How to Avoid Costly Wage & Hour
Pitfalls for Hospitality Industry
Employers

Featuring Seyfarth Shaw LLP
Welcome

Today’s Host
Michelle Lanter Smith
Chief Marketing Officer
EPAY Systems, Inc.
mlsmith@EPAYsystems.com
773-499-751...
EPAY Systems -- designed to meet the needs
of your complex, distributed workforce

• Reduce your labor

•

3|

costs by 5%...
Today’s Discussion
Federal court filings of wage and hour class and
collective actions have increased more than 500%
since...
Presenting
Jeremy W. Stewart
Associate, Seyfarth Shaw LLP
Labor & Employment
jwstewart@seyfarth.com
(312) 460 - 5662

Jeff...
Q&A

To ask a question, simply
type your question in the
“Question” box on the right
side of your screen or raise
your han...
Overview: Trends for 2013
•
•
•
•

Litigation trends
o Continued aggressive plaintiffs’ bar
Increased agency enforcement
C...
National Wage & Hour Litigation Trends

•
•

Aggressive plaintiffs’ law firms have created
consortiums, jointly filing cla...
National Wage & Hour Litigation Trends

•

•

Aggressive outreach efforts to identify potential
plaintiffs
o Outside compa...
Top 10 Private W&H Settlements In 2012
1.
2.
3.
4.
5.
6.
7.

$99 Million – Novartis (misclassification of pharma sales rep...
FLSA Cases in Federal Court,
1993-2012

11
©2013 Seyfarth Shaw LLP
WHD Continues To Be Aggressive
•
•
•
•

Increase in targeted investigations in low-wage/high risk
industries
Increase in c...
Increased WHD Enforcement Capabilities
Number of W age and Hour Division Investigators, 1987 to 2011
1,100

1,050
1,006

1...
Compliance With The FLSA Is Not Easy
•

•
•
•
•
•
•
•

The Fair Labor Standards Act was enacted in 1938
o Minimum Wage
o O...
Tip Credit Issues
•
•
•

April 5, 2011--DOL Wage and Hour Division Published Revised
Regulations Covering the Tip Credit
R...
Mistake
•
•

Assuming employees know a tip credit is being taken.
Key issues:
o Verbal is not likely to be enough – jurisd...
Mistake
•
•

Using tipped workers for non-tipped work.
Key issues:
o Avoid the use of tipped employees for nontipped work....
Tip Pools
•

•

No Maximum Contribution to Tip Pool
o Must Notify Employees of Tip Pool Contribution
Requirements
Best Pra...
Mistake
•
•

Including non-tipped employees in the pool.
Key Issues:
o Non-customer facing or interacting positions should...
Service Charges
 Federal law





Automatic service charges generally not tips
Portions of service charges distributed...
Other Automatic Charges
 Varies by state



Ex., MA, NY & HI: depends on understanding of patron.


How is the charge d...
Meal Periods/Breaks
 Federal law



Short rest periods (usually 20 min or less) count as hours
worked (including smoking...
Missed / Interrupted Breaks
Document Reminders
 Orientation, staff meetings
Schedule Breaks Where Feasible
 Impose Sta...
Meal Periods: A Few Simple Safeguards

Implement a policy that only uninterrupted
meal periods are unpaid.

Implement a ...
Other Common Pay
Issues

25

©2013 Seyfarth Shaw LLP

|
Mistake
•
•

Employees have to pay for their own uniforms no matter what.
Key issues:
o Are the uniforms generic or elabor...
A Few Simple Safeguards
•
•
•

Receive authorization for the deduction
(if required by state law).
Do not count a uniform ...
Mistake
•
•

Requiring individuals to show up at work and wait to
clock-in.
Key Issues:
o How long in advance of the shift...
A Few Simple Safeguards
•
•
•

Only require people to be at work by their
scheduled start time.
If employees are required ...
Mistake

•
•

Not including all required time in the calculation of
hours worked
Key issues:
o Pay for pre- and post-shift...
A Few Simple Safeguards
•
•

•

Do not let hourly employees start working until
they are on the clock (but don’t require t...
Mistake
•
•

Failure to take a strong stand against offthe-clock work
Key issues:
o Failure to properly compensate for all...
A Few Simple Safeguards
•
•
•

Implement strong policies and set expectations.

