Articles Posted in Wage and Hour Claims

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.

Our New York employment law firm has filed numerous lawsuits against high-profile businesses, restaurants, and organizations for wage and hour violations, tip pool violations and other instances of flouting New York Labor Laws and the Fair Labor Standards Act (FLSA).

But what motivates this mission? Why bother compelling a restaurant to stop “nickel and diming” its wait staff, for instance, when the financial damage seems to be rather limited?

First off, we believe that people should be paid fairly for the work that they do. Period. An employee who loses $50 a week due to an unfair and illegal tip pool violation, for instance, will really feel that loss, particularly when he or she is struggling to get by in an expensive city, like New York.

A legal decision upholding the rights of workers at Tyson Foods pork processing plants came under fire recently as Tyson filed a petition to have a $5.8 million judgment overturned. The judgment was initially awarded following a case in U.S. District Court that found workers at a plant in Iowa had not been properly compensated for the time it takes to sanitize equipment when their shifts end, nor the time involved in putting on and taking off protective gear required for working at the plant.

At the time the case was filed, Tyson paid workers an additional four to seven minutes’ pay each day for these activities, but workers said the time actually used in performing the activities was much greater – sometimes as much as 30 minutes. Tyson responded by increasing the extra pay to 20 to 22 minutes’ extra pay for each shift for its hourly employees.

The workers’ legal team countered by claiming Tyson violated the Fair Labor Standards Act (FLSA) as well as state laws by neglecting to pay overtime for actual time worked, and the class action suit was filed and won.

A recent audit of the Los Angeles Department of Transportation revealed substantial overtime pay for workers in the traffic paint and sign division – on average, workers were paid $48,000 in overtime compared to just over $8,000 for workers in other city departments, including police and firefighters. But while the figures may sound excessive, an audit found there wasn’t enough evidence to support a legal claim against the division. And what’s more, the workers say the additional overtime was earned.

According to Los Angeles Department of Transportation General Manager Seleta Reynolds, the overtime occurred during a time during the tenure of former Mayor Antonio Villaraigosa. During his time in office, more than 100 miles of bike lanes were commissioned and thousands of city streets had been recently resurfaced, requiring extensive hours of striping. At that time, the division employed just three crews and had access to only two trucks, resulting in significant backlogs of work which, in turn, caused the overtime to build up.

Since the audit, the city has approved the hiring of at least 20 additional employees for the traffic paint and sign division, sending a clear signal the division has been overworked.

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.

As Los Angeles city leaders ponder the steps they need to take to increase wages across the city, business owners are pushing hard to have tips counted toward minimum wage requirements for workers in the restaurant industry and other service industries where tipping is more common. Currently, California labor laws prohibit business owners from counting tips toward minimum wage requirements. But area restaurant owners claim increasing minimum wage levels across the city will force them out of business entirely unless they can use tips to offset their obligations.

The California Restaurant Association has been working to rally support. In response, state Assemblyman Tom Daly recently introduced association-sponsored legislation to loosen regulations that prohibit counting tips toward minimum wage, but he indicated the legislation failed to garner enough support to move forward, despite backing from L.A. Mayor Eric Garcetti.

Studies in other areas, including New York, where tips can be counted toward wage requirements, have found that complex rules can result in workers being significantly underpaid.

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.