Kentucky Employment Law Blog

Tip Credit Not Applicable to Bartenders and Servers Where More Than 20% of Work Is Performing Related But Nontipped Duties

Bartenders and servers almost always are subject to the "tip credit" that makes up the difference between their hourly pay rate, which is $2.13, and the minimum wage. A group of current and former servers and bartenders at Applebee's restaurants filed a class action lawsuit under the federal Fair Labor Standards Act seeking unpaid wages and challenging the application of the "tip credit" to non-tip producing duties they performed during their shifts. Thus, the case presented the question of whether and to how much working time does the "tip credit" apply to time spent on tasks that produce no tips for the bartender or server.  

The United States Court of Appeals for the Eighth Circuit ruled recently in Fast v. Applebee's International, Inc., Nos. 10-1725/10-1726 ( April 21, 2011), as follows:

employees who spend 'substantial time' (defined as more than 20%) performing related but non-tipped duty should be paid the full minimum wage for that time without the tip credit[.]

The import of this ruling is that the "tip credit" does not apply to all the hours worked by a bartender, server or other tipped employee, provided that he or she spends more than 20% of the working time performing nontipped tasks and duties.

Robert L. Abell
www.RobertAbellLaw.com 

Racing Officials Not Exempt From Overtime Requirements

Racing officials, a placing judge, a paddock judge, a horse identifier, and a clerk of scales, are not exempt from the overtime compensation requirements of the Fair Labor Standards Act (FLSA) the Fourth Circuit has ruled in Desmond v. PNGI Charles Town Gaming, No. 08-1216 (April 30, 2009). The Court reversed a district judgment and ruled that the racing officials’ positions did not fall under the administrative exemption to the FLSA.

The plaintiffs worked as racing officials at the Charles Town race course in the positions of placing judge, paddock judge, horse identifier, and clerk of scales during horse racing at that facility. They filed suit under the FLSA seeking overtime compensation, because they regularly worked more than 40 hours per week.

The issue was whether the racing officials’ positions fell under the administrative exemption to the overtime requirement. The administrative exemption has three components: (1) the employee must be compensated at a salary rate of not less than $455 per week; (2) the employee’s primary duty must consist of the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and (3) the employee’s primary duty must include the exercise of discretion and independent judgment with respect to matters of significance.

The court ruled that the racing officials’ jobs were not directly related to the general business operations of the race course. The court noted that the racing officials have no supervisory responsibility and do not develop, review, evaluate, or recommend business policies or strategy with regard to the horse races put on by their employer. While acknowledging that the racing officials’ jobs were important to the operation of the racing business and indeed that state law required the positions to exist, the court concluded that the positions “are unrelated to management or the general business functions of the company.”

 The court also analogized the racing officials’ work to those of a manufacturing production employee, stating that the position of racing official consists of “the day-to-day caring out of [Charles Town Gaming’s] affairs to the public, a production-side role.” Therefore, the court ruled that the racing officials’ position does not satisfy the requirements for the administrative exemption under the FLSA.

Robert L. Abell
www.RobertAbellLaw.com

Nurses File Class Action Suit Seeking Training Time and Missed Meal Break Time Pay

Nurses have filed a class action lawsuit against the Pittsburgh Mercy Health System claiming that they were not paid for training time and work they performed while supposedly on meal breaks the Pittsburgh Post-Gazette reports, "Nurses File Lawsuit Against Mercy Health System."  The nurses claim that they are allotted 30 minutes each shift for a meal break but either are unable to take a meal break or are compelled to work through much of it. They also claim that they were not paid for certain training time. 

The suit appears similar to one filed last November against 2 Syracuse, New York area hospitals as reported in the Kentucky Employment Law Blog, "Interrupted Lunch Breaks Cited In Wage Class Actions."

Employers are not required to pay employees for their meal breaks. Employers are required to pay employees for the time they work. If an employee works through his or her lunch break, they are supposed to be paid. Also, if an employee's lunch break is interrupted by work duties, the employee must be paid according to the U.S. Department of Labor. 

Robert L. Abell

www.RobertAbellLaw.com

Wage and Hour Enforcement Again Faulted In Government Report

Enforcement of overtime wage and hour law by the federal Department of Labor's Wage and Hour Division has again been faulted as lax in a government report released today, the New York Times reports, "Enforcement Agency Is Failing Workers, Report Says."A copy of the report, which was completed by the Government Accountability Office, can be read here.