Train managers to look out for and report ...
EPAY Systems

Michelle Lanter Smith
Chief Marketing Officer
EPAY Systems, Inc.
mlsmith@EPAYsystems.com
773-499-7512
.

34
EPAY -- In Time with You

Complex pay rules?
Mobile workforce,
union contracts,
multiple job assignments?

No problem!

Un...
Reduce your labor costs

Eliminate erroneous
pay
calculations, time
rounding,
and management
inconsistencies

Eliminate bu...
Minimize Compliance Risk
•
•
•
•
•
•

Audit Trails
Overtime
Meal Breaks
Pay Differentials
Privacy and Security
Reduce Work...
Over 40,000 customer sites

38
Easy, Anywhere Time Tracking

Blueforce adapts
to how YOU
do business

39
Upcoming Education
•

•

Mobile GPS Webinar: Time Tracking & Mobile
Apps. Nov 7: 10:00 am cst

EPAY Demonstration: Time Tr...
Thank You!
Jeremy W. Stewart
Associate, Seyfarth Shaw LLP
Labor & Employment
jwstewart@seyfarth.com
(312) 460 - 5662

Jeff...
Connect with us
Connect with EPAY on:
o LinkedIn – follow our company page at
EPAY Systems
o Twitter -- @EPAYsystems
o Sig...
Thank You!

43
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How to Avoid Costly Wage and Hour Pitfalls for the Hospitality Industry Employers

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Litigators from Seyfarth Shaw, the top U.S. labor law firm, as they share do’s, don’ts, tips, and traps for employers in the hospitality industry. The labor law attorneys from Seyfarth Shaw, LLP–the country’s top wage and hour litigator–share their best advice for minimizingg compliance risk for employers just like you.

