Exotic Dancers Attempt to Receive Minimum Wage Back Pay

Three exotic dancers are claiming that they were exploited employees at Anchorage strip clubs. Allegedly, Fantasies on 5th Avenue and Crazy Horse “use stage fees, illegal tip-pooling, house fees, mandated souvenir sales, and even involuntary charity drives to extract money from strippers.” Not only do these practices break state wage and hour laws, but they also go against the Fair Labor Standards Act. The Fair Labor Standards Act is a federal piece of legislation that provides regulations for minimum wage, overtime pay, and minor employment.

The dancers contend that they would sometimes earn less than minimum wage on slow business nights. This was the result of owing the club more money for stage fees than what they had earned for particular slow shifts. Therefore, they often did not keep the majority of the cash that they were handed.

Essentially, the strippers’ goal is to verify that they were employees of the clubs because that will allow them to collect minimum wage back pay. In actuality, most exotic dancers want to be considered independent contractors because, even after paying stage fees, they still make substantially more than minimum wage.

Even though the club owners requested for this case to be dismissed, U.S. District Court Judge Timothy Burgess denied their request in September. The dancers will be represented by their lawyer, Ken Legacki, on their trail date, which is January 3, 2012. This case will ultimately determine whether these strippers were “exploited employees” and if they should be qualified as club employees or independent contractors. In addition, this case will determine if the cash given to the exotic dancers is considered tips or service charges.

Judge Burgess prohibited this case from becoming a class action. Therefore, only these three un-named dancers will be rewarded if they win the case.

Minimum wage according to the Fair Labor Standards Act

If a state’s minimum wage is higher than the federal minimum wage, then employers are required to pay the state’s minimum wage. The federal minimum wage is $7.25, while Alaska’s minimum wage is $7.75. Thus, Alaskan employers must pay their state minimum wage to all nonexempt employees.

Vacation Pay Abuse Under Investigation

Eric Vasquez, a Los Angeles fire captain, has been put on administrative leave because of timecard falsification. He supposedly fabricated timecards in order to earn an excessive amount of vacation pay. According to the Daily News of Los Angeles, Vasquez was given $50,000 in vacation pay in 2010. Vacation pay, as well as bonuses and overtime pay, increased his yearly wages by about $77,000.

Since Vasquez was in charge of manually keeping track of the time sheets for his division, including his own time sheets, it was easy for him to fabricate vacation time. The Los Angeles Fire Department used manual time sheets up until October of 2011, when they finally applied a new system. Consequently, vacation pay problems were discovered when this new electronic payroll system was implemented. Vasquez and 50 other Fire Department employees have allegedly falsified extra vacation time. These other employees, however, did not exceed their accumulated allowance of vacation time as much as Vasquez did. All of these cases, particularly Vasquez’s case, are still under investigation.

Throughout Los Angeles, there have been many cases of city employees committing “timecard abuse.” Thus, the LAFD is not the only city agency under investigation for timecard falsification. Other agencies under investigation include the Department of Building and Safety and the Department of Animal Services.

Vacation pay is an optional employee benefit. Hence, employers are not mandated to offer it to their employees. If an employer does offer vacation pay, then it is necessary for them to set a limit as to how much vacation time an employee may take each year. The LAFD, for instance, allows their employees to accumulate vacation time based on the amount of time they work. In Vasquez’s case, he “would earn 24 days of vacation a year and could accrue a maximum of 48 days.” He significantly exceeded these limits: he claimed 919 hours of vacation pay in 2010 and, up until September of 2011, he claimed 459 hours of vacation pay.

Essentially, vacation pay is a type of wages. If an employer permits paid vacations, then they should include vacation pay regulations as a part of their employment contract. The regulations should involve how much vacation time is offered and how vacation time is accumulated. Ultimately, it is critical for an employer to inform their employees of the vacation pay policy at the beginning of each employment relationship.

Laws for Receiving Tips and Gratuities

Many employees working in restaurant, valet and other performing services often receive tips and gratuities, which are subject to income tax. Tips and gratuities are the sole property of the employee to whom they were given, meaning they cannot be collected or received by the employer. Additionally, an employer cannot credit the employee’s tips and gratuities against his/her wages to satisfy wage requirements. Since tips are subject to income taxes, employees should report tips to their employers who may then make the appropriate deductions for said taxes on the next paycheck. Some employers attempt to deduct the actual tip amount from the hourly wages earned by each employee; however, this is illegal in the state of California.

In addition to the employer, it is also illegal for any “agent” of the employer to collect, take or receive any tips or gratuities given to an employee by patrons. According to Labor Code, an “agent” is defined as every person other than the employer who has the authority to hire or discharge any employee, or supervise, direct or control the employees’ actions.

