Accusations of Labor Violations at TGI Friday’s

One of the nation’s most popular casual dining spots has been named in a class action lawsuit. TGI Friday’s is accused in the suit of systematically underpaying its tipped employees. Allegations made within the suit filed on April 17, 2014 in New York Federal Court include: TGI Friday’s requires that tipped workers are at work early and say late after closing without minimum wage compensation and/or overtime pay. The suit was filed by four former employees of TGI Friday’s in the New York metro area and Fredericksburg, Virginia. Plaintiffs also indicate that the restaurant management utilized a central time-keeping system that allowed them to cut hours from employee time records – requiring employees to work off the clock doing prep work and clean up before and after their shifts/restaurant hours.

No one has indicated a specific dollar amount for this lawsuit, but speculation puts it in the millions. Allegations of violations of the Federal Fair Standards Act and the New York Law were made against TGI Friday’s and Carlson Restaurants (its parent company).

TGI Friday’s has approximately 540 domestic locations and 17,700 US employees. The suit represents all current and former workers: servers, bartenders, hosts, bussers and any other “tipped” workers at the chain.

Workers are seeking recovery of minimum wages as well as overtime pay, misappropriated tips, unlawful deductions, etc.

Many employers are attempting to maximize profit by minimizing employee costs. If you are being underpaid for hours worked, get in touch with an expert wage and hour attorney at Blumenthal, Nordrehaug & Bhowmik. 

Beau Biden Named in Unpaid Overtime Suit

Three detectives (R. Durnan, G. Christian, and M. Forbes) previously employed by the Delaware Attorney General’s Office have filed charges against their former employer claiming that they were not paid overtime. The federal lawsuit claims that the failure to pay overtime was in violation of federal labor laws and that in response to their demands for overtime pay they were demoted.

The detectives named Delaware Attorney General Beau Biden, Timothy Mullaney (his chief of staff) and the Delaware Department of Justice as defendants. The civil action was filed in U.S. District Court earlier this week.

Christian retired earlier this year and Durnan is set to retire in May 2014. The three were titled “detectives,” but their job duties were almost entirely made up of one task – handling the out-of-state extradition of fugitives who fled the state. The detectives allege that they all worked in excess of 40 hours/week between November 2010 and November 2013, but were never paid overtime due. According to the allegations made in the suit, Mullaney’s response to the detective’s request for overtime compensation was to reassign Durnan and Forbes to different assignments and to leave Christian in his position at a limited capacity with no overnight travel, no flying and a maximum of 37.5 hours allowed per week. The detectives claim the reassignments were retaliation. The plaintiffs seek overtime pay due, reassignment to their old positions, damages and legal fees.

Talk to the experts at Blumenthal, Nordrehaug & Bhowmik to find out if you have cause to worry about your own situation. Are you getting the overtime pay you are due? 

Starbucks Agreed to Pay up to $3M Settlement for Mileage Reimbursement Suit

An agreement is in place for Starbucks to pay up to $3 million to settle the lawsuit based on allegations that the popular coffee house did not reimburse named California employees for mileage related expenses incurred while on the job. Employers who typically incur mileage expenses while on the job include: store managers, assistant managers, and shift supervisors. These employees working at Starbucks stores located in California employed from March 2003 through March 2008 are eligible for payments of $30-75 each.

Attorney’s fees are included in the $3 million settlement as well as an undisclosed amount given to the representative plaintiff as an incentive award and a payment to the California Labor and Workforce Development Agency of $25,000.

In the documentation, Starbucks agreed to class-action status for settlement purposes along – they do not accept liability. Within the settlement paperwork it was agreed that the plaintiff and plaintiff’s attorneys are not to respond to questions from the media. The only exception is to allow them to refer to court documents on file. Jonelle Lewis filed the lawsuit in March 2007. She had worked at Starbucks since December of 2005. She resigned within one month of filing the lawsuit. The lawsuit filed by Lewis claimed that she consistently used her personal vehicle for work purposes (i.e. bank deposits, obtaining supplies, etc.) She also claimed that she attempted to request reimbursement for the mileage, but that Starbucks’ response was not to reimburse as a matter of “policy.”