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  • Thanks John. Welcome to our webinar “Time & Attendance Solutions for Employers with a Distributed Workforce” presented by EPAY Systems. My name is Michelle Lanter Smith. I am the Vice President of Marketing here at EPAY.I’d like to extend a warm welcome to all of you on the line with us today.Also, I see we have some our partners with us today. A warm welcome goes out to our Sprint and Paychex friends.Our goal today is to give you a high level understanding of how an EPAY time and labor management system can benefit a firm that has employees scattered across many locations. I’ll be taking you through an overview and then I’ll be joined by our systems expert, John Gaudiuso, for a demonstration of our cloud-based software, Blueforce.
  • But before we give you a brief tour of Blueforce, I’d like to tell you briefly about EPAY.EPAY is in the time and labor management business and we specialize in dealing with complex and distributed labor. Our organization understands all of the challenges and limitations a company with employees scattered everywhere deals with as it relates to deploying new technology in the field, as well as managing and tracking it’s labor force.Our web-based system, Blueforce, drives two main benefits for our clients:We help them reduce their total labor costs by more than 5%We help them lower their overall risk in facing compliancy issues – we have a built-in compliance orientated features . . . Right in our systemDistributed labor can present many challenges. Yet, labor is probably your largest cost.Complex pay rules, shift differentials, employees working one task in the morning and a different one in the afternoon. Employees working at customer sites or moving from job to job.These are tough for most time and attendance systems. But not for us. Our uniquely flexible pay rules engine can handle complex union rules and state regulations, not to mention your own complexities because of the nature of your business.
  • And speaking of compliance, it’s not something to be overlooked in today’s labor environment.Federal court filings of wage and hour class and collective actions have increased more than 500% since 2000.The Department of Labor (DOL) recently increased its investigative staff by 40% to crack down on non-compliant.Indeed, the vast majority of class and collective actions filed in state and federal courts continue to be wage-hour cases. And when they do coming knocking on your door, it’s expensive.The average reported settlement is $8.5 million per case, with a per plaintiff average of $5,600. Allegations run the gamut—unpaid overtime; off-the-clock-work; misclassification of exemption status; missed short or late meals and breaks; unpaid donning and doffing time; failure to pay minimum wage, and improper tip pooling. Could you be at RISK?Probably most of you on the line, would say “most definitely”That’s why today, I’m thrilled to introduce to you our guest speakers from Seyfarth Shaw for today’s webinar on compliance. They really do have the Best Tips for Staying out of Trouble.Seyfarth Shaw’s defense of employers in wage and hour litigation has become one of the hallmarks of the firm’s nationally recognized employment law practice. Its Wage & Hour litigation practice group consists of more than 80 attorneys in offices across the country. They have litigated hundreds of complex wage and hour cases in nearly every federal jurisdiction and in courts of almost every state, as well as before administrative agencies and on a multi-jurisdictional basis.Today we are fortunate to have two of the firms prominent partners in the California wage and hour space, Brandon McKelvey and Ann Marie Zaletel
  • Wage and hour cases continue to be a source of potential liability for employers.  Indeed, the vast majority of class and collective actions filed in state and federal courts continue to be wage-hour cases.  Additionally, the Department of Labor has hired more investigators and continues to aggressively investigate company’s wage-hour practices.  Companies hit with these cases may face significant exposure and, even if their policies are lawful, defending a class or collective action can cost hundreds of thousands of dollars, if not more.  As a result, it is critical for a company facing a lawsuit to quickly assess its risks and determine its litigation “goals.” Even if not currently facing a lawsuit, a company should take measures to avoid litigation and to minimize its legal risks.  To do so, companies need to keep abreast of changes in the law and litigation trends.  Wage-hour law continues to develop and change, and these developments may impact your organization or industry. 
