Minimum Wage for Tipped Employees

Cutting costs. It’s the name of the game these days. While it may be tempting to view payroll as a budgetary line item on par with all other line items -- like office supplies, for example -- doing so can be a mistake. Copy paper and staplers can’t get upset and file a lawsuit for violating their rights -- workers whose wages have been cut certainly can, and do. Ensuring that wages are calculated correctly is vital, both for workers and for businesses.

Workers’ wages are regulated by a number of laws, but one of the most important ones is the Fair Labor Standards Act (FLSA). In addition to setting the minimum wage rate, this law and the regulations that go along with it set forth all kinds of requirements related to the proper payment of wages. In this series, Athens employment attorney Penn Dodson describes in layman’s terms some of the common ways employers fail to comply with correct wage paying procedures.

Part I: Minimum Wage for Tipped Employees

The current minimum wage, effective July 24, 2009, is $7.25 per hour. However, employers are still allowed to pay tipped employees $2.13 per hour, if certain conditions are met. One of those conditions is that the employee must actually be earning at least minimum wage each workweek, between the $2.13 per hour and the money earned as tips. Where a tipped employee’s total wages (i.e. the employer-paid sub-minimum wage amount plus the customer-paid tips) does not equal an average hourly wage equal to or greater than the applicable minimum wage, the employer must pay the worker for the difference. 29 U.S.C. § 203(m).

With the combination of minimum wage having increased and in many cases sales being down, there are more and more cases lately of tipped employees not receiving enough in tips to make minimum wage. Where it was once the case that an employer could fairly presume that, by and large, tipped employees were receiving enough to meet minimum wage, these days employers can no longer safely make that assumption.

Employers are able to enjoy the benefit of the “tip credit” which allows them to pay the employees less than the applicable minimum wage for hours worked. A “tip credit” is the difference between the applicable minimum wage and the rate of pay the tipped employee earns as an hourly wage from the employer (the lowest it can be is $2.13, but sometimes employers pay some other rate) which the employee earns in tips. That benefit, however, comes with the responsibility of keeping accurate account of the tips received. Because of this tip credit benefit, it is the employers’ responsibility to maintain records supporting the tip credits from which they benefit. If they are unable to substantiate the tip credits, they lose their ability to enjoy the benefit of the tip credit.

The IRS requires that employees report all of their tips. Of course, at least in some circles, especially where cash tips are the norm, underreporting of tips is common. To some degree that is an issue between the employee and the IRS. However, to the extent that any such suspected tip underreporting affects wage law requirements, employers have an incentive to ensure that employees are in fact reporting all of their tips.

An employer suspecting its workforce to be underreporting tips should first educate and remind employees of their obligations, perhaps through memos, employee meetings, or other suitable formats for issuing policy directives. If the employer still suspects that this is not being done, the employer should establish a protocol for tip counting at the end of workers’ shifts, such as by a supervisor. If there is still a problem and the employer becomes aware of actual underreporting, disciplinary measures may be appropriate for failure to abide by the prescribed policies. Where reported tips are not meeting or exceeding the tip credit amounts, however, there are actions that an employer ought not take, such as withholding tips from employees, requiring employees to sign something suggesting that they are earning a certain amount in tips that they are not in fact earning, etc.

Employers need to ensure that tips are reported accurately at the time they are being earned. If employers don’t track tips accurately at the time they are earned, it is difficult, if not impossible, to retroactively go back and recreate accurate records. Employers also cannot retroactively, after the day, week, or pay period, make blanket generalizations to the effect that the servers must have received more than a certain amount and, on that assumption, fail to pay the difference between the reported tips plus paid wages and minimum wage. In other words, an employer is stuck with the numbers contained in its records. If the employer’s records do not support a sufficient amount of tips, then they should be paying the difference.

In sum, tipped employees, like other hourly-paid workers, have to be earning at least minimum wage, and the employer has to be able to point to records giving evidence that that is in fact happening. If they can’t, employers need to pay the difference.

