Tag Archives: United States Department of Labor

Sonic Drive In Gets Department of Labor Help to Stop Wage Theft

sonic drive in wage theft

The U.S. Department of Labor and Sonic Drive In, the nation’s largest drive-in restaurant chain have signed a voluntary agreement to help Sonic’s 3,000+ drive in franchise locations comply with federal labor laws. Sonic has been one of a number of fast food restaurants that have been hit with wage theft lawsuits complaining that workers have had their time shaved, did not get overtime after 40 hours, and were required to work “off the clock.”

The Department of Labor announced, “We encourage other franchisors to follow Sonic’s example and take similar steps to benefit their franchises’ employees and owners by complying with the law… Abiding by the law makes better business sense than facing the prospect of paying back wages, damages, and penalties for violations of the Fair Labor Standards Act.”

The Department of Labor will provide easy-to-use compliance assistance tools designed for the franchise restaurant industry. The package will include video and online training, educational articles for use in internal company publications, and sample training materials for use in company staff meetings. The Department of Labor will also make representatives available to provide training and labor law compliance assistance to Sonic franchisees.

The Fair Labor Standards Act requires that fast food workers be paid at least the federal minimum wage of $7.25 per hour (note that New York has a higher minimum wage) as well as time-and-one-half their regular rates for every hour they work beyond 40 per week. Fast food restaurants and many chain restaurants have been sued recently for violating workers’ rights by failing to pay overtime and by forcing employees to work “off the clock.”


Department of Labor Rescinds Tip Pooling Rule

tip tip pooling tip theft

The United States Department of Labor announced that it will revoke an Obama-era regulation prohibiting restaurants from pooling customers tips with back-of-the-house workers.  Although this change could have a significant impact in many areas of the country, New York State still has restrictions on who can participate in a tip pool.

The Legal History

Unless state laws require higher amounts, as is the case in New York State, the Fair Labor Standards Act (“FLSA”), a federal law, requires employers to pay employees at least the federal minimum wage rate of $7.25 per hour worked.  The FLSA allows restaurants to pay employees who regularly receive tips as little as $2.13 per hour if they make the difference (i.e., $5.12) per hour in tips.  The $5.12 difference is known as a “tip credit,” which is a privilege that the FLSA gives to restaurants.  The FLSA also allows restaurants to require tip-receiving employees to pool their tips for distribution among employees.

Before 2011, there was much debate about which employees could participate in a restaurant’s mandatory tip pool.  Some courts concluded that only employees who regularly receive tips and who spend at least 80% of their time serving customers at tables, known as “food service employees,” could participate in a tip pool.  These courts concluded that if a restaurant forced food service employees to share their tips with non-service employees, such as cooks or other back-of-the-house employees, then the restaurant violated the FLSA and had to pay back tips and other wages to the food service employees.  Other courts reached the opposite conclusion.  They reasoned that any employee should be allowed to participate in the mandatory tip pool as long as the restaurant did not take a tip credit and, instead, paid its employees the full minimum wage rate ($7.25 under federal law, but higher under New York State law).

In 2011, the US Department of Labor enacted a regulation that back-of-the-house employees cannot participate in a tip pool with front-of-the-house food service employees regardless of whether the restaurant takes a tip credit. The 2011 regulation mirrors the New York Labor Law and the New York State Department of Labor’s Hospitality Wage Order, which limit tip pooling to food service employees only.  In New York, back-of-the-house employees can never participate in a mandatory tip pool with front-of-the-house food service employees.

The Recent Change and Effect in New York

Under the Trump Administration, the US Department of Labor has announced that it will revoke the 2011 regulation.  The effect of this revocation is that in many areas of the country, but not in New York, restaurants that do not take a tip credit can require front-of-the-house employees to share their tips with any other restaurant employee.  Note that, restaurants that take a tip credit against front-of-the-house food service employees still cannot require them to share their tips with back-of-the-house workers.

These changes at the federal level have no impact in New York, whose laws and regulations already require that tips left by customers be given to front-of-the-house employees.  Under New York laws, food service employees can be required to share their tips only with other food service employees.   For example, a tip pool in a New York restaurant is lawful if it is composed of non-managerial bartenders, servers, bussers, and runners.  However, it would be unlawful for a New York restaurant to require servers and bartenders to share tips with a cook or manager.

Restaurant Worker Rights Group Is Accused of Misconduct

roc united logo

Restaurant Opportunities Center (ROC), a restaurant worker rights advocacy group has been accused of misconduct.  In an opinion piece published in the New York Post, Mike Paranzing accused the ROC of being a labor union front that doesn’t practice what it preaches.  Acccording to Paranzing, ROC exploited its own workers and cheated its employees at the restaurant Colors, and is guilty of the same labor abuses and health violations that it has leveled against other restaurants.

Beverly Hills Restaurant Sued for Wage Pay Violations

urasawa logo

The New York Times has reported that Urasawa, one of the country’s best sushi restaurants, has been sued by its back of the house employees for wage and overtime violations.

The New York Times article reports that, according to a California Labor Department investigation and former employees, kitchen workers at the Beverly Hills restaurant are routinely denied overtime pay and forbidden from taking breaks.

A lawyer for one of the workers noted that, “people might expect paying so much means that workers are getting paid.”  In New York, attorneys have filed lawsuits in the last few years against some of the best restaurants in the city.  Some of the highest rated restaurants that have been hit with similar lawsuits in New York include restaurants owned by Mario Batali and Sparks Steakhouse.