If you feel you that company “policy” in your workplace is conflicting with your rights as outlined in employment law, get in touch with the experts at Blumenthal, Nordrehaug & Bhowmik.

Arguing the Professional Exemption

The Obama administration recently took a closer look at the Professional Exemption. Their scrutiny was followed by instructions to the Department of Labor to narrow the definition of the exemption. Changes are set to take effect in 2015, but Courts may begin utilizing the new definitions and strictures immediately if recent activity is any indication. 

Court cases that involve the proper classification of employees are generally the most contentious. This makes sense as the stakes are higher than cases involving potential repayment of back wages and/or penalties for overtime. They can also require complete reclassification of employees listed in the case with overtime required from that point forward. In proper classification cases, a ruling against the employer often means a complete change in the way the company runs their business.

Many employers have been cutting corners to save money on overtime. Some say it’s due to the Labor Code coming across as complex. But it’s more likely a combination of complexity allowing for loose interpretations/purposeful misinterpretations embraced during low cash flow points in a troubled economy. Employers feel they need to save the money and many are deciding to do whatever they can (legal or not) to save money on overtime costs.

A recent case involving day rate employees being classified under the labor code as professionals exempt from overtime pay seems to support the idea that the courts will consider changes to the Professional Exemption now rather than waiting until 2015. Workers in the recent case were working 12-hour shifts, sometimes 7 days a week leaving them totaling in excess of 84 hours some weeks. Their work was compensated by a day rate. Some weeks their total pay (if they worked only a couple days) was less than $455/week. Legal representation for the plaintiffs in the case argued that claiming an employee is a salaried professional, but paying them less than $455/week some weeks does not meet the requirements of the Professional Exemption’s first prong.

The case was concluded on March 27, 2014. The Federal Middle District of Pennsylvania court clerk recorded judgment for wage and hour violations in the case (3:14-cv-00042-RDM). Allegations accused the employer of failing to pay workers overtime for their hours that exceeded the full time 40. The court supported the claims. We can most likely expect to see more decisions leaning towards the new understanding of the Professional Exemption.

If you feel that you may be due past overtime or know someone who is in an untenable work environment, get in touch with the experts at Blumenthal, Nordrehaug & Bhowmik today.

Popular, But Risky Method of Avoiding Obamacare: Cutting Hours

The employer mandate portion of the Affordable Care Act (ACA) or what most are referring to as Obamacare has been delayed until 2015, but many companies are already searching for ways to get around the new requirements. One of the most popular techniques companies are putting in place is purposefully cutting hours to circumvent the mandate. It’s risky and it could land stick those who try it with some tough legal issues.

As of the first of the year in 2015, employers with 50+ full time (or full time equivalent) employees will be required to provide health coverage to those employees. For this mandate full time is defined as workers who put in 30 or more hours/week. Employers who don’t provide the required coverage will be required to pay $2,000/year per full time employee. The mandate excludes the first 30 employees and is dependent upon at least one employee using the federal premium tax credits to purchase insurance through the Marketplace. Employers who try to get around the mandate by providing coverage that is not “affordable” will also incur penalties.

Companies who have decided to cut employee hours in order to avoid the mandate include Subway, Forever 21, Regal Entertainment Group, etc.) These groups plan to cut their employees hours to less than 30 hours/week. This will ensure they do not meet the 50 full time employee mark or at least drastically reduce the number of employees that would qualify under the current definitions as set down in the ACA.

While it may seem like a smart move, companies embracing such tactics may be doing more than cutting corners. They may be breaking the law. The Employee Retirement Income Security Act of 1974 (ERISA) includes an often overlooked provision (Section 510) that makes it illegal for employers to make employment decisions solely in order to prevent an employee from obtaining or retaining benefits.  Experts are speculating on the financial damage that could be on the horizon for companies who try to avoid the ACA mandate by cutting employee hours due to potential class action lawsuits down the road. Employers at the greatest risk will most likely be those who arranged employment in order to remove benefits/coverage from employees who previously qualified.