For more information on wage and hour laws, contact Penn Dodson at 706.548.8668 pud@classiccitylaw.com or see the US DOL website:

http://www.dol.gov/esa/whd/regs/compliance/whdfs15.pdf

Calculating Workers’ Overtime Wages Correctly in Tough Economic Times

Ensuring that wages are calculated correctly is vital, both for workers and for businesses. Employers and employees alike are almost universally aware that for most hourly-paid employees, hours over 40 worked in a workweek must be paid at a rate of time and a half the worker’s regular hourly rate. As simple as that concept may sound, however, errors related to overtime pay occur on a frequent basis, in any number of different ways. There are all kinds of variables and factors that potentially can make a difference as to whether overtime is owed and if so, how to calculate it. Following are a few pointers related to the calculation of overtime for nonexempt employees. While the list is far from exhaustive, it should at least provide food for thought about some of the common pitfalls.

1. Even if employees aren’t supposed to work overtime, they still have to be paid for it.

Employers trying to watch their bottom lines by reducing the amount of overtime worked often create “no overtime” rules. Employees may indeed properly be directed not to work more than 40 hours in the workweek, generally speaking. However, the methods employers use to enforce these kinds of rules can sometimes get them into trouble.

Where an employer tries to enforce a no-overtime rule by not paying for overtime worked, generally they are violating the law. Time worked must be paid, plain and simple.

That does not mean, however, that employers are powerless to enforce their rules. If an employee works unauthorized overtime, the correct response should be to pay the employee for that overtime but then issue him or her corrective discipline to ensure that it does not occur again.

Workers should not, however, be reprimanded for incurring overtime because they were directed to work more than 40 hours in that particular workweek. Employers should not issue blanket no-overtime rules on the one hand but then during the workweek direct employees to work more than 40 hours on the other and then scold them for doing so.

2. Overtime is calculated by the workweek, not the pay period.

Some employers mistakenly believe that if an employee works 60 hours in the first week of a two week pay period and 20 hours in the second week, then the worker can be paid straight time for 80 hours of work. Some even go farther than that and run ongoing “comp time” type systems. The vast majority of the time, these systems are impermissible. Although “comp time” systems can be permissible for certain governmental employers, generally for private employer hourly workers, they are improper.

The FLSA “takes a single workweek as its standard and does not permit averaging of hours over 2 or more weeks.” 29 C.F.R. §778.104. In the first example, the employer should pay 20 of the total 80 hours worked at the overtime rate because the employee worked 20 overtime hours in the first workweek of the pay period. In most circumstances, the “workweek” is the unit from which to determine whether and how much overtime pay is owed.

3. The correct overtime rate for a $2.13/hr tipped employee is NOT $3.20/hr.

Overtime rates for tipped employees are calculated wrong all the time. When a tipped employee paid at $2.13 per hour works more than 40 hours in a workweek, his or her overtime rate is not $2.13 x 1.5 = $3.20. By law, tipped employees should have their overtime rate calculated as follows: minimum wage times time-and-a-half minimum wage, minus the applicable “tip credit.” 29 C.F.R. § 531.60(a). Thus, for example, for a server whose hourly rate is $2.13 per hour, the applicable overtime rates should have met or exceeded the following rates:

Tipped Employee Overtime Rates
	pre-7/24/07	7/24/2007	7/24/2008	7/24/2009
Min Wage	$ 5.15	$ 5.85	$ 6.55	$ 7.25
Min Wage x 1.5	$ 7.73	$ 8.78	$ 9.83	$ 10.88
Wage	$ 2.13	$ 2.13	$ 2.13	$ 2.13
Tip Credit	$ 3.02	$ 3.72	$ 4.42	$ 5.12
OT rate	$ 4.71	$ 5.06	$ 5.41	$ 5.76

These are just a sampling of some of the issues that can come up in the context of overtime law and should be construed as general guidelines, not legal advice. Every business is different, and in order to figure out proper compliance with the rules, the specific circumstances of the operation and positions should be addressed individually. For more information on wage and hour laws, contact Penn Dodson at 706.548.8668 pud@classiccitylaw.com or see the US DOL website: http://www.dol.gov/whd/regs/compliance/whdfs23.pdf

Keep Track of Your Hours!