Restaurants Are Hiring More Part-Time Workers

There is a hiring boom of part-time workers in the restaurant industry as a result of a new federal law requiring certain employers to provide health insurance to its workers, according to a recent article in the Wall Street Journal.

A recent report conducted by the United States Department of Labor, leisure and hospitality businesses have hired more workers in June than any other industry and, since April, restaurants and bars have added an average of 50,000 jobs a month.  But, in response to the Affordable Care Act, a growing number of restaurants are adding part-time workers rather than traditional full-time.

The Affordable Care Act (“ACA”) requires employers with 50 or more full-time employees to offer affordable insurance to employees who work 30 or more hours a week.  In an effort to circumvent the costs of the ACA, restaurants and other businesses have increased their staff by hiring more part-time employees to replace full-time workers who have left.  Others attribute the increase of part-time workers in the restaurant industry to a stronger economy.  Still, some restaurants say that they will continue to rely on part-time workers in order to minimize health care costs.

The FLSA at 75

The Fair Labor Standards Act (“FLSA”), which was signed into law by Franklin Delano Roosevelt on June 25, 1938 outlawed “oppressive child labor,” imposed a federal minimum wage of 25 cents per hour, and required overtime for hours worked over 40 in a week. But the America we live in is far different from that which existed 75 years ago and both employee advocates and company executives have raised serious questions as to how well the FLSA is currently working.  Read the full article written Louis Pechman, founder of waiterpay.com, on The Huffington Post.

Department of Labor Cracks Down on Long Island Restaurants

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The United States Department of Labor is targeting Long Island restaurants, charging close to 100 restaurants on Long Island with minimum wage and overtime violations in the last year, according to a Newsday article dated February 24.  Chateau Briand, a Long Island catering hall recently agreed to pay $278,000 to settle contempt charges filed by the United States Department of Labor that alleged that Chateau Briand had failed to pay its workers overtime and minimum wage.

Program on “How to Handle a Wage and Hour Case” at NYCLA

A program on “How to Handle a Wage and Hour Case” will be held at the New York County Lawyers’ Association on January 31, 2013. Faculty for the program are Terri Gerstein, the Labor Bureau Chief, New York State Attorney General’s Office; Justin Swartz, attorney with Outten & Golden LLP; and Noel Tripp, attorney with Jackson Lewis LLP.

Louis Pechman, founder of waiterpay.com, will moderate the program. For more information on the program, visit NYCLA’s site.

Wayne Chrebet’s Long Island Restaurant Hit With Minimum Wage and Overtime Case

Social Sport Kitchen, a sports bar owned by the former New York Jets wide receiver Wayne Chrebet, was hit with an overtime and minimum wage lawsuit by the United States Department of Labor.  In a settlement reached with the U.S. Department of Labor that was filed with the United States District Court for the Eastern District of New York, Chrebet’s restaurant agreed to pay back wages and liquidated damages in the amount of $22,781 to ten employees for violating the minimum wage and overtime laws.

Gaylord Texan Resort and Convention Center Agrees to Pay $200,000 Settlement for Alleged Wage Violations

gaylord texan logo

Gaylord Texan Resort and Convention Center has agreed to pay 429 service employees working at the Gaylord Texan Resort and Convention Center in Grapevine, Texas, $204,329 after U.S. Department of Labor’s Wage and Hour Division filed a lawsuit against the hotel for wage and hour violations, including violations of minimum wage, overtime and record-keeping provisions.

Investigations into the practices of the resort’s vendors and staffing agencies, including The H Roslin Staffing Group in Dallas, SMB Services in Dallas, All Team Food Team in Hurst, Xclusive Staffing Inc. in Grapevine and Five Star Laundry-Dallas LLC in Grapevine, disclosed significant violations of the Fair Labor Standards Act, according to the Department of Labor.  The investigations found that five companies which provided services such as housekeeping, food service, landscaping, janitorial maintenance and valet services to the hotel, violated workers’ rights under of the FLSA.

Some of the common FLSA violations found included employers paying “straight time” for all hours worked rather than time and one-half employees’ regular rates for hours over 40 in a week; failing to combine hours worked by employees at multiple job sites; improper wage deductions for uniforms, name badges and background checks, resulting in wages falling below the federal minimum wage; improperly classifying workers as exempt from overtime compensation; and failing to maintain accurate records of employees’ work hours and wages, as required under the law.

The FLSA requires that covered, nonexempt employees be paid at least the federal minimum wage of $7.25 for all hours worked, plus time and one-half their regular rates, including commissions, bonuses and incentive pay, for hours worked beyond 40 per week. Additionally, employers must maintain accurate time and payroll records.

Gaylord Texan is owned and operated by Gaylord Hotels, a division of Gaylord Entertainment Co., which operates four resorts across the country. Upon being notified of the division’s investigative findings, Gaylord Entertainment agreed to promote FLSA compliance among its vendors at all four of its locations by requiring the vendors to sign FLSA compliance agreements, providing them with compliance assistance materials and making available to their employees a toll-free complaint hotline.

The U.S. Department of Labor’s Wage and Hour Division investigation was conducted under a multiyear enforcement initiative aimed at strengthening labor law compliance in Texas’s hotel and motel industry.