In addition to the potential legal issues due to Section 510 and the popular trend to cut hours to avoid the mandate coming in 2015, companies also need to consider their work force’s demographics. Companies who cut back hours on older workers could leave themselves open to age discrimination lawsuits. Company brands could see notable damage due to their maneuvering and it could decrease their chances of recruiting top notch employees in future.

Employers are encouraged to steer clear of the temptation to cut hours in order to avoid the employer mandate. There are better ways to deal with the upcoming changes. Some will find that they will be best served by filling their work force with contractors employed by staffing services. In this instance, the staffing service will be responsible for ACA compliance. This will avoid the hassle of meeting requirements of the new mandates as well as meeting the expectations of quality workers. They’ll still receive quality benefits packages; it will just be through the staffing service.

We’re not trying to sell anyone on the line that Obamacare isn’t an issue. As trusted employment experts, Blumenthal, Nordrehaug & Bhowmik is available to help you navigate the upcoming changes. 

Labor Board: Northwestern University Football Players Can Unionize

As of Wednesday, and according to the National Labor Relations Board in Chicago, football players are employees. For the players at Northwestern University this is good news because they can now unionize. The players petitioned in order to increase their bargaining power in the college sports arena. The ruling could change the landscape of the NCAA. In response to the petition, Northwestern University claimed that their players are not employers, they are students.

The board’s decision that the players should be classified as employees was based on several factors:

·       Athletes at the university get “paid” in scholarships
·       They work between 20 and 50 hours/week
·       They generate millions of dollars of revenue for the university

Players claimed the reason behind their petition was to receive better medical coverage (including concussion testing), four-year scholarships and the potential for outright payment for athletic services.

Northwestern plans to appeal. Richard Epstein, labor law professor at New York University, said the ruling has “vast implications for the structure of the sport, if upheld.” Individuals opposing the board’s decision claim that while the reform issues players are looking to address may be appropriate, unionizing may not be the best method of achieving change in this instance because of the negative effect it could have on the success of Northwestern athletics. An appeal would likely take years to resolve.

The NCAA responded to the issue by saying that, while it wasn’t directly involved in the proceedings, it didn’t agree with the decision of the board and disagreed with the idea that student athletes should be classified as employees.

For up to date information on the issue or to discuss other current affairs related to employment status, wage issues, etc. contact the experts at Blumenthal, Nordrehaug & Bhowmik today. 

Obama Signs Memo to Strengthen Overtime Pay Rules

President Barack Obama signed a presidential memo this month directing the Dept. of Labor to come up with new overtime rules in order to make more workers eligible for time and a half pay. Obama has made it clear that he will bypass Congress when necessary to take action on economic initiatives. This is currently one of his most far-reaching executive actions this year even though new rules wouldn’t take effect most likely until 2015.

The new overtime pay rules would be focused towards workers on salary who earn more than $455/week and are ineligible for overtime due to management titles even though their actual job duties include few supervisory capacities. New regulations could change the definition of “supervisor” according to employment law. The salary/week limit separating workers who get paid overtime and those who don’t was last raised in 2004 by the Bush administration. Prior to 2004 it hadn’t changed since the 1970’s.  

Those in support of new overtime rules feel that millions of American workers could benefit from a change. Those who are against the change feel that increasing the number of workers eligible for time and a half pay for overtime would create a burden too heavy for small businesses and could potentially cost Americans jobs.  

Obama’s focus isn’t limited to overtime pay rules. This year, the President is also focused on federal minimum wage. He hopes to increase worker pay this year by calling on Congress to increase the minimum from $7.25 to $10.10.

For additional information on employment law, federal minimum wage and overtime regulations get in touch with the experts at Blumenthall, Nordrehaug & Bhowmik.