All workers should keep track of how many hours they are working.  Whether you are "hourly" or "salaried," an "independent contractor" or an "employee," whether you're a stock broker or a janitor, you need to keep logs of your hours worked.  Lately I have seen a huge upsurge in the number of individuals calling me with complaints that their employers are subtracting hours from their paychecks, making automatic deductions for breaks even when they weren't taken, and the like.  There are also many occasions when employers make mistakes about what the laws are.  It is unfortunate that workers cannot always trust that their employers are treating them fairly and according to the law, but that is a sad reality.  It is easy to simply write on a calendar or day planner something like "8:10-11:45, 12:45-5:15" each day.  You may need it someday.    

For more information about wage and hour laws, you can visit

www.workplacefairness.org

www.dol.gov/dol/topic/wages

or give me a call or email.

Race Discrimination Case

I just read this 11th Circuit case: Alverene Butler v. Ala. DOT, 2008 U.S. App. LEXIS 16113 (11th Cir. Ala. July 30, 2008) which can be found at http://www.ca11.uscourts.gov/opinions/ops/200713358.pdf. This sentence in particular upsets me: "Assuming that Butler actually believed that Stacey's offensive statements constituted an unlawful employment practice of ALDOT, that belief was not objectively reasonable. It follows that her retaliation claim fails as a matter of law and judgment should have been entered for ALDOT on it." By way of brief background, 2 coworkers (1 black, 1 white) were in a truck together and had a minor accident. The white coworker used the "n" word a couple of times directed at the other driver who'd caused the accident. The black coworker tried to report the use of the racial epithets to the supervisor in the hospital and was cut off. She tried again to report it about 3 months later. Before long she found she was being treated worse than white colleagues and eventually filed a lawsuit alleging just that - retaliation.

The 11th Circuit's essential reasoning was that since the use of the offensive racial epithets could not have, for technical legal reaons, constituted a "hostile work environment" in that particular situation (nor was it alleged that it did), anything bad that happened to her as a result of her making the complaint could not have amounted to retaliation under the law.

This reasoning to me is ridiculous. Decisions like this are precedent-setting; they are the law. The intent of having laws is to affect future behavior (or else the decisions wouldn't be published and binding). Isn't the natural result of this decision to have a chilling effect on employees' complaints about situations they perceive to be racially hostile??? Is the Court suggesting that when a black employee hears a coworker angrily using the "n" word that she should engage in a complex legal analysis to screen through all the particulars about where the coworkers were when the word was said, who it was directed at, what the frequency was, etc before reporting it? In this case, the Court has completely foreclosed a retaliation claim because it was not "objectively reasonable" for her to believe that complaining about the racial epithet constituted a "hostile work environment." In other words, she could have said, "Supervisor, Ms. Coworker just used the 'n' word a couple of times in an angry way in my presence and I found it racially offensive" to which the Supervisor could have legally responded "Thank you for telling me. You're fired." That is the logical extension of the finding and is ludicrous.

Worse yet, the average worker is going to have no clue about this or other similar cases. It is individuals HR/management who are more likey to hear from their attorneys what this and other similar cases are saying. If anything this will empower them not to take complaints seriously.

My second major problem with this case: This is yet another example of a losing race discrimination case where African-American is the victim (in this case the plaintiff's jury verdict was overturned). I implore a sociologist or other social scientist to track rulings in GA/11th Circuit to see how they play out - generally (as compared to other jurisdictions), but then specifically the difference between situations where the plaintiff is white versus black. Anecdotally it seems to me that so-called "reverse race" cases overwhelmingly fare much better in this jurisdiction. If that is indeed the case, it is at best ironic that there seems to be something causing a significant disparate impact along race lines in the decisions made in race discrimination cases. It seems to me that if I had an employment case where the statistics were as flagrant as what I believe they are in this jurisdiction where Title VII race discrimination decisions are made in favor of whites at a much higher rather than of blacks, I would have some great evidence showing a "pattern and practice" of discrimination. Recall that under the law these kinds of results need not be "intentional" or full of malice - they are likely tied to something structural. If that is indeed the case, then there is a very serious problem indeed.

The thing is, this case probably did have some legal problems - it may have even had legitimate reasons for being overturned. But to me the legitimate reasons were not given their day in court.

Quote

Good quote I came across today: "Our greatest glory is not in never falling, but in rising every time we fall." -Confucius

Sounds much more inspiring than Chumbawumba's version.

