Articles Posted in Tip Pool Violations

An early July ruling by the U.S. Court of Appeals for the Second Circuit in the case of Gortat v. Capala Bros offered mostly good news for the plaintiffs, as the Second Circuit affirmed that they were entitled to substantial attorney’s fees thanks to overly aggressive litigation tactics used by the defendants.

The plaintiffs won a trial in 2013 that concerned the fate of seven construction workers who had alleged that Capala Bros Inc., their employer, failed to pay them time and a half overtime, per Fair Labor Standards Act (FLSA) requirements.

The workers said the company only paid them $15 to $25 an hour, even when they worked more than 40 hours in a week. The plaintiff’s attorney argued that the case was a “garden variety” FLSA matter, but the defendants “turned it into a nuclear war.” The court agreed, sanctioning the defense to the tune of $8,000 for making “ad hominem attacks on Steven Gold, a Magistrate Judge.” The summary order also noted that “delays in the case were due to defendants’ combative and extraordinary conduct that raised many unnecessary disputes regarding case management and discovery as revealed by even a cursory review of the docket sheet.”

In our last blog post, we reported on New York State’s Fast Food Wage Board’s July decision to incrementally elevate the minimum wage for fast food workers in New York City to $15 an hour.

That change will nearly double the current minimum wage of $8.75 and will likely shake up New York’s restaurant industry. But how, exactly, will this paradigm shift affect things? Will the changes all be good (from the perspective of workers)? Or will there be subtle, potential dangers?

Our New York employment law firm has agitated for better treatment and fairer pay for restaurant workers for years. Our attorney, Maimon Kirschenbaum, has even won the distinction of being known in the press as the “Scourge of Restaurateurs.”

In late July, the Fast Food Wage Board in New York State recommended that New York City elevate the minimum wage for restaurant workers to $15 per hour by 2018. Fast food operations in New York state will have to follow suit by 2021.

This bold move – celebrated by political figures like New York Governor, Andrew Cuomo, and Democratic candidate, Hillary Clinton – was approved unanimously by the three member wage board.

The recommendations would have effects on all restaurant chains that have over 30 locations, including fast food joints such as McDonald’s, Burger King and Wendy’s. Currently, New York’s minimum wage is $8.75 an hour. By the end of 2015, that number will bump up (a bit) to $9 an hour.

In Part 1 of this series, we discussed how and why the salary minimum for the “white collar” overtime exemption may soon change. In this post, we’ll examine how workers will be impacted by the Department of Labor’s (DOL) new proposed rules.

How Many Workers Will Be Affected

The DOL predicts that if the proposed change becomes final, 4.6 million more workers will become eligible for overtime pay during the first year the change goes into effect. Those millions of workers will include people who are classified as executive, professional, or administrative, and who earn more than $23,600 but less than $50,440 per year (more than $455 but less than $970 per week). Over the next 10 years, an additional 5.6 million more workers could also become eligible for overtime because of this rule change.

Whether or not an employer must pay a worker overtime wages for working more than 40 hours per week depends on a complex series of rules. These rules, which determine which workers are “exempt” from overtime — that is, which workers must be paid time-and-a-half after 40 hours (“non-exempt” workers) and which workers don’t have to be paid extra (“exempt” workers) — may be about to change by the federal Department of Labor (DOL). The implications for the labor market could be quite profound.

The “White Collar” Exemption

One set of rules, aimed at white collar workers, hinges, in part, on the amount of a worker’s annual salary. Currently, federal law classifies workers as exempt (not having to be paid overtime) if these two conditions are met: (1) they receive a salary (not an hourly wage) that is at least $23,600 per year ($455 per week), and (2) their job is primarily executive, professional, or administrative. Recently, the DOL has proposed raising that minimum salary.

Los Angeles officials are pointing fingers at the city Department of Transportation, alleging department employees in the traffic paint and sign division might have padded their overtime wages to the tune of $3.3 million. An initial audit of department figures revealed a superintendent employed by the division received $155,310 in overtime pay, about twice his annual salary of $78,000.

