Hospitality Labor and Employment Law Blog

Hospitality Labor and Employment Law Blog

Category Archives: FLSA

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Offset as Defense to FLSA Suit May Mitigate Unpaid Wage Claims

Our colleague Jeffrey H. Ruzal recently wrote an article entitled “Offset as Defense to FLSA Suit May Mitigate Unpaid Wage Claims,” which appears in the June 2014 issue of Hospitality Law.

Following is an excerpt:

A federal district court in Michigan recently preserved for trial the question of whether a defendant employer may mitigate its back wage liability by offsetting paid break time, which would effectively extinguish plaintiff employees’ claims under the Fair Labor Standards Act.

In Hayes, et al., v. Greektown Casino, LLC, et al., No. 12-1552 (E.D. Mich. 03/31/14), a group of
current and former security … Continue Reading

Kara Maciel Quoted in “Six Tips on Not Getting Tripped Up by FLSA’s Tipped Employee Rules”

Our colleague Kara Maciel, the editor of Hospitality Labor and Employment Law Blog, was quoted in an article titled "Six Tips on Not Getting Tripped Up by FLSA’s Tipped Employee Rules" that was recently published in Thompson’s HR Compliance Expert.

Following is an excerpt:

Employers need to make sure they are following both federal Fair Labor Standards Act requirements and state laws regarding tipped employees, said Kara Maciel of the firm Epstein Becker Green during a recent seminar focused on tipped employees. …

However, every state has its own set of rules regarding tipped workers and … Continue Reading

Hot Topic for Summer: How to Handle Unpaid Internships

By: Kara M. Maciel

My colleagues have a new post on the Retail Labor and Employment Law blog that will help many of our readers at this time of year: “Summer’s Coming! How to Handle Unpaid Internships,” by Jeffrey M. Landes, Susan Gross Sholinsky, and Nancy L. Gunzenhauser.

Following is an excerpt:

A hot topic for every summer – but particularly this summer – is the status of unpaid interns. You are probably aware that several wage and hour lawsuits have been brought regarding the employment status of unpaid interns, particularly in the entertainment and … Continue Reading

Filing a Wage And Hour Class Action is Protected by The National Labor Relations Act

By Steven M. Swirsky

An NLRB Administrative Law Judge issued a Decision on April 29th in which he found that when a waiter in a restaurant in New York City, acting alone, instituted a class action lawsuit claiming violation of state or federal wage and hour laws, he was  engaging in concerted activity on behalf of himself and co-workers, even if none of those co-workers are aware of the filing.  While the decision does not mention whether the waiter was represented by a union, it seems pretty clear that there was no union in this case.

 

Thus, the Judge … Continue Reading

Playing with Employees’ Hours Could Get You in Hot Water under the ACA and FLSA

By:  Kara Maciel, Adam Solander and Lindsay Smith

As the Employer Mandate compliance deadline looms for employers under the Affordable Care Act (“ACA”) and employers are closely monitoring employee hours, it is critical that employers take appropriate and lawful steps to record all hours worked by an employee.  If employers try to play games and manipulate how time records are maintained, they could find themselves in hot water under both the ACA and the Fair Labor Standards Act (“FLSA”). 

In what appears to be one of the first lawsuits challenging how hours are recorded under the ACA, an employee … Continue Reading

President Obama’s Announcement Regarding Overtime Regulations: If It Is As Big Of A Deal As They Say It Is, Beware Of A New Wave Of Class Action Lawsuits

 By Aaron Olsen

President Obama’s announcement last week that he was ordering the Labor Department to revise the regulations concerning who can be classified as “executive or professional” employees has created a buzz about what this will mean for both employers and employees.  The fact that the President specifically identified concerns about managers in the fast-food industry suggests that the Department of Labor will be looking for ways to change how employees in the hospitality industry are classified. 

However, there have been very few details about what any of this will actually mean for employers.  The President trumpeted the request … Continue Reading

Are Your Employees Being Compensated Correctly for Training Time?

By Jordan B. Schwartz

Virtually all hospitality employers are aware that pursuant to the Fair Labor Standards Act (“FLSA”), they are required to compensate employees for all hours worked. What is not as clear, however, is whether the time an employee spends at training programs, lectures, meetings, and other similar activities should be considered hours worked. As a result, our clients in the hospitality industry often ask whether they are required to compensate employees for time spent in such training activities. 

The short answer to this question is that an employee’s time spent in training sessions should be considered “working time” and … Continue Reading

Tipped Employees Under the FLSA

Our colleagues Kara Maciel and Jordan Schwartz, both of Epstein Becker Green, recently cowrote an article for PLC titled "Tipped Employees Under the FLSA."

Following is an excerpt:

Wage and hour lawsuits certainly are not new phenomena, but in recent years, service industry employees have increasingly made claims regarding tips and service charges. In particular, employers in states such as Massachusetts, New York and California have seen a surge in class actions involving compulsory tip pools and distributions of service charges to employees. Commonly targeted employers include large restaurant and coffee chains, as well as upscale eateries, many … Continue Reading

Wage and Hour Update

Our colleague Kara M. Maciel of Epstein Becker Green wrote a wage and hour update in this month’s Take 5 labor and employment newsletter.