Caregiver Discrimination at Work

Valuing Family in the Workplace: 

The Law’s Response to the Work-Life Balance

By Penn Dodson

 

            Imagine this:  you are the mother of two children, one of whom is disabled.  As a family you decide that both parents need to work full time to have adequate health insurance coverage, to make enough money to provide for your family and in particular the expenses associated with your child’s disability, generally to provide the quality of life you want, and to do work which you find satisfying.  You both choose your jobs carefully, learning all you can about the companies, especially the leave and flex time policies.  You follow every procedure to the “T,” equitably sharing the responsibilities of doctor appointments, teacher workdays, and parent-teacher conferences.  You never go over your allotted amounts of leave.

            After a couple of years, you suddenly realize that you’ve been passed over for two big promotions that your less competent co-workers have gotten.  A month later the hammer falls:  your husband’s boss tells him, “I’ve got to have someone reliable, not someone who has to play Mommy once a week” and fires him.

*          *          *

            As women have increasingly joined the workforce and the aging population has begun living longer, there are more people to care for and fewer people to provide care than there were 50 years ago.  At least in part to pay for the needs of dependents such as children, elderly parents, and sick or disabled family members, working age people have flocked to the workforce in droves.  Companies have discovered that with favorable sick leave, flexible work schedules, in-house childcare, and other family-friendly policies, they have been better able to attract top talent.  Generally speaking, those who provide care often show themselves to be responsible individuala, and they also have the added incentive of needing to remain in stable employment since peole depend on them, which promotes lotalty.  These employers have enjoyed the benefit of the talents of more women and other caregivers.  In turn, by family members working to support their dependents, pressure on the government to take care of these vulnerable populations is alleviated.

            As a society we are to the breaking point – in the ever-elusive “work-life balance” dilemma, something has to give.  Under this framework, where employers fail to follow their own policies or penalize employees for utilizing the benefits offered to them, the law is increasingly holding companies accountable.  Following are just a few examples of some of the kinds of claims being made.

*          *          *

One of the largest awards to date was one in Illinois in which a male custodian received a $11.65 million jury verdict.  The man had taken Family and Medical Leave Act (“FMLA”) leave to care for his elderly parents who were in poor health.  When he came back to work, his employer, which was a hospital of all things, established new performance standards that they applied very rigidly toward him but not to others in similar positions, and he was fired.  He sued his employer under the provisions of the FMLA which prohibit retaliation for taking FMLA leave.  Schultz v. Advocate Health & Hosp's Corp., 2002 WL 32154732 (N.D. Ill). 

Another caregiver case was brought by a female school psychologist who, despite consistently having outstanding performance reviews, had been denied tenure after having a child.  There was evidence that school district personnel said that it was not possible for a person to be a good mother and have the plaintiff's position and questioning how she could perform the job with "little ones."  She argued that her employer made stereotypical assumptions about her ability and commitment to return to work after having a child. The judge agreed that this was an example of gender stereotyping which constituted illegal gender discrimination.  Back v. Hastings on Hudson Union Free Sch. Dist., 365 F.3d 107 (2d Cir. 2004).

In another case, a male police officer in Maryland was denied FMLA leave to care for his wife and newborn child after they left the hospital following a difficult birth.  His supervisor told him that his wife would have to be "in a coma or dead" for him to qualify as the family's primary caregiver. A jury awarded over $600,000.  Knussman v. Maryland, 272 F.3d 625 (4th Cir. 2001).

*          *          *

            Employers have begun to recognize the carrot and the stick associated with caregivers.  By implementing and consistently following family-friendly policies, many companies have not only avoided being sued but have benefited from retaining bright, loyal caregiver employees rather than suffering the so-called “brain drain” of employees leaving the workforce when caregiving responsibilities arise.

            Meanwhile, workers who have family responsibilities struggling to maintain the precarious work-life balance as best they can have begun to collaborate with their employers to find creative solutions to meet their needs while remaining productive at work.  When pressed, they have begun to assert their rights, putting their foot down and saying with confidence that their families come first, and their jobs should not be in jeopardy because of it.  And the courts have heard, and often agreed with them.

