Hospitality Labor and Employment Law Blog

Hospitality Labor and Employment Law Blog

NLRB Argues “Misclassification” of Independent Contractors Is Unfair Labor Practice

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Our colleague Steven M. Swirsky, a Member of the Firm at Epstein Becker Green, has a post on the Management Memo blog that will be of interest to many of our readers in the hospitality industry: “NLRB Argues ‘Misclassification’ as an Independent Contractor Is Unfair Labor Practice.”

Following is an excerpt:

In a further incursion into the area of the gig and new age economy, the Regional Director for the National Labor Relations Board’s Los Angeles office has issued an unfair labor practice complaint alleging that it is a violation of the National Labor Relations Act (the “Act”) for an employer to misclassify an employee as an independent contractor. …

The issuance of the complaint in this case comes less than a month after the Board’s General Counsel issued General Counsel Memorandum 16-01, Mandatory Submissions to Advice, identifying the types of cases that reflected “matters that involve General Counsel initiatives and/or priority areas of the law and labor policy.”  Among the top priorities are “Cases involving the employment status of workers in the on-demand economy,” and “Cases involving the question of whether the misclassification of employees as independent contractors,” which as reflected in the IBT complaint the General Counsel contends violates Section 8(a)(1) of the Act.

Read the full post here.

Paid Parental Leave in San Francisco: Employer Alert

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Our colleagues Steven R. Blackburn and Elizabeth J. Boca, attorneys at Epstein Becker Green, have a post on the Retail Labor and Employment Law blog that will be of interest to many of our readers in the hospitality industry: “San Francisco Paid Parental Leave.”

Following is an excerpt:

Under the proposed San Francisco ordinance, for up to six weeks employers must bridge the gap between the amount the employee receives in PFL and one-hundred percent of the employee’s gross weekly wages (referred to as “Supplemental Compensation”) for parental bonding purposes.  In other words, the employer must pay the remaining forty-five percent of the employee’s gross wages. However, if the employee is already receiving the maximum weekly benefit under the PFL law, the employee’s gross weekly wage is calculated by dividing the maximum weekly benefit amount by the percentage rate of wage replacement provided under the PFL.

Read the full post here.

Accessible Technology Claims Are Not Going Away: Recent Decisions Under ADA

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Our colleague Joshua A. Stein, attorney at Epstein Becker Green, has a post on the Retail Labor and Employment Law blog that will be of interest to many of our readers in the hospitality industry: “Recent Decisions Reinforce That Accessible Technology Claims Are Not Going Away.”

Following is an excerpt:

As businesses continue to compete to provide customers and guests with more attractive services and amenities, we have seen increased utilization of technology to provide those enhanced experiences.  However, in adopting and increasingly relying on new technologies such as websites, mobile applications, and touchscreen technology (e.g., point of sale devices, beverage dispensers, check-in kiosks) accessibility is often overlooked because of the lack of specific federal standards in most contexts. The two recent decisions discussed below – one in New York and the other in California – do just that.

Read the full post here.

California’s “Suitable Seating” Wage Rule: More Seats – and More Class Actions – Are Likely

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Our colleague Michael Kun, attorney at Epstein Becker Green, has a post on the Wage & Hour Defense Blog that will be of interest to many of our readers in the hospitality industry: “Clarification of California’s Obscure ‘Suitable Seating’ Wage Rule Likely to Lead to More Employers Providing Seats – and to More Class Actions Against Those Who Don’t.”

Following is an excerpt:

The Court explained, “There is no principled reason for denying an employee a seat when he spends a substantial part of his workday at a single location performing tasks that could reasonably be done while seated, merely because his job duties include other tasks that must be done standing.”

The California Supreme Court’s opinion should help employers assess whether and when to make seating available to employees.  And employers should review their practices promptly to try to comply with the law.  Now that the California Supreme Court has provided some much needed guidance on the issue, employers can expect that their practices will be challenged, and those challenges will often come in the context of class action lawsuits.

Read the full post here.

