Last week Rep. Donna Edwards (D-Md) introduced legislation that would amend the Fair Labor Standards Act (FLSA) to establish a base minimum wage for tipped employees. Continue reading on Littler's Washington DC Employment Law Update blog.
On May 19, 2009, the Sixth Circuit Court of Appeals found that the operator of health and fitness centers violated the salary basis requirements under the Fair Labor Standards Act (FLSA) when it deducted money from the base compensation of employees to reclaim previously paid bonuses. (Baden-Winterwood v. Life Time Fitness, 6th Cir., No. 07-4437, 5/19/09). Accordingly, the employer could not establish that the employees from whom money was deducted were exempt, salaried employees.
In its decision, the Court held that the salary basis test adopted by the U.S. Supreme Court in Auer v. Robbins, 519 U.S. 452, 117 S. Ct. 905, 137 L. Ed. 2d 79 (1997), should be applied to pay periods occurring before August 23, 2004, and the salary basis test stated in 29 C.F.R. § 541.603 should be applied to pay periods occurring after August 23, 2004. Under the Auer test, an employee is not paid on a salary basis, and thus loses exempt status, if (1) there is an actual practice of salary deductions or (2) an employee is compensated under a policy that clearly communicates a significant likelihood of deductions. In the revised Regulations, which became effective on August 23, 2004, the Department of Labor (DOL) noted that "[a]n actual practice of making improper deductions demonstrates that the employer did not intend to pay employees on a salary basis." 29 C.F.R. § 541.603(a). Under the Regulations, there is no violation of the salary basis requirements and, therefore, no loss of the exemption, unless there is an actual practice of improper deductions.
Continue Reading...On April 29, 2009, the Supreme Court of California granted the petitioner’s petition for review of the Second District Court of Appeal’s opinion in Lu v. Hawaiian Gardens Casino (2009 170 Cal. App. 4th 466, 88 Cal. Rptr. 3d 345), concerning the legality of tip-pooling arrangements with casino dealers.
In granting review, the Supreme Court limited the pure legal question to the following: “Does Labor Code section 351, which prohibits employers from taking ‘any gratuity or part thereof that is paid, given to, or left for an employee by a patron,’ create a private right of action for employees?” The vote for review of the Court of Appeal decision was unanimous.
In addition to the recent Etheridge v. Reins Int’l Cal., Inc. opinion by California’s Second District Court of Appeal, California employers should note the Second District’s recent tip-pooling opinion in Grodensky v. Artichoke Joe’s Casino, 171 Cal. App. 4th 1399 (2009). In Grodensky, the plaintiff, a casino card dealer, filed a putative class action challenging a mandatory tip-pooling policy that Artichoke Joe’s Casino had implemented for its dealers. The trial court determined (and the Court of Appeal affirmed) that the casino had not violated the minimum wage law by the tip-pooling arrangement, but had violated Labor Code section 351 by requiring the dealers to share their tips with shift managers. The Court of Appeal found no error in the trial court’s issuance of a pre-trial protective order prohibiting any communications regarding the lawsuit between the casino and dealers while determination of the class certification motion was pending. The Court of Appeal also affirmed that Grodensky and the putative class had a private right of action under Labor Code § 351 and that the trial court did not abuse its discretion by ordering the disgorgement of the sums taken from the dealers’ tips and distributed to the shift managers. Compare Etheridge v. Reins Int’l Cal., Inc., 2009 WL 794521 (Cal. Ct. App. 2009) with Budrow v. Dave & Buster’s of Cal., Inc., 171 Cal. App. 4th 875 (2009) (restaurant employees who do not provide direct table service may share in tip pool).
This blog entry was authored by Tyler Paetkau.
In a blow to UPS, and other employers in California, a California federal court recently ruled that employers are liable for up to two hours of additional pay when an employee misses both a meal and rest break. California law provides for a one hour premium of regular pay for each day that a non-exempt employee is not provided meal or rest breaks as required by the various California Wage Orders. (California Labor Code sec. 226.7).
Employers have argued that under California law, an employer is only obligated to pay a one hour premium for missed meal and lunch breaks per day, whether there was one or multiple violations in the same day. In the first direct ruling on this issue, the court in Marlo v. United Parcel Service, Case No. CV 03-04336 DDP, held that the employee may recover up to two additional hours of pay on a single work day for meal period and rest break violations: one if any meal period violations occur in a work day and one if any rest break violations occur in a work day. However, if more than one rest period violation occurs in a single work day but no meal period violations occur, the employee may only recover one additional hour of pay for all of the rest period violations combined; likewise, if more than one meal period violation occurs in a single work day but no rest period violations occur on that day, the employee may only recover one additional hour of pay for all of the meal period violations combined.
While the ruling will likely be appealed, employers should evaluate their pay practices with respect to missed meal and rest periods to comply with the ruling until further authority is established. On a positive note, the Court agreed with other recent rulings and held that an employer's obligation with respect to meal breaks is to make a meal period available to employees, but places them under no further obligations to ensure that a meal break is taken. This issue is currently pending a decision by the California Supreme Court in Brinker Restaurant Corp. v. Superior Court (Hohnbaum).
This blog entry was authored by Gregory G. Iskander.
Beginning July 1, 2009, every employer subject to Indiana's minimum wage law or any rule or order issued under that law, is required to post a poster providing employees with the following information: the current Indiana minimum wage; a description of an employee’s rights under the minimum wage law; and information regarding how an employee can obtain additional information from, or direct questions or complaints to, the Indiana Department of Labor. The poster is available free of charge from the Indiana Department of Labor.
This blog post was authored by Christopher Kaczmarek.
Maine recently enacted a new statute designed to protect private sector employees who disclose, compare or otherwise discuss their wages. 26 Me. Rev. Stat. § 628-A. Specifically, Section 628-A provides that "an employee may inquire about, disclose, compare or otherwise discuss employee wages, and the employer may not interfere with, discharge or in any manner discriminate against the employee for such inquiries, disclosures, comparisons or other discussions." Although Maine has chosen to give employees specific protection for discussing and disclosing their wages, the National Labor Relations Board has long considered such conduct by employees -- even in non-union workplaces -- to be "protected concerted activity" within the meaning of Section 7 of the National Labor Relations Act. Thus, an employer in Maine who disciplines an employee for discussing her wages with co-workers could face liability under Section 628-A as well as an unfair labor practice charge before the NLRB.
For the full text of the bill, please follow this link: http://www.mainelegislature.org/legis/bills/bills_124th/billtexts/SP003301.asp
This blog entry was authored by Brian Clarke.
This most recent on the city charter exemption in State Building and Construction Trade Council of California, AFL-CIO v. City of Vista (4/28/09) D052181 (PDF), is a favorable one for city contractors who might do work for chartered cities. The court held that chartered cities are exempted from the requirements of the prevailing wage statute, Labor Code section 1720, et seq. under the municipal affairs clause of the California Constitution. The victory may be short-lived, given the number of amicus on this appellate decision, including California’s Attorney General, which filed a brief in support of the Building Trade Councils. The “municipal affairs exemption” is ripe for Supreme Court review. Those following prevailing wage cases will recall that many anticipated a decision from the California Supreme Court in City of Long Beach v. Department of Industrial Relations (2004) 34 Cal.4th 942 on the municipal affairs exemption but were disappointed when the California Supreme Court reached a decision on other grounds and failed to address the exemption.
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