This follows a similar report last summer as also reported in the Kentucky Employment Law Blog, "Overtime and Wage Enforcement Lax, Government Reports."

Robert L. Abell
www.RobertAbellLaw.com

Wal-Mart Settles Overtime and Break Time Lawsuits

Wal-Mart has agreed to settle dozens of lawsuits for unpaid overtime, claims that employees were forced to work off-the-clock, claims that employees' time cards were changed by store managers and claims that employees were denied break time required by wage and hour laws in many states, the New York Times reports, "Wal-Mart Settles 63 Lawsuits Over Wages."  The amount of the settlement will be between $352 and 640 million that will depend on workers' filing claims for wages due them.  The settlement covers 63 lawsuits pending in 42 state and federal courts.  

Wal-Mart recently settled a wage and hour lawsuit in Minnesota for $54 million, see "Working Off The Clock and Missed Breaks Law Suit Settled by Wal-Mart."  That settlement followed a state court verdict against Wal-Mart, see "Wal-Mart Found Liable For Underpaying Workers." 

Robert L. Abell

www.RobertAbellLaw.com

Working Off The Clock and Missed Breaks Lawsuit Settled By Wal-Mart

A lawsuit to recover unpaid wages for employees who were forced to work off the clock and to skip meal breaks has been settled by Wal-Mart for $54 million, the New York Times reports, "Wal-Mart To Pay $54 Million To Settle Wage Suit."  Last summer a state court in Minnesota found that Wal-Mart managers had made employees complete computerized in-house training off the clock and both compelled and tolerated employees skipping mandatory breaks.  

Robert L. Abell

www.RobertAbellLaw.com

Interrupted Lunch Breaks Cited In Wage Class Actions

Interrupted lunch breaks are the basis for class action lawsuits for unpaid wages filed on behalf of workers at two hospitals reports the Syracuse Post-Standard, "Firm Sues 2 Hospitals In Syracuse."

Wage and hour law does not require employers to pay employees for their lunch breaks.  Kentucky law specifically requires that an employee be allowed a "reasonable" time period for a lunch break as close as possible to the middle of an employee's shift.  However, employers are required to pay employees for the time they work.  If an employee's lunch break is interrupted by work duties, the employee must be paid according to the U.S. Department of Labor. 

Robert L. Abell
www.RobertAbellLaw.com 

$10 Million Police Overtime Case Settled

Police officers in Cleveland, Ohio have settled an overtime compensation case for $10.4 million, the Cleveland Plain-Dealer reports, "Cleveland Settles $10 Million Comp Time Dispute With Police."  The suit challenged the city's policy of not paying overtime to police officers and instead required them to bank "comp time" hours that they could cash out at retirement.  Police officers who wished to use their banked hours for paid time off were often not permitted to do so. 

Robert L. Abell
www.RobertAbellLaw.com

Overtime and Wage Enforcment Lax, Government Reports

Overtime and minimum wage enforcement actions of the Fair Labor Standards Act have gone wanting by the Labor Department's Wage and Hour Division, according to two reports released today by the Government Accountability Office.  To review the reports click here and here.  In one inexcusable example, a truck driver was not paid overtime even though he worked 55 hours a week; his complaint sat idle for 17 months before an investigator was assigned and, when one was assigned, he did nothing until dropping the case because the statute of limitations was about to expire.  Enforcement actions declined to 29,584 from 46,758 ten years earlier.  What's the upshot: the number of investigators declined throughout the Bush Administration, the number of enforcement actions declined and, according to Representative George Miller of California, "the problem of wage theft is only getting worse because of weaker enforcement." 

Robert L. Abell
www.RobertAbellLaw.com

Wal-Mart Found Liable for Underpaying Workers

    The St. Paul Pioneer Press reports that a Minnesota state court judge has ruled that Wal-Mart violated wage and hour laws by shortening workers' meal and rest breaks and forcing them to work off the clock, see "Judge: Wal-Mart Owes Minnesota Workers $6.5 Million for Off-Clock Work, Lost Breaks." $6.5 million was awarded to cover the workers' back pay.  The employees claimed that they were forced to work through their mandated by law breaks and that managers sometimes recorded breaks on their time cards that they never took.  A further trial is scheduled in the fall to determine possible punitive damages and other penalties.  The Minnesota case follows other similar decisions against Wal-Mart in Pennsylvania, California and Colorado.  About 70 similar cases remain pending against Wal-Mart in various courts around the country. 

Robert L. Abell
www.RobertAbellLaw.com