Southern District of New York’s Rejection of FLSA Settlement Highlights Need to Settle on Terms That Will Pass Judicial Muster

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Brian W. Steinbach

Brian W. Steinbach

In rejecting the terms of a collective action settlement in Yun v. Ippudo USA Holdings, No. 14-CV-8706 (S.D.N.Y. March 24, 2016) the United States District Court for the Southern District of New York has confirmed the significance of last year’s Second Circuit Court of Appeals decision in Cheeks v. Freeport Pancake House, Inc., 796 F.3d 199 (2015)Cheeks held that parties cannot enter into an enforceable private settlement of Fair Labor Standards Act (“FLSA”) claims without the approval of either the district court or the Department of Labor. Yun shows what this means in practice by highlighting the issues that may arise in seeking to obtain approval.

Yun involved 53 “Collective Members” – five “Named Plaintiffs” and 48 “Opt-In Plaintiffs.” The Court closely analyzed the terms of a proposed settlement agreement, guided by various previous decisions within the Southern District. It had little trouble finding that a recovery for the Collective Members of about 52% of estimated back wages was “fair and reasonable” due to the presence of certain defenses and the litigation risks of proceeding to trial. It also found that service awards to the five Named Plaintiffs totaling 5% of the settlement funds were also “fair and reasonable.” And it also found that a fee award representing one-third of the total recovery was appropriate, rather than a lower fee based on lodestar rates, particularly as the case settled relatively early and before any depositions occurred.

However, the court rejected a limited confidentiality provision that would require all the Collective Members to keep the aggregate settlement amount confidential. In so doing it rejected the Defendants’ argument that the aggregate amount created a “false and disproportional sense of culpability and liability,” particularly as the information was already disclosed in numerous places on the public record through ECF filings. It also emphasized that generally “confidentiality provisions in FLSA settlements are contrary to public policy.”

Finally, the court rejected release language for the Named Plaintiffs that waived not only the right to bring claims relating to payment of compensation (as did the release language for the Opt-In Plaintiffs), but also any and all other claims of any type that they might have against the Defendants. Following other, pre-Cheeks Southern District precedent, it held that while releases in an FLSA settlement may include claims not presented that arise from the same factual predicate as the settled conduct, they cannot include waivers of claims that have no relationship to wage and hour issues. As a consequence, the court ordered the parties to file a revised settlement proposal.

The Yun decision is a warning to FLSA settling parties that the Cheeks decision not only means settlement agreements must be submitted for approval, but also that approval will not be a mere rubber stamp, and provisions that the court feels are overreaching will be rejected. Employers as well as plaintiffs’ attorneys need to review local precedents as to what provisions will and won’t be approved.

DOL’s New Persuader Rule Is Intended to Aid Union Organizing

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Our colleagues Adam C. Abrahms and Steven M. Swirsky, attorneys at Epstein Becker Green, have a post on the Management Memo blog that will be of interest to many of our readers in the hospitality industry: “Department of Labor Releases New Persuader Rule Intended to Aid Union Organizing.”

The US Department of Labor has finally issued its long awaited Final Rule radically reinterpreting the “Advice Exemption” to the Labor Management Reporting and Disclosure Act of 1959 (“LMRDA.”).  The Final Rule eviscerates any meaningful use of the Advice Exemption, which would be swallowed up by the new expansive definition of persuader activity which could include discussion regarding strategy, reviews of employer drafts and myriad other ways labor attorneys currently aid their clients including essentially any meaningful advice or counsel provided by labor counsel. The move comes just over two years to the day from the DOL’s 2014 postponement of its issuance of the Final Rule. …

Read the full post here.

Philadelphia Employers: New Ban-the-Box Poster Is Required

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Our colleague Nancy L. Gunzenhauser, an Associate at Epstein Becker Green, has a post on the Retail Labor and Employment Blog that will be of interest to many of our readers in the hospitality industry: “Reminder: All Philadelphia Employers Must Post New Ban-the-Box Poster.”

Following is an excerpt:

One of the requirements of the amended Philadelphia ban-the-box law has gone into effect. As of March 14, 2016, Philadelphia employers are required to post a new poster provided by the Philadelphia Commission on Human Relations in a conspicuous place on both the employer’s website and on premises, where applicants and employees will be most likely to notice and read it. …

Read the full post here.

Ninth Circuit Upholds DOL Rule Restricting “Tip Pooling” – Employment Law This Week

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A featured story on Employment Law This Week is the Ninth Circuit’s backing of the Department of Labor’s rule on “tip pooling.”

