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Posts Tagged ‘Department of Labor’
Wednesday, April 27th, 2011
On April 5, 2011, the Wage and Hour Division of the Department of Labor issued a final rule entitled “Updating Regulations Issued Under the Fair Labor Standards Act.” The final rule makes several “updates” to the Fair Labor Standards Act (FLSA), but most significantly impacts the areas of tip pooling and the fluctuating workweek.
First, with regards to tip pooling, the final rule increases the maximum amount that an employer may claim as a tip credit from $4.42 per hour to $5.12 per hour. However, an employer may only apply the credit to a tipped employee if the employee has been given notice of the tip credit provisions under FLSA and all tips above the maximum credit amount are kept by the employee. Although there is no cap on a tip pool, under the final rule, an employer is not permitted to use tips for any purpose other than a tip pool, regardless of whether they choose to participate in the practice.
Second, the final rule places more stringent requirements on the use of the fluctuating workweek. A fluctuating workweek allows an employee covered by the FLSA who works on an irregular schedule to be paid a straight time salary. Under the new rule, an employer is prohibited from paying bonuses, premium payments or other additional amounts in conjunction with a fluctuating workweek. The comments to the rule indicate the belief that allowing these payments causes a drop in the overall salary paid. Additionally, the new rule clarifies that the fluctuating workweek can only be used where the employee’s hours actually fluctuate in an irregular and unpredictable manner.
In light of the new rule, employers engaging in a tip pool should ensure that they do not exceed the maximum tip credit amount and that all involved employees have been given notice of their rights under the FLSA. Furthermore, employers who use a fluctuating workweek in compensating their employees should verify that all involved employees have irregular hours. The final rule will go into effect on May 5, 2011.
Tags: Department of Labor, Fair Labor Standards Act, Final Rule, Fluctuating Workweek, tip pooling
Posted in Industry News | No Comments »
Wednesday, April 6th, 2011
The Department of Labor recently recovered $219,390 in back wages and liquidated damages from three Massachusetts restaurants for misclassifying 44 employees as independent contractors. The restaurants had contracted with an agency called the Operations Management Group (OMG) to move many existing employees to the OMG payroll. The restaurants would set the hourly rate the employees were to be paid and tell OMG how many hours each employee had worked. The restaurants then used this arrangement to treat the employees as independent contractors to avoid withholding tax deductions and paying overtime.
This fine issued in this case is part of the Department of Labor’s increased enforcement and monitoring efforts in the restaurant industry. The Department of Labor views the misclassification of workers as an alarming trend that is particularly prevalent in industries with many low-wage workers, such as the restaurant industry. In a press release on the incident, the Department stated that “the Wage and Hour Division wants to send a strong message that employers cannot evade their responsibility under the law by using staffing agencies or labor contractors…These business practices are not a legal way to reduce labor costs.”
Tags: Department of Labor, Independent contractor, Misclassification of employees, Operations Management Group, Wage and Hour Division
Posted in Industry News | No Comments »
Sunday, December 12th, 2010
Brazilian workers at the award-winning Massachusetts gourmet pizza chain, the Upper Crust, claim that the chain systematically violates the Wage and Hour Act as well as other state and federal laws designed to protect employees. Perhaps as bad as the chain’s legal woes – which appear to be serious – is the fact that the Boston Globe has taken a keen interest in the chain’s quick rise, and the shortcuts it allegedly took with employees.
According to the Globe’s latest story, the Massachusetts Attorney General’s office is investigating numerous allegations that the chain exploited its Brazilian workforce, including by forcing its Brazilian staff to work as much as 80 hours per week without paying them overtime wages. The connection between the pizza chain and the small Brazilianvillage of Merrilac is particularly interesting, as for a decade, workers from Merrilac would enter the United States illegally to work at the Upper Crust to send money back to Merrilac. The village, in turn, has become dependent on the emigrants’ wages at Upper Crust to survive.
The Attorney General’s office is in good company, as the Department of Labor and Massachusetts Commission Against Discrimination are also investigating the chain. A spokesman for U.S. Immigration and Customs Enforcement would neither admit nor deny that it was investigating the chain.
