to the federal wage and hour standards, get in touch with the experienced attorneys at Blumenthal, Nordrehaug & Bhowmik.