According to Los Angeles City Controller Ron Galperin, four division supervisors were paid $70,000 in overtime pay. Overall, workers in the division were paid an average of $48,000 in overtime pay, compared to the average of $8,300 in overtime pay received by employees in other city departments, including employees in the city’s police and fire departments.

What triggered the audit? The City Controller’s office received a tip that employees in the division were claiming overtime pay for hours they did not actually work. And indeed, once the audit was initiated, overtime claims declined by 40 percent, according to the officials who completed the audit.

The U.S. Department of Labor has filed a lawsuit against the owners of two restaurants in Ames, Iowa, alleging they failed to pay workers the minimum wage of $7.25 per hour as well as additional payments for overtime as required by law.

The suit lists nearly $600,000 in damages for the wages it says are owed to the workers at both Mongolian Buffet and the now-defunct King Buffet. Both restaurants were owned by Li Ying Li and Jian Yum Zheng, a husband and wife who are both named in the lawsuit.

According to the suit, which was filed in late April, both servers and kitchen employees at the two restaurants were expected to work 72 hours per week. Some of the employees received fixed weekly wages of $450, which works out to $6.25 per hour.

San Francisco has joined its sister city, Oakland, in establishing the highest minimum wage rates in the country, increasing the citywide minimum wage from $11.05 to $12.25. The hike occurred on April 15th following Oakland’s raise in early March, and it marks an important step toward achieving the eventual goal of $15 per hour that’s targeted for 2018, according to the Service Employees International Union 1021.

The union hailed the move in a statement issued just prior to the rate going into effect, calling it a “mass movement on behalf of all the low-wage workers in our society.”

“The Bay Area is moving to develop the first regional standard in the country for wages and working conditions,” said Gary Jimenez, SEIU 1021’s Vice President for the East Bay.

Fast food giant McDonald’s recently announced, after some significant prodding from employees, that it will increase pay for all employees by $1 an hour. While the change represents a step in the right direction, it falls considerably short of the $15 an hour many workers’ rights advocates say that employees need to survive and thrive in today’s economy.

Just a few short years ago, at the height of the most recent economic downturn, unemployed workers counted themselves lucky to find even a minimum wage job at a fast food restaurant. With the Great Recession thankfully behind us now, however, these workers are beginning to feel secure enough once again to speak out against repressed wages as well as wage and hour violations and violations of the Fair Labor Standards Act (FLSA).

Organized demonstrations across the country have put pressure on big name employers to raise wages – and companies appear to be feeling the pressure. Within the last few months, McDonald’s, Walmart, TJMaxx, Marshalls, Homegoods, and Target have all agreed to increase wages to at least $9 an hour for all employees, and some of these companies have agreed to further increases to $10 an hour within the next year. These labor victories have followed on the heels of similar wage hike successes during Election Day 2014.

Every day, millions of people across America pass through a fast food drive through or stop inside places like McDonald’s or Carl’s Junior for a quick bite to eat. The fast food industry shows no signs of being crippled or even daunted by recent science suggesting that foods like processed carbs and sugar and vegetable oil may be fueling diseases like obesity and diabetes. But whether or not we should be eating all that fast food is a debate for another day. Today, we want to address whether or not fast food workers deserve a pay rate increase.

Research shows that workers at restaurants like McDonald’s typically earn minimum wage… or slightly above in some locations. Supporting yourself, much less a family, on minimum wage would be challenging, even in a city where the cost of living is relatively low. Imagine, however, trying to live on minimum wage in New York City.

According to a recent New York Times article, 20 year old Julia Andino faces that exact challenge. Not surprisingly, Andino’s McDonald’s wages do not stretch far enough to pay her rent, child care, bus pass, and other bills. So Andino, and thousands of others like her, are asking companies like McDonald’s to provide a substantial raise.