  • Amount Employer is using as the tip credit is the difference between the minimum wage and the wage being paid (in many states $2.13 per hour; some states that is higher)The FLSA’s tip credit provision allows employers to pay tipped employees a sub-minimum wage as long as the employer:  (1) pays a cash wage of at least $2.13 per hour; (2) informs its employees of the FLSA’s tip credit provisions; (3) permits its employees to retain all their tips (w/ some exceptions); and (4) ensures that the cash wage plus the tip credit equal at least the minimum wage each week.  The rub is that the FLSA does not permit an employer to utilize the tip credit for all time worked by employees, just for time spent in a tipped occupation.  An example the regulations use is the hotel worker who is both a maintenance man and a waiter.  In this dual job scenario, the tip credit can be taken for the time the worker spends as a waiter, but not as a maintenance person.  There is no clear demarcation between when waiter becomes the maintenance person, but the DOL takes the position that if a tipped employee spends “substantial time” (more than 20%) performing related, but non-tipped duties referred to as “general preparation work or maintenance,” then the entire tip credit is lost.  The problem for employers is no authority explaining what duties constitute “general preparation work or maintenance.” Recent Increase in Tip Credit CasesBurden of Proof in Tip Credit Cases is UnresolvedArgument Tip Credit is an exemption to the minimum wage, so, it is an Affirmative Defense and Employer Bears the BurdenLimited and cursory case law on the topic—Barcellona v. Tiffany English Pub, Inc., 597 F.2d 464, 467 (5th Cir. 1979)Alternatively, Tip Credit is Not An Exemption, Plaintiff Bears the BurdenFast v. Applebee’s Int’l, Inc., 638 F.3d 872, 882 (8th Cir. 2011) Tip Credit is Not Found in Exemptions Section, so Plaintiff Bears the BurdenEmployers Should Utilize Applebee’s and Similar Cases When Tip Cases AriseWill want to give examples of recent tip credit cases--Few other state court cases stating employer bears burden for tip credit violation: See Chisolm v. Gravitas Rest. Ltd , 2008 WL 838760, *3 (S.D. Tex. Mar. 2008) (simply stating employer bears the burden of proof of its entitlement to the tip credit); Dominguez v. Quigley’s Irish Pub, No. 09-cv-2583, 2011 WL 2038728, *15 (N.D. Ill. May 24, 2011) (same) --Barcellona was effectively overruled by Allen v. McWane, Inc., 593 F.3d 449, 458 (5th Cir. 2010) (employee bears the burden on § 203 claims because “[t]he statute…demonstrates that § 203 is a list of definitions…in contrast to § 213, which is titled “Exemptions.”) So, distinguishing between exemptions and exceptions--Exemptions from minimum wage are found in Section 213 of the FLSA. Tip Credit is found in 203(m), which sets forth definition of wages. --Cases in similar contexts have found burden to be on Plaintiff if it is not an exemption. Allen v. McWane, Inc., 593 F.3d 449, 458 (5th Cir. 2010) (employee bears the burden on § 203 claims because “[t]he statute…demonstrates that § 203 is a list of definitions…in contrast to § 213, which is titled “Exemptions.”); Franklin v. Kellogg Co., 619 F.3d 604, 612 (6th Cir. 2010) (explaining that burden of proof for claim arising under section 203(o) was properly on plaintiff because section 203 is not an exemption and thus, not an affirmative defense on which the employer bears the burden); Hertz v. Woodbury Cty., Iowa, 566 F.3d 775, 783-84 (8th Cir. 2009) (explaining that mealtimes are not an exemption from the minimum wage and overtime requirements and thus, employee bears the burden of proof); Brock v. City of Cincinnati, 236 F.3d 793, 809-10 (6th Cir. 2001) (explaining that Section 207(k) is not an exemption, but instead is a declaratory statement that adjusts the permissible length of the workweek, and thus, the provision’s applicability is not an affirmative defense on which the employer must plead and carry the burden).
  • Was some discussion before regulations came out of whether DOL would impose a percentage limit on the amount of tips that could be contributed to a tip pool, but the DOL did not do so.Although the FLSA permits the use of tip pools, the statute and its regulations limit the types of employees who can participate in a tip-pool to those who “customarily and regularly” receive tips like waiters, bartenders, busboys, bellhops, and other front-of-the-house employees.  But, if the employer does not take a tip credit (that is, if the employer does not pay less than the federal minimum wage to tipped employees), employers and employees can agree to include non-tipped employees like dishwashers and cooks in the tip pool.  Oregon Restaurant and Lodging, et al v. Solis, D. OR June 7, 2013 - holding that the amended regulations were invalid because the clear intent of Section 3(m) of the FLSA was “only to limit the use of tips by employers when a tip credit is taken” and because “an employment practice does not violate the FLSA unless the FLSA prohibits it.”
  • STATE: Requirements vary from state to stateExample: Massachusetts -30 minutes after 6 hours -Must be relieved of all duties
  • STATE: Requirements vary from state to stateExample: Massachusetts -30 minutes after 6 hours -Must be relieved of all duties
  • STATE: Requirements vary from state to stateExample: Massachusetts -30 minutes after 6 hours -Must be relieved of all duties
  • “Engaged to Wait” or “Waiting to be Engaged”
  • Wow – what a lot of great information you’ve given us in such a short time. Now if you have question for Brandon or Ann Marie, just let us know. We’ll see a short survey when you close out today’s session. Just let us know and we’ll try to help get your question answered.I’d like to wrap up our time together today with a few words on EPAY and how we address your compliance needs.