 

 

For further reading:

• Williams, Joan. Unbending Gender: Why Family and Work Conflict and What to Do About It (Oxford University Press, 2001).
• www.worklifelaw.org - WorkLife Law Center of the University of California, Hastings College of the Law
• http://www.eeoc.gov/policy/docs/caregiving.html - Equal Employment Opportunity Commission “Enforcement Guidance: Unlawful Disparate Treatment Of Workers With Caregiving Responsibilities”

  

Penn Dodson, an employment law attorney with the downtown Athens firm of Timmons, Warnes & Anderson, LLP.  Penn can be reached at penndodson@yahoo.com or 706-548-8668.

 

Breastfeeding in public & at work

Breastfeeding Rights: Truth and Fiction

Even after the umbilical cord is cut, mothers still share a vital nutritional connection with their babies through breastfeeding.  Such a beautiful, natural thing.  Surely nothing could stand in the way of nurturing a healthy infant – right?  Unfortunately, this is not always the case.  Once a new mother and baby figure out the delicate bio-mechanics of how it all works, mom realizes at some point that she will have to go Out Into The World.  And it’s a world with a desperate fear of the unclothed human body.  Mom is desperately trying not to be an exhibitionist while still placating the child head-butting her chest, and she may begin to wonder… What are the rules? What are my rights?

Take heart.  Though we’re not 100% there yet, the rules are getting more mother-friendly all the time.  You have rights.

Breastfeeding and the law

Fact or fiction:  Breastfeeding is a constitutional right under federal law.

            Fact!  In the case Dike v. School Board, the federal appeals court in the circuit including Georgia held that breastfeeding is a constitutional right.  “Breastfeeding is the most elemental form of parental care. It is a communion between mother and child that, like marriage, is ‘intimate to the degree of being sacred,’ [ ] Nourishment is necessary to maintain the child's life, and the parent may choose to believe that breastfeeding will enhance the child's psychological as well as physical health. In light of the spectrum of interests that the Supreme Court has held specially protected we conclude that the Constitution protects from excessive state interference a woman's decision respecting breastfeeding her child.” 650 F.2d 783, 787 (former 5th Cir. 1981), internal citations omitted.  In that case, a kindergarten teacher had asked her husband to bring their baby to her every day during her lunch period so that she could nurse.  The school said she couldn’t do that because she was violating a school policy prohibiting employees’ children from coming on campus since doing so might subject the school to liability if an accident occurred.  The school also said she could not nurse her child in her car because of its policy forbidding employees from leaving the building during school hours.  She ended up switching the baby to formula and then when the baby displayed allergies eventually had to take unpaid leave time for the rest of the school year to breastfeed.  Fortunately the court hearing this case held that breastfeeding was a constitutional right. 

However, this did not give mothers a carte blanche to breastfeed anywhere and everywhere.  First, as this case went on to say, even when there are constitutional rights, if the governmental entity (such as the school) has a legitimate reason for evenly enforcing a policy (such as no teachers’ kids at school) it could still legally do so.  Second, what many people misunderstand about constitutional rights is that they simply mean that the government cannot infringe on that right.  So, for example, if she had been a kindergarten teacher at a private school she would not have had a case under constitutional law.  Similarly, if you are nursing on a bench in a public park and a state police officer asks you to leave, this may be a violation of your constitutional rights.  If you are in a privately owned store and the manager asks you to leave, you cannot sue him under the constitution for it (though you may have other rights). 

It is also worth mentioning that the fact that the court deemed breastfeeding to be a constitutional right means that the state cannot generally pass laws which would actively interfere with a woman’s right to breastfeed unless there is a compelling reason to do so.  This case was a huge victory for mothers and babies.

Fact or fiction:  State law allows you to breastfeed anywhere you’re allowed to be.

            Fact!  Georgia law takes federal caselaw even further.  You can cut this law out and put this Georgia law in your diaper bag:

“The breast-feeding of a baby is an important and basic act of nurture which should be encouraged in the interests of maternal and child health. A mother may breast-feed her baby in any location where the mother and baby are otherwise authorized to be.”  O.C.G.A. § 31-1-9

A mother may breastfeed her baby in any location where the mother and baby are otherwise authorized to be.  It’s the law.  Are you legally entitled to breastfeeding while riding a super duper crazy roller coaster?  No, your baby is not authorized to be on it.  Do you have a legal right to breastfeed on a bench in the mall?  Yes, you do.