In perhaps the most egregious allegation of the chain’s behavior comes following a U.S. Department of Labor investigation last year which resulted in the Department ordering the Upper Crust to make nearly $350,000 in uncompensated overtime payments to approximately 120 employees. A lawsuit filed this summer by two cooks alleges that the chain “took back” the overtime payments by reducing their wages over the next several months. An Upper Crust spokesman states that at least one of the plaintiffs was a management employee and thus ineligible for overtime. The fact that this employee was a cook allegedly being paid less than the minimum wage would seem to belie this defense, however.
Even giving Upper Crust the benefit of the doubt, it now faces state and federal investigatory scrutiny on serious allegations. It also is clearly facing a public relations nightmare.
Stephen D. Coppolo, a member of NKMS’s Food and Hospitality Group and Employment Counseling and Litigation Group contributed this report.
Tags: attorney general, Department of Labor, discrimination, ethnicity, massachusetts, upper crust, wage and hour
Posted in Industry News | No Comments »
Tuesday, April 6th, 2010
“The Apprentice” is not just a TV show, it’s a concept going back to the middle ages and probably to pre-history.?? It makes total sense.?? A person new to a trade offers his or her services for free as an “apprentice” or??”intern” just to have the chance to work with a master at the trade??for the pure opportunity to learn and gain experience to launch a career.?? But while abuses and indentured servitude were par for the course hundreds of years ago, The New York Times has recently reported that the United States Department of Labor today is on the lookout for companies who abuse the internship concept to exploit free labor rather than to impart knowledge.?? An employer who crosses the line can run the risk of serious liability, including multiple fines and other enforcement actions.
Interns typically??work in a number of different industries.?? You see them in brokerage houses, law firms, publishing and, yes, in restaurants–particularly in kitchens where culinary arts students would kill for an opportunity to work behind the line and develop themselves, their experience and their craft.?? But the problem arises when companies take on interns as “volunteers” and use them for work that they would normally pay for someone to perform.?? An unpaid intern must not be used to replace a paid worker, and generally the company hosting the intern cannot derive immediate benefit from the unpaid intern’s work.?? Rather, the intern’s activities??must be primarily educational for the intern rather than economically productive for the host company.?? Otherwise, the host company must pay the intern at least at the rate of minimum wage.
Charities and non-profits are allowed more flexibility with unpaid interns than for profit companies, as people generally are permitted to volunteer their time to charitable causes.?? But companies who use unpaid intern labor to fill in at jobs where the company would normally need to hire a worker to perform probably commit violations of minimum wage laws and other aspects of the federal FLSA.
To be sure your??shop does not cross the line, examine the purpose of your intern program, audit the activities of interns and be sure you do not encourage managers to lower their labor costs by relying on student interns.?? Take a look at the DOL website and be sure to consult with counsel for further guidance.
Chris Vrountas, Chair of the Employment Counseling Litigation Practice Group, contributed this posting.
Tags: apprenticeship, Department of Labor, DOL, Fair Labor Standards Act, FLSA, intern, intern abuse, interns, internship, internships, The Apprentice, The New York Times
Posted in Industry News | No Comments »
Thursday, February 18th, 2010
The Obama Administration continues to make vigorous enforcement of employment laws an essential part of its economic program. We earlier commented on this blog about the Administration’s push to enforce wage and hour and anti-dsicrimination laws. Later, the White House issued notice that its budget projections assume greater enforcement of laws requiring employers to classify workers properly as employees rather than as independent contractors. Today, we have learned from a report in The New York Times that such enforcement is expected to yield Seven Billion Dollars to the United States Treasury.
Why does the government care? Lots of workers would rather be be paid cash without withholdings and be issued a 1099 rather than have their pay reduced by federal and state withholdings and receive a W2 at the end of the year. But that is precisely the problem from the government’s perspective. Those misclassified as independent contractors end up not paying their social security taxes or medicaid taxes, and their employers end up not paying for unemployment insurance, workers compensation insurance or their share of the social security tax to the government. In addition, the Department of Labor argues that employers undermine the entire welfare state structure that is geared to protect workers as that structure assumes workers shall be treated as employees rather than as independent contractors. Workers compensation laws, unemployment insurance, even anti-discrimination laws protect employees, not independent contractors.