  • Since 2001, EPAY has delivered innovative, efficient and effective solutions to address our clients critical time and labor management issues.Our client base is very diverse – serving some of the largest in Janitorial,Building Maintenance – Healthcare –– Security –– Foodservice – and Hospitality. You’ll see our clocks in some of the largest retailers, public sporting venues, and airports in the nation.One of the central themes we hear from our clients is that we can mirror the operating environment. Specifically we can handle all the various payroll permutations to ensure accuracy and compliancy for their organization. The flexibility of Blueforce is built-in; we meet our customers’ business needs without upfront custom costs.
  • Upon the implementation of our system, EPAY’s clients see an immediate Return on Investment, through the reduction of the following exposures.Elimination of buddy of punchingEliminate erroneous pay calculations,human error, and time roundingReduce payroll administration and distribution time associated with pay checks and pay stubsBy utilizing our advanced functionality the 5% reduction in Labor can climb to 9%.An example of this would be our real time alerts which can reduce overtime exposure and keep you on budget
  • Time and Wage cases in 2012 have surpassed discrimination cases for the most litigated exposure facing corporations. EPAY provides many features and reports that help mitigate exposure and provides access to historical data to dispute labor audit claims.Audit Trails – Changing an employee’s timecard without his/her approval is a surprisingly common FLSA violation. Blueforce flags all unapproved changes, so managers can address them before they become issues.  Overtime - Calculating overtime properly is a huge litigation concern for employers. Blueforce tracks work time to the minute and automatically notes when an employee reaches overtime. Better yet, it can even alert managers before an employee hits the OT threshold. Meal Breaks – Improperly tracking or enforcing required meal breaks are another corporate Achilles’ heel. Blueforce asks employees if they’ve taken their proper meal breaks, advises you of deviations, and can even generate real-time alerts when a meal break is missed. Pay Differentials – When a single employee is paid varying hourly rates, depending on shift or task, it can create headaches for your payroll staff. Because we ‘configure’ your pay differentials into Blueforce at the outset, it accurately calculates employee pay effortlessly. Privacy and Security - Our time-tracking system keeps you in complete compliance with the Sarbanes-Oxley Act, which protects employees’ confidential information. We can even provide you with documented proof that your employees and managers only have access to what they should. Workplace Safety – We know on-the-job injuries are a real concern and that Workers’ Compensation claims are a very real expense. That’s why we’ve built a rather unique safeguard into our punch-out procedure. At the end of each shift, employees are asked if they had a “safe day.” The benefits are two-fold: 1) if an accident occurs, you’re instantly in the loop, and 2) if a questionable claim is made later, you have some documentation of your own.
  • EPAY has provided solutions to the most complex labor environments, encompassing hundreds of collective bargaining agreements.ABM Industries – 110,000, across 6500 sitesHealthcare Services Group 30,000 eeacroos 3,000 sitesCompass Group – 20,000 across 2500 sites Crothall - 16,000 eeUnicco - 16,000 eeKBS – 15,000 ee
  • In working with our clients EPAY has understood the importance of mirroring our clients environment and making our system as user friendly as possible.Upon the tabulation of punch data, EPAY’s pay rules engine allows our system to compute gross payroll regardless of the complexity of the clients pay rule. Our competitors struggle with this development and often time costs their clients hundreds of thousands of dollars in professional services fees.Understanding the challenges that end users face in remote environments, EPAY has developed various forms of data collections methods that ensure two things for our clients:There will always be a way for us to collect and transmit data (Wireless, LAN, WiFi, DialUp)NEXT SLIDE . . .
  • Wage and hour cases continue to be a source of potential liability for employers.  Indeed, the vast majority of class and collective actions filed in state and federal courts continue to be wage-hour cases.  Additionally, the Department of Labor has hired more investigators and continues to aggressively investigate company’s wage-hour practices.  Companies hit with these cases may face significant exposure and, even if their policies are lawful, defending a class or collective action can cost hundreds of thousands of dollars, if not more.  As a result, it is critical for a company facing a lawsuit to quickly assess its risks and determine its litigation “goals.” Even if not currently facing a lawsuit, a company should take measures to avoid litigation and to minimize its legal risks.  To do so, companies need to keep abreast of changes in the law and litigation trends.  Wage-hour law continues to develop and change, and these developments may impact your organization or industry. 
  • That’s all the time we have today. Thank you to all of you for joining us today. We’d like to be your time and labor management provider. At EPAY, we’re IN TIME WITH YOU.Until next time, then, have a wonderful rest of your day. Good-bye.
  • How to Avoid Costly Wage and Hour Pitfalls for the Hospitality Industry Employers