In 2011, the Department of Labor issued a rule that barred restaurant and hospitality employers from including kitchen staff in “tip pools,” which are sometimes used to meet an employer’s minimum wage requirements. The DOL ruled that kitchen staff should be excluded from pools even if the tips are not required to meet minimum wage obligations. Two district court decisions held that the department does not have the authority to regulate this practice outside of the minimum wage issue, but the Ninth Circuit recently reversed those decisions and upheld the department’s rule.

View the episode below or read more about this case in an earlier post on this blog.

Meal and Rest Period Class Action: Settlement Versus Litigation Costs for Taco Bell

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Our colleague Michael S. Kun, a Member of the Firm at Epstein Becker Green, has a post on the Wage and Hour Defense Blog that will be of interest to many of our readers in the hospitality industry: “Taco Bell Employees Likely Are Not Celebrating Their ‘Victory’ in California Meal and Rest Period Class Action.”

Following is an excerpt:

More than a few media sources have reported on the March 10, 2016 wage-hour “victory” by a class of Taco Bell employees on meal period claims in a jury trial in the Eastern District of California. A closer review of the case and the jury verdict suggests that those employees may not be celebrating after all — and that Taco Bell may well be the victor in the case.

The trial involved claims that Taco Bell had not complied with California’s meal and rest period laws. The employees sought meal and rest period premiums and associated penalties for a class of employees that reportedly exceeded 134,000 members.

Now, it is certainly true that, at trial, a class of employees prevailed on a claim that Taco Bell did not comply with California meal period laws for a limited period of time (2003-2007), when Taco Bell reportedly provided employees with 30 minutes of pay when they were not able to take meal periods, rather than the full one-hour of pay provided for by California law.

And it is certainly true that the class of employees was awarded approximately $496,000 on that claim.

But as it appears that there were more than 134,000 employees in the class, a few punches on the calculator show that, on average, each employee would receive approximately $3.70. …

 Read the full post here.

Ninth Circuit Approves DOL Rule Prohibiting “Tip Pooling” for Kitchen Employees Even Where No “Tip Credit” Is Taken

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The Fair Labor Standards Act (“FLSA”) permits employers to use “tip credits” to satisfy minimum wage obligations to tipped employees.  Some employers use those “tip credits” to satisfy the minimum wage obligations; some do not.  (And in some states, like California, they cannot do so without running afoul of state minimum wage laws.)

Many hospitality employers use “tip pools” to divide customer tips among staff.  Those “tip pools” normally provide for tips to be divided among “front of the house” employees who are involved in serving customers – servers, bartenders, etc. Some employers have extended the “tip pools” to include “back of the house” employees – dishwashers, cooks, etc. – particularly where they are not using a “tip credit.” 

In 2011, the Department of Labor (“DOL”) issued a rule prohibiting employers from including kitchen staff in “tip pools” – even where no “tip credit” was being taken.  Two separate district courts held that the DOL did not have authority to issue such a rule where no “tip credit” was taken, relying on the Ninth Circuit’s ruling in Cumbie v. Woody Woo, Inc., 596 F.3d 577 (9th Cir. 2010).

On February 23, 2016, in Oregon Restaurant & Lodging Assoc. v. Perez, No. 13-25765 (9th Cir. Feb. 23, 2016), a divided Ninth Circuit Court of Appeals reversed those two district court decisions, holding that the DOL in fact has the authority to regulate the “tip pooling” practices of employers even when they do not take tip credits — including prohibiting employers from including kitchen employees in “tip pools.” While confirming that the FLSA permits the use of “tip credits” to fulfill minimum wage requirements, the Court concluded that the DOL was acting within its authority in concluding that employers that establish “tip pools” may only do so when the persons who are included are persons who normally receive tips – and that, as kitchen staff do not normally receive tips, they cannot be included in “tip pools.”

The decision not only appears to be inconsistent with the Ninth Circuit’s own Cumbie decision, but with other courts that have reviewed this same issue.

The National Restaurant Association, a co-plaintiff in the case, has already indicated that it may seek review of the decision by a full panel of the Ninth Circuit.  And it is certainly possible that the decision will be reviewed by the United States Supreme Court.  But unless and until the decision is reversed, restaurant employers in the Ninth Circuit – which encompasses Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, and Washington –would be wise to review their “tip pooling” practices promptly with counsel.

              

 

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