To add to the difficulty, every state has its own set of rules to determine whether a worker can be treated as a contractor or must be treated as an employee, while the IRS has its own set of standards. On top of that, one set of rules may apply to unemployment insurance and workers compensation while another set may apply to tort liability and tax obligations.
What’s an employer to do? First, be honest. Do not play close to the edge to get a tax benefit or to obtain some other short term cost savings. The long run cost, including potential enforcement actions, could likely set you back much farther. Second, go to the relevant government websites, including the IRS, the United States Department of Labor, or your local state DOL and learn the relevant standards. Third, seek the advice of counsel. You may actually decide to ask the IRS directly through a form SS8, which allows you to seek an opinion in advance of going forward with any hire as to whether such hire should be considered an employee or independent contractor. The IRS might not tell you want you want to hear, but you will get a response of some kind. A word to the wise should be sufficient to take the proper course and reduce the risk of multiple damages, fines and attorneys fees, not to mention potential class action liability, in the event you misclassify your workers.
Chris Vrountas contributed this posting.
Tags: Department of Labor, DOL, Federal Budget, independent contractors, Internal Revenue Service, IRS, New York Times, Obama, Obama Administration, taxes, unemployment insurance, United States Treasury, workers compensation
Posted in Employment Law/Legislation, Industry News | No Comments »
Thursday, January 28th, 2010
Chris Vrountas has posted the following:
President Obama delivered his first State of the Union address to a Joint Session of Congress and to the American people last night. He covered quite a bit of ground about the economy, health care and national security, among other things, but he also specifically discussed his administration’s policy regarding civil rights and wage law enforcement. The president’s strident tone should provide notice to business and other employers that the federal government will be looking to enforce the anti-discrimination and wage laws vigorously and, in some cases, looking to make examples of certain violators. Here is a brief portion of the speech last night:
. . .
Abroad, America’s greatest source of strength has always been our ideals. The same is true at home. We find unity in our incredible diversity, drawing on the promise enshrined in our Constitution: the notion that we are all created equal, that no matter who you are or what you look like, if you abide by the law you should be protected by it; that if you adhere to our common values you should be treated no different than anyone else.
We must continually renew this promise. My Administration has a Civil Rights Division that is once again prosecuting civil rights violations and employment discrimination. We finally strengthened our laws to protect against crimes driven by hate. This year, I will work with Congress and our military to finally repeal the law that denies gay Americans the right to serve the country they love because of who they are. We are going to crack down on violations of equal pay laws - so that women get equal pay for an equal day’s work. And we should continue the work of fixing our broken immigration system – to secure our borders, enforce our laws, and ensure that everyone who plays by the rules can contribute to our economy and enrich our nations.
In the end, it is our ideals, our values, that built America – values that allowed us to forge a nation made up of immigrants from every corner of the globe; values that drive our citizens still. Every day, Americans meet their responsibilities to their families and their employers. Time and again, they lend a hand to their neighbors and give back to their country. They take pride in their labor, and are generous in spirit. These aren’t Republican values or Democratic values they’re living by; business values or labor values. They are American values.
. . .
So, it is “let the word go forth” time for this administration and its policy on civil rights and wage and hour enforcement. Employers should mindfully review their policies, develop their training, ensure compliance, make HR available and noticeable, take internal complaints seriously and resolve them fairly because employers who do not manage their workplaces actively may have the EEOC or the DOL doing it for them.
Tags: civil rights, Congress, Constitution, constitutional law, Department of Labor, discrimination, DOL, economics, EEOC, Equal Employment Opportunity Commission, equal pay, equal pay laws, health care, health care bill, healthcare, Obama, Obama Administration, SOTU, State of the Union
Posted in Diversity, Employment Law/Legislation, Health & Safety, Industry News | No Comments »
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