Here’s a preview of the five items:

1. IRS Will Begin Taxing a Restaurant’s Automatic Gratuities as Service Charges
2. The New DOL Secretary, Tom Perez, Spells Out the WHD’s Enforcement Agenda
3. DOL Investigates Health Care Provider and Obtains $4 Million Settlement for Overtime Payments
4. Federal Court Strikes Down DOL Tip Pooling Rule
5. Take Preventative Steps When Facing WHD Audits

Read the full article here.

 … Continue Reading

Take 5 Views You Can Use: Wage and Hour Update

By:  Kara M. Maciel

The following is a selection from the Firm’s October Take 5 Views You Can Use which discusses recent developments in wage hour law affecting the hospitality industry.

IRS Will Begin Taxing a Restaurant’s Automatic Gratuities as Service Charges

Many restaurants include automatic gratuities on the checks of guests with large parties to ensure that servers get fair tips. This method allows the restaurant to calculate an amount into the total bill, but it takes away a customer’s discretion in choosing whether and/or how much to tip the server. As a result of this removal of a … Continue Reading

Serving Up More Taxes – IRS to Begin Taxing Automatic Gratuities as Service Charges

By: Kara M. Maciel

Many restaurants include automatic gratuities on guests’ checks with large parties to ensure servers get fair tips. This method allows the restaurant to calculate an automatic gratuity or tip into the total bill, but it takes away the customer’s discretion in choosing whether and/or how much to tip the server. As a result of this removal of a customer’s voluntary act, the IRS has decided that it will separately tax automatic gratuities.

In 2012, the IRS issued a ruling to clarify earlier tax guidance on tips, particularly automatic gratuities, but because restaurants persuaded the IRS to hold off … Continue Reading

T.G.I. Fridays Settles With DOL For FMLA Policy and Procedure Violations

By Anna A. Cohen

Demonstrating the importance for employers to review their FMLA practices, an investigation by the U.S. Department of Labor’s Wage and Hour Division (DOL) revealed that T.G.I. Fridays’ FMLA policy and notification practices did not comply with the law. Specifically, the policy did not include information on the FMLA’s military family leave provisions, information on the right to take FMLA-covered leave on an intermittent or reduced schedule basis, and misstated the 12-month employment requirement for FMLA eligibility as being 12 continuous months. 

T.G.I. Fridays has agreed to revise its FMLA policy and to correct the violations found … Continue Reading

DOL Tip Pooling Rule Held Invalid by Federal Court

By:      Kara Maciel and Jordan Schwartz

As discussed in prior blogs, due to confusion surrounding FLSA tip pool requirements, the U.S. Department of Labor (“DOL”) Wage and Hour Division enacted a strict rule in 2011 related to proper tip pooling and service charge practices. This rule was met with swift legal challenges, and earlier this week the U.S. District Court for the District of Oregon concluded that the DOL had exceeded its authority when implementing its final rule. See Oregon Rest. and Lodging Assn. v. Solis, No. 3:12-cv-01261 (D. Or. June 7, 2013). 

Inconsistent interpretations of the FLSA among … Continue Reading

EBG Provides a Wage and Hour Division Investigation Checklist for Hospitality Employers

Epstein Becker Green is pleased to announce the availability of a Wage and Hour Division Investigation Checklist, which provides hospitality employers with valuable information about wage and hour investigations and audits conducted by the U.S. Department of Labor (DOL). Like EBG’s first-of-its kind Wage and Hour App, which provides detailed information about federal and state laws, the Checklist is a free resource offered by EBG.

The Checklist provides step-by-step guidance on the following issues: preparation before a Wage and Hour Division investigation of the DOL; preliminary investigation issues; document production; on-site inspection activities; employee interviews; and back-wage findings, … Continue Reading

Hurricane Sandy Is About to Blow Our Way: Wage & Hour Implications for the Hospitality Industry

By: Kara Maciel

Hurricane Sandy is approaching this weekend, so hospitality employers along the East Coast should refresh themselves on the wage and hour issues arising from the possibility of missed work days in the wake of the storm.

A few brief points that all employers should be mindful of under the FLSA:

  • A non-exempt employee generally does not have to be paid for weather-related absences. An employer may allow (or require) non-exempt employees to use vacation or personal leave days for such absences. But, if the employer has a collective bargaining agreement or handbook policies, the employer may obligate
  • Continue Reading

Tip Pools: Challenging DOL’s Amended Rule on Employee Participation

By:  Kara M. Maciel

In April of 2011, the U.S. Department of Labor (“DOL”) changed its rule defining the general characteristics of tips in an attempt to overrule the U.S. Court of Appeals for the Ninth Circuit’s decision in Cumbie v. Woody Woo, Inc. ruling that the FLSA does not impose any restrictions on the kinds of employees who may participate in a valid tip pool where the employer does not claim the “tip credit.”