    1. 1. How to Avoid Costly Wage & Hour Pitfalls for Hospitality Industry Employers Featuring Seyfarth Shaw LLP
    2. 2. Welcome Today’s Host Michelle Lanter Smith Chief Marketing Officer EPAY Systems, Inc. mlsmith@EPAYsystems.com 773-499-7512 2|
    3. 3. EPAY Systems -- designed to meet the needs of your complex, distributed workforce • Reduce your labor • 3| costs by 5% or more Keep you in control and in compliance
    4. 4. Today’s Discussion Federal court filings of wage and hour class and collective actions have increased more than 500% since 2000. Are you at risk? ©2012 Seyfarth Shaw LLP 4
    5. 5. Presenting Jeremy W. Stewart Associate, Seyfarth Shaw LLP Labor & Employment jwstewart@seyfarth.com (312) 460 - 5662 Jeffrey M. Burns Associate, Seyfarth Shaw LLP Labor & employment jburns@seyfarth.com (617) 946-4944 5|
    6. 6. Q&A To ask a question, simply type your question in the “Question” box on the right side of your screen or raise your hand by clicking on the icon next to your name. 6|
    7. 7. Overview: Trends for 2013 • • • • Litigation trends o Continued aggressive plaintiffs’ bar Increased agency enforcement Compliance Risks – Surprise!!! “Riskiest” times of day. o Pre & Post Shift o Meal Times o Travel time • Simple Safeguards 7| ©2013 Seyfarth Shaw LLP
    8. 8. National Wage & Hour Litigation Trends • • Aggressive plaintiffs’ law firms have created consortiums, jointly filing class/collective suits In recent years, plaintiffs’ firms have employed an industry-specific approach when it comes to wage & hour litigation o One firm successfully targets an industry and is quickly followed by other plaintiffs’ firms who target other employers in that industry 8| ©2013 Seyfarth Shaw LLP
    9. 9. National Wage & Hour Litigation Trends • • Aggressive outreach efforts to identify potential plaintiffs o Outside companies sending email blasts to employees of target companies o Ads on Facebook, Twitter 7064 lawsuits filed under the Fair Labor Standards Act (“FLSA”) in 2012 o Record high number o State wage-and-hour actions raise this number significantly o Of all state and federal class or collective actions filed in the U.S., vast majority are wage and hour claims 9| ©2013 Seyfarth Shaw LLP
    10. 10. Top 10 Private W&H Settlements In 2012 1. 2. 3. 4. 5. 6. 7. $99 Million – Novartis (misclassification of pharma sales reps) $40 Million – Merrill Lynch (wage claims related to merger) $35 Million – H&R Block (timeliness of payments) $21 Million – Rite Aid (misclassification of ass’t store mgs) $20 Million – City of New York (misclassification of police sergeants) $19 Million – Robert Half (misclassification of recruiters) $15.6 Million – HSBC Bank (misclassification of bankers, managers, & specialists) 8. $15.5 Million –Conoco Phillips (failure to provide meal breaks) 9. $14 Million – Family Dollar (misclassification of store managers) 10.$12.9 Million – Spearmint Rhino Cos. Worldwide, Inc. (independent contractor misclassification) 10 | ©2013 Seyfarth Shaw LLP
    11. 11. FLSA Cases in Federal Court, 1993-2012 11 ©2013 Seyfarth Shaw LLP
    12. 12. WHD Continues To Be Aggressive • • • • Increase in targeted investigations in low-wage/high risk industries Increase in corporate-wide investigations Assessment of liquidated damages, penalties, and other sanctions Grass Roots Campaign: o Continued push of “Bridge to Justice” and “We Can Help”   Partnering with community and worker organizations to increase employee awareness Referring certain cases to private attorneys to initiate litigation 12 | ©2013 Seyfarth Shaw LLP
    13. 13. Increased WHD Enforcement Capabilities Number of W age and Hour Division Investigators, 1987 to 2011 1,100 1,050 1,006 1,000 970 951 952 942 938 950 942 938 949 950 945 898 900 893 865 850 835 850 804 800 809 788 800 773 751 781 750 732 731 700 650 600 1987 1989 1991 1993 1995 1997 1999 Applied Econom ic Strategies , us ing U.S. Departm ent of Labor, Wage and Hour Divis ion data. 13 | ©2013 Seyfarth Shaw LLP 2001 2003 2005 2007 2009 2011
    14. 14. Compliance With The FLSA Is Not Easy • • • • • • • • The Fair Labor Standards Act was enacted in 1938 o Minimum Wage o Overtime o Child Labor Amended 44 Times Well Over 50 Statutory Exemptions Over 700 Pages of Regulatory Text 14-15 Public Chapters of Field Operations Handbook 350+ Opinion Letters Since 2000 Does Not Preempt State Law Generally Cannot Be Overruled by CBA 14 ©2013 Seyfarth Shaw LLP |