It is very common for businesses in restaurant and hospitality industries to create Tip Pooling for employees. A tip pool is created when those employees who receive tips and gratuities place them into a pool which is then divided amongst all employees. The idea is to spread the risk of receiving little or no tips and gratuities from low-tipping patrons among all tipped employees. Tip pools also create a way for tips and gratuities to be shared with employees who are not directly tipped by customers, such as table bussers. Although California law does not specifically prohibit involuntary tip pooling, the employer or any agents of the employer cannot share in the tips.

There are a few downsides for employers when creating tip pools: (1) There may be less incentive for employees to work hard for their tips and gratuities when they know it will not go straight into their own pockets; (2) all employees who contribute to the patron’s service should be included in the tip pool, which other employees may not agree with; and (3) there is always a risk that the tip pool may later be determined unlawful. Conversely, not implementing a tip pool may cause some employees who do not receive tips and gratuities to demand a higher pay rate.

If patrons are permitted to pay tips by credit card, employees must receive their tip amounts no later than the next regular payday following the date the patron authorized the credit card payment. Employers must keep accurate records of tips and gratuities received, including those received by employees through a customer’s credit card. Additionally, costs of credit card charges incurred by the employer cannot be deducted from tips and gratuities paid by the customer on said credit card. Since the employer chose to use the services of the credit card company, the employer, not the employee, must bear the cost of using that service.

Unfair Work Discipline Demotion Laws

Although there are no federal or state laws protecting an employee from unfair work discipline demotion laws, the California Supreme Court does recognize an employee’s right to sue for “wrongful demotion” if a contract is breached without a just cause. Since personal grudges sometimes become reality in the work place, it is important for employees to protect themselves against unfair work discipline demotion laws.

Wrongful demotion occurs when the employer commits an unfair work discipline demotion due to lack of a just cause. Meanwhile, a just cause is defined as a fair and honest cause or reason, acted on in good faith by the employer. Therefore, in order to legally demote an employee with just cause, there must not be a breach in any written, oral or implied contract for any reason. Similar to termination laws, unfair work discipline demotion laws clarify that an employee cannot be demoted due to retaliation for exercising a legal right. Examples of this would be demotions due to filing a workers’ compensation claim, picketing or striking without violating just policies, or stopping an employee from climbing higher up the company’s salary structure.

A case in point of such unfair work discipline demotion happened when two senior managers were disciplined for alleged misconduct. The exact demotions were reductions in their salaries and benefits. However, the court agreed with the managers' argument that the employer's policies, practices and communications created an implied contract not to demote without just cause. Since the employer's handbook contained a progressive discipline system requiring counseling, oral and written warnings, and other disciplinary steps before demotion would occur, the court found a breach of the implied contract not to demote without good cause.

Apple's Intolerable Working Conditions

In recent years, Apple has been accused of permitting intolerable working conditions for the creation of their products. Foxconn, one of Apple’s main suppliers, is the largest contract manufacturer of electronics in the world. Foxconn manufactures Apple products such as the iPhone, iPod, and iPad. Within the last couple of years, there has been over ten suicides at Foxconn complexes, most of which occurred at the Shenzhen complex. These deaths have been attributed to intolerable working conditions.

Consequently, Apple has put together efforts to prevent further suicides. At the Shenzhen complex, large nets have been installed on the buildings. These nets are meant to catch suicidal employees who have jumped out of the complex’s windows. Other efforts to prevent suicides include pay raises and the availability of counseling.

Since the wave of Foxconn suicides, Apple has improved its process of upholding work safety standards at their manufacturing facilities. Apple has contended that they are very diligent in cutting ties with suppliers and contractors that operate with intolerable working conditions. Even though Apple claims to have improved its auditing process, it is still questionable as to whether or not their auditing procedures are thorough enough.

In the Apple Supplier Responsibility 2011 Progress Report, Apple did not mention any issues related to intolerable working conditions at the Shenzhen complex. Nor did Apple mention Foxconn’s association with poor working conditions at all. The report does come to reveal, however, that the majority of Apple’s suppliers do not comply with their Supplier Code of Conduct. In particular, there has been a significant increase in the use of underage labor among the suppliers. China Labor Watch, an organization based in New York, has reported that the working conditions at Apple’s suppliers in China are much more severe than what Apple has claimed. Essentially, there is enormous room for improvement in creating satisfactory working conditions at Apple’s manufacturing facilities.

Apple maintains that it strives to be a leader in the industry for eliminating intolerable working conditions. Still, unfortunate incidents have continued to occur at Apple manufacturing facilities. Recently, there was a deadly explosion at Foxconn’s Chengdu plant, a facility that manufactures the iPad. Three workers were killed and fifteen were injured in this explosion, supposedly triggered by combustible dust. Moreover, around fifty workers have been poisoned at a firm that manufactures touchscreens for Apple. Ultimately, Apple, as well as other technology companies, needs to realize that intolerable working conditions do not need to exist in order to reduce manufacturing costs and keep the price of American gadgets low. Work safety should be top priority.