DOL’s Recent Position on Tip Pool Participation

The DOL’s amended rule provides that tips are the property of the employees, and may not be used by … Continue Reading

Are Your Employees’ Tips Subject To Garnishment?

By Matthew Sorensen

Wage garnishment can pose a number of potential problems for hospitality businesses. This is particularly true where the employee whose pay is subject to garnishment receives tips.

Garnishment is a legal procedure in which an employee’s earnings must be withheld by an employer for the payment of a debt under a court order. When faced with a garnishment order involving a tipped employee, the employer must determine whether all or part of the employee’s tips must be included in the amounts withheld under the garnishment order. This question turns on whether or not the employee’s tips may … Continue Reading

Are Your Non-Exempt Employees Being Compensated Correctly For Travel Time?

By:   Jordan Schwartz

Like many attorneys, I spend a significant amount of time traveling, whether it is to meet with clients, take depositions, or conduct training sessions. Business-related travel certainly is not unique to the legal industry. In fact, more and more employees in other industries, including the hospitality industry, are spending a greater amount of time traveling for work than ever before. Such travel typically includes attending out-of-state trade shows, recruiting visits, job fairs, and sales calls. As an exempt employee, compensation for travel time is cut and dry – an employee simply continues to receive his or her salary. For non-exempt employees, … Continue Reading

Hotel Operators and Managers Remain Vulnerable to Wage and Hour Class Actions

By:  Casey Cosentino

A hotel management company was recently hit with a putative class action in federal court for allegedly failing to compensate hotel employees overtime pay at one and one-half times their regular rate of pay for all hours worked over 40 hours in a workweek. As the chief engineer, the lead plaintiff was classified as an executive employee and, thus, was exempt from overtime requirements under the Fair Labor Standards Act (“FLSA”). The lead plaintiff asserts, however, that he was misclassified under the Executive exemption because he “regularly and routinely performed non-exempt tasks . . . including but not limited … Continue Reading

Top Legal Issues for the Hospitality Industry to Watch in 2012

by:  Matthew Sorensen

 1.      Deadline For Compliance With New ADA Accessibility Rules Approaching:

 On March 15, 2012, hospitality establishments will be required to be in compliance with the standards for accessibility set by the Department of Justice’s final regulations under Title III of the ADA (2010 ADA Standards). The regulations made significant changes to the requirements for accessible facilities, and will require additional training of staff on updated policies and procedures in response to inquiries from guests with disabilities. Among the most significant changes for hospitality businesses are:           

·         New structural and communication-related requirements for automatic teller machines (“ATMs”);

·         Accessible … Continue Reading

First Circuit Finds Hotel Banquet Sales Manager Exempt from Overtime Pay

By Peter M. Panken, Michael S. Kun, Douglas Weiner and Larissa Lalor-Rosado

Hotels, restaurants and private clubs all rely on sponsored events, banquets and social soirees for the profitability of their operation.  Most employ one or more “managers” to solicit the business, work with the clients, detail the services to be provided, prepare the contract and even negotiate a price.  In most instances higher management must approve the terms the managers propose including the financial arrangements.  In other cases the basic terms are set forth in directions which can only be varied if approved by higher management. There … Continue Reading

Employees Working Dual Jobs: Better Watch Out for the Tricky Wage & Hour Issues

By:   Jordan Schwartz

The holiday season is often the busiest time of the year for hospitality employers. At the same time, employees may appreciate the opportunity to earn more during these busy months. Consequently, there may be occasions when an employer places an employee in a dual capacity role. For example, from November through January, a hotel may permit (or require) a housekeeping attendant to also function as a front desk reservation assistant. While assigning (or permitting) an employee to work at another post with a different rate of pay is generally permissible and may be preferable to hiring additional employees for the holiday … Continue Reading

National Restaurant Chain Seeks Guidance from U.S. Supreme Court on Tip Credit

By:  Ana S. Salper

With the recent surge in class action wage and hour lawsuits, hospitality employers have developed a heightened sensitivity to tip pooling arrangements, distributions of service charges to employees, and application of the “tip credit.” A case before the U.S. Supreme Court this month, Applebee’s International Inc. v. Gerald A. Fast et al., is likely to add further fuel to the fiery “tip credit” world,  as the high court will have to decide whether tipped employees should be paid minimum wage for nontipped tasks employees perform.

Under the Fair Labor Standards Act (“FLSA”), tipped employees can be … Continue Reading

N.Y. Court Allows Restaurant Servers to Pursue Class Claims against Batali Restaurants due to Tip Policy

By:  Kara M. Maciel and Jordan Schwartz

On May 10, 2011, the Southern District of New York conditionally certified a collective action against eight New York metropolitan area restaurants owned by celebrity chef Mario Batali alleging violations of the Fair Labor Standards Act. In the action, restaurant servers argue that the Batali restaurants are paying employees less than minimum wage and unlawfully retaining a portion of their tips.

The primary allegation in the lawsuit is that the restaurants deduct from the employee tip pool a portion of all credit-card tips equal to approximately 4-5% of the nightly wine sales. One plaintiff, a … Continue Reading

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