Fact or fiction:  Employers must by law provide a private place and a break for milk pumping in support of breastfeeding.

            Fiction (in Georgia); fact in some other states.  In Georgia, the law is that employers may (but do not have to) provide a private location and opportunity (i.e. a break) to express milk.  O.C.G.A.  § 34-1-6.   The law encourages but does not require it.  In California and New York, by contrast, employers must provide this accommodation.  Some other states have passed legislation allowing employers to be labeled “Mother Friendly” if they have breastfeeding accommodation policies in place. 

Breastfeeding Accommodation

1. The Company encourages new mothers to nurse their babies.  As such, the Company will attempt to provide breastfeeding accommodation for at least the first year of the child’s life (for more than that you will need to speak with ___).
2. This accommodation is subject to the feasibility of instituting it given the staffing needs at the time.
3. This accommodation includes the following:
1. A location in which to nurse or pump breast milk discreetly and comfortably
2. Time in which to nurse or pump.  The nursing mother shall be allowed up to two 20-minute breaks (in addition to her normal lunch break) per day, not to be taken back-to-back.  These breaks are unpaid and the employee must clock out for these breaks.
4. Although children are generally not allowed on company premises, a nursing baby may be brought to the mother for the limited purpose of nursing during the allowed break times.  Mothers may not leave company premises during these break times.
5. If a mother opts to pump her breast milk, the company will attempt to make refrigerator space available in which to store it until the end of the day (milk must be taken home in the evenings).

These kinds of policies have been passed by legislatures not only based on the underlying notion that it is a good idea to support breastfeeding but also on more pragmatic rationales: breastfed babies get sick less, meaning new moms have to miss less work.  It is therefore a good idea for all employers, regardless of what the laws in the state are, to consider adopting such policies.  Whether you are currently breastfeeding or not, you can ask your employer to consider adopting a breastfeeding policy.  Here’s an example:

Fact or fiction:  Exposing a breast for the purpose of breastfeeding constitutes the crime of public indecency.

            Fiction (at least in Georgia):  In many states, public indecency statutes technically criminalized breastfeeding in public because of how the statutes were worded.  Showing a breast or a nipple was a crime.  Fortunately, because this was obviously not the intent of the laws, many states have passed modifications specifically exempting breastfeeding from indecent exposure laws.  In Georgia, the broad law mentioned above says that mothers may breastfeed wherever they are authorized to be.  O.C.G.A.  § 31-1-9.  The law authorizes you to do it, so you cannot legally be convicted for breastfeeding in public.

Fact or fiction:  The laws adequately protect mothers’ rights to breastfeed.

            Fiction!  Georgia is further along than some states, but it still needs legislation that actively protects mothers’ rights to breastfeed at work.  Contact your legislators!

           

For more information on the law:

La Leche League’s website has excellent summaries of the law related to breastfeeding.  http://www.lalecheleague.org/Law/LawUS.html?m=0,1,0

Beyond the law:  other things you can do

The American Academy of Pediatrics lists lack of public support as the number one reason why mothers discontinue breastfeeding before the end of the child’s first year. That means there is still work to do, both inside the law and out.

From time to time you hear about a security guard or a store manager asking a nursing mother to leave the premises, lock herself in a smelly bathroom stall, or cover up.  In some of these cases there are laws in place to protect against that kind of situation, sometimes not – but in either case, there are alternatives to heading to court.  In numerous instances across the country when women have been treated this way they have successfully organized media campaigns informing the public just which store it was that treated her that way.  Others have staged “nurse-ins,” getting a group of nursing mothers together sit-in style.  Less visibly, they have told all their parent friends where not to shop or have blogged about their experiences.  Use your creativity!

            If you make the brave and admirable choice to nurse your child, do so proudly and openly.  The more women future mothers see breastfeeding their children, the more normal it will seem to them to follow suit.  And if anyone gives you a hard time, come see me or another lawyer or breastfeeding support specialist!

Penn Dodson, nursed her two children for one year each.  She is an employment attorney with the firm of AndersonDodson, P.C.  She can be reached at penn@andersondodson.com or 212-961-7639.