Overtime Pay Laws in California

There are several important things for employees to know about overtime pay laws in California, which will benefit those employees more than corresponding federal regulations. For nearly all non-exempt private sector employees in California, overtime pay laws are based not only on the number of hours worked per day, but also per week. Overtime consists of any hours worked over 8 hours in a single work day or 40 hours in a single work week.

According to California overtime pay laws, employers must provide time-and-one-half the employee’s regular rate of pay for: (1) all hours worked over 8 in a single workday; and (2) the first 8 hours worked on the seventh consecutive day worked in a single workweek. Double hours must be given for: (1) all hours worked beyond 12 in a single workday; and (2) the hours worked beyond 8 on the seventh consecutive day worked in a single workweek. In the situation where an employee works a 6-day workweek, but has not worked more than 40 hours in that workweek, no overtime is owed unless the employee works more than eight hours on the sixth day.

Payroll administration often has a difficult time while calculating overtime due to confusion over time-and-one-half and double-times. That is why employees should thoroughly understand overtime pay laws as well as their employer’s overtime policies before their first paycheck arrives. No matter what level of overtime pay the employee is going to receive, the calculations must be based upon their “regular rate of pay” versus their normal hourly amount. Under overtime pay laws, the regular rate is a term used to mean the employee's actual rate of pay once all hourly earnings plus many other types of compensation are considered. It must include nearly all forms of pay received by that employee, including commissions, production bonuses, piece work earnings, and value of meals and lodging.
A sample calculation of the regular rate is as follows: a restaurant employee receives $10 per hour while working as a hostess and $9 per hour while bussing. Assume she receives no tips or other forms of pay. In a five day period, she works 10 hours per day – 40 hours as a hostess and 10 hours bussing overall. Therefore, her regular rate of pay is (($10×40) + ($9×10)) ÷ 50, which equals $9.80. Assuming her employer’s policy is to give employees time-and-one-half for overtime work, then she receives $9.80 ÷ 2, which is equal to $4.90 as her overtime premium. Therefore, she would receive $4.90 × 10 (which is $49.00) in overtime pay in addition to her $490 in base pay, making a grand total of $539.00 for the week (before taxes of course).
One way many employers try to avoid confusing overtime pay laws is by placing employees on salary instead of hourly pay structures. However, non-exempt salaried employees still must receive overtime pay for hours worked over 8 hours in one work day or 40 hours in one work week. As mentioned earlier, it is very important for employees to understand their company policies and corresponding overtime pay laws since there are many different situations and confusing calculations involved.

Pregnancy Discrimination in the Workplace: Laws for Time off and Reinstatement

Even though female employees are eligible for Pregnancy Disability Leave from their first day on the job, they must have worked as least 1,250 hours in the past 12 months to take additional leave under the California Family Rights Act (CFRA). The third important act to remember is the federal Family Medical Leave Act (FMLA), which is leave provided for employees disabled by pregnancy or pregnancy-related issues. When an employer illegally prevents an employee from taking such leave, it is a form of Pregnancy Discrimination.

While the CFRA and FMLA are similar and may overlap for some employees, it is usually dependent on how many employees the business has in order to qualify for each. To lay things out as generally as possible, a California employee could take 4 months PDL leave, 12 weeks FMLA leave and additional time for “baby bonding” under CFRA.

Under Pregnancy Disability Leave, employers with 5 or more employees must provide up to four months of leave for employees disabled by pregnancy and pregnancy-related conditions. Although employers are not required to pay wages during Pregnancy Disability Leave (unless that employer pays wages for other types of disability leave), most benefits and the accrual of seniority must continue. The only exception to this is that employers are not required to continue health benefits during Pregnancy Disability Leave, unless there are limited circumstances. As mentioned above, the employee can take up to 4 months of Pregnancy Disability Leave, either as one single chunk of time or broken down into a combination of shorter periods.

The FMLA provides leave for employees disabled by pregnancy or pregnancy-related issues. The CFRA, on the other hand, does not provide for such leaves. Both the FMLA and CFRA cover private employers with 50 or more employees on the payroll during each of any 20 or more calendar weeks in the current calendar year or the preceding calendar year, and all public employers, regardless of the number of employees. Employees may take up to 12 workweeks of family leave in a 12-month period, as one single chunk of time or broken down into a combination of shorter periods. They may also create a reduced work schedule, where he/she works fewer hours per day and counts those hours toward the 12-week entitlement.

A couple of random details are as follows: (1) If both the mother and father work for the same employer and wish to have more “baby bonding,” the employer may limit them to 12 weeks combined time off. However, FMLA specifies the two must be “husband and wife,” while the CRFA states the two can be “parents” regardless of whether or not they are married.

When an employee is ready to return to work after Pregnancy Disability Leave, FMLA and/or CRFA, the employer must reinstate her to the original position or a comparable position. Regarding Pregnancy Disability Leave, there must be legitimate business reasons if reinstatement is denied. Finally, under FMLA and CRFA, the employer can only refuse to honor the reinstatement guarantee under very limited circumstances.