    15. 15. Tip Credit Issues • • • April 5, 2011--DOL Wage and Hour Division Published Revised Regulations Covering the Tip Credit Regulations Became Effective May 5, 2011 New Regulations Require Employers to Inform Employees Of: o Intent to Take Tip Credit o Cash Wage that will be paid by Employer o Amount Employer is Using as a Credit Against Tips Received o Amount Claimed By Employer As Credit Can’t Exceed Tips Received o Tip Credit Won’t Apply Unless Employee is Informed o All Tips Must be Retained by Employee Except for Valid Tip Pool 15 | ©2013 Seyfarth Shaw LLP
    16. 16. Mistake • • Assuming employees know a tip credit is being taken. Key issues: o Verbal is not likely to be enough – jurisdictions vary, but a written notice that is signed by all tipped employees and new employees is critical to the defense. o A lack of notice is enough to lose the tip credit. 16 ©2013 Seyfarth Shaw LLP |
    17. 17. Mistake • • Using tipped workers for non-tipped work. Key issues: o Avoid the use of tipped employees for nontipped work. o Limit time spent doing general preparation and maintenance work (not easy to defined distinction in all cases). o Non-customer facing work is almost never tip generating. 17 ©2013 Seyfarth Shaw LLP |
    18. 18. Tip Pools • • No Maximum Contribution to Tip Pool o Must Notify Employees of Tip Pool Contribution Requirements Best Practices for Compliance: o Notify employees in writing with the specific requirements:  Tip credit will be taken  Wage that will be paid by Employer and amount of tip credit  Amount of tip credit won’t exceed tips actually received  All tips will be retained (except for valid tip pool)  Tip Credit Won’t Apply Unless Employee Informed o Get signatures from employees that they have received notification ©2013 Seyfarth Shaw LLP 18 |
    19. 19. Mistake • • Including non-tipped employees in the pool. Key Issues: o Non-customer facing or interacting positions should be excluded from the pool. o Managers and supervisors should not be included in the pool. o The tip pool cannot be used or retained by the company for its own use or benefit. The pool belongs to the employees. 19 ©2013 Seyfarth Shaw LLP |
    20. 20. Service Charges  Federal law    Automatic service charges generally not tips Portions of service charges distributed to employees cannot be counted as tips for tip credit Can be counted to satisfy minimum wage obligations  State Law   Important differences depending on state Example: MA, NY & HI: automatic “service charges” may be tips unless patrons informed otherwise  Depends on disclosures to patrons  Must be distributed only to certain employees 20 ©2013 Seyfarth Shaw LLP |
    21. 21. Other Automatic Charges  Varies by state  Ex., MA, NY & HI: depends on understanding of patron.  How is the charge described to patrons?  Avoid ambiguous terms.  Provide appropriate description of all automatic charges. If charges are not distributed to employees, then say so.  Significant consequences for violations  MA: automatic treble damages, attorneys’ fees, costs 21 ©2013 Seyfarth Shaw LLP |
    22. 22. Meal Periods/Breaks  Federal law  Short rest periods (usually 20 min or less) count as hours worked (including smoking breaks)  Bona fide meal periods generally need not be compensated  Employee completely relieved from duty  Freedom to leave work station  Break location away from work station • Not relieved if required to perform any duties, active or inactive  No private right of action for break per se – agency enforcement  State Law 22 ©2013 Seyfarth Shaw LLP |
    23. 23. Missed / Interrupted Breaks Document Reminders  Orientation, staff meetings Schedule Breaks Where Feasible  Impose Staffing Standards & Requirements to Impact Meal/Rest Periods  Watch automated deductions, interruptions, standard time card entries, skipping to make up for tardy, leaving early in lieu of break, no comp time  E.g. sign/clock in and out for meal periods – documented compliance Review of Time Records Use of Waivers 23 ©2013 Seyfarth Shaw LLP |
    24. 24. Meal Periods: A Few Simple Safeguards Implement a policy that only uninterrupted meal periods are unpaid. Implement a system to allow employees to document if they did not take or did not get their full meal period. Keep records. Have employees verify that any time deducted for meal breaks each pay period is accurate. 24 ©2013 Seyfarth Shaw LLP |
    25. 25. Other Common Pay Issues 25 ©2013 Seyfarth Shaw LLP |
    26. 26. Mistake • • Employees have to pay for their own uniforms no matter what. Key issues: o Are the uniforms generic or elaborate? o Do employees authorize the deduction? o Does the deduction make their pay fall below minimum wage? o Are they responsible for cleaning the uniform? 26 ©2013 Seyfarth Shaw LLP |
    27. 27. A Few Simple Safeguards • • • Receive authorization for the deduction (if required by state law). Do not count a uniform as a credit against wages. Make sure that the cost of uniform deductions does not reduce pay below minimum wage. 27 ©2013 Seyfarth Shaw LLP |
    28. 28. Mistake • • Requiring individuals to show up at work and wait to clock-in. Key Issues: o How long in advance of the shift are they required to arrive at the job site or central location? o Are employees free to use this time for their own purposes? o Are they disciplined or prevented from working if they do not show up at the required time? o Waiting to work- you don’t have to exert yourself to be working. 28 ©2013 Seyfarth Shaw LLP |
    29. 29. A Few Simple Safeguards • • • Only require people to be at work by their scheduled start time. If employees are required to be at work by a certain time and employees are there by that time, pay the employees starting at that time. Only discipline individuals who are tardy for their scheduled start time, not the early arrival requirement. 29 ©2013 Seyfarth Shaw LLP |
    30. 30. Mistake • • Not including all required time in the calculation of hours worked Key issues: o Pay for pre- and post-shift activities (loading/unloading; donning & doffing; etc.) o Is the activity “integral and indispensable” to employees’ principal work activities (and therefore compensable)? o Do the employer’s rules or the nature of the work require it? o If an employee continues to work voluntarily after the end of his shift and the employer knows or has reason to know, that time is considered working time 30 | ©2013 Seyfarth Shaw LLP
    31. 31. A Few Simple Safeguards • • • Do not let hourly employees start working until they are on the clock (but don’t require them to be there before they are allowed to clock in). Pay attention and make sure that people are not working after they clock out. Have employees verify each pay period that they have been paid for all time worked. 31 ©2013 Seyfarth Shaw LLP |
    32. 32. Mistake • • Failure to take a strong stand against offthe-clock work Key issues: o Failure to properly compensate for all hours worked = most frequently cited violation by WHD (in terms of numbers of employees affected) in the course of its investigations o A number of states have recently enacted antiwage theft laws 32 | ©2013 Seyfarth Shaw LLP
    33. 33. A Few Simple Safeguards • • • Implement strong policies and set expectations. Train managers to look out for and report off the clock work. Train employees on your policies. 33 ©2013 Seyfarth Shaw LLP |
    34. 34. EPAY Systems Michelle Lanter Smith Chief Marketing Officer EPAY Systems, Inc. mlsmith@EPAYsystems.com 773-499-7512 . 34
    35. 35. EPAY -- In Time with You Complex pay rules? Mobile workforce, union contracts, multiple job assignments? No problem! Uniquely flexible 35
    36. 36. Reduce your labor costs Eliminate erroneous pay calculations, time rounding, and management inconsistencies Eliminate buddy punching Reduce costs associated with paper checks. Save an average of $2.87 per pay period/per employee. or more! Biometric time clocks with camera and finger print reader 36
    37. 37. Minimize Compliance Risk • • • • • • Audit Trails Overtime Meal Breaks Pay Differentials Privacy and Security Reduce Workers Comp Claims • Did you have an accident free day? 37
    38. 38. Over 40,000 customer sites 38
    39. 39. Easy, Anywhere Time Tracking Blueforce adapts to how YOU do business 39
    40. 40. Upcoming Education • • Mobile GPS Webinar: Time Tracking & Mobile Apps. Nov 7: 10:00 am cst EPAY Demonstration: Time Tracking Your Way. Nov 14: 10:00 am cst Register at www.EPAYsystems.com 40
    41. 41. Thank You! Jeremy W. Stewart Associate, Seyfarth Shaw LLP Labor & Employment jwstewart@seyfarth.com (312) 460 - 5662 Jeffrey M. Burns Associate, Seyfarth Shaw LLP Labor & employment jburns@seyfarth.com (617) 946-4944 41
    42. 42. Connect with us Connect with EPAY on: o LinkedIn – follow our company page at EPAY Systems o Twitter -- @EPAYsystems o Sign up for our e- newsletter at EPAYsystems.com Connect with Seyfarth Shaw LLP: o Wage & Hour Litigation Blog http://www.wagehourlitigation.com/ o Twitter - @SeyfarthShawLLP 42
    43. 43. Thank You! 43

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