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Total Articles: 146

USDOL's Proposed Tip-Pooling Modification Sent To OMB

The U.S. Department of Labor has taken the next step toward rescinding the prior administration's 2011 regulatory position that an employer may not retain any of an employee's tips even if management:

DOL Confirms to OMB It Will Reverse Course on Yet Another Controversial Regulation, New Rule Will Reduce Restrictions on Tip Sharing

In recent years, one significant issue that has plagued industries employing tipped employees is whether the employers must ensure that tipped employees retain all of their tips even if the company is not using the employee’s tips to satisfy part of the minimum wage pursuant to the FLSA’s “tip credit” provision, 29 U.S.C. § 203(m). The provisions of Section 203(m) of the FLSA require, among other things, that tipped employees paid a tip credit rate retain all of their tips except for permissible tip pools.

Service Adviser Exemption Goes Back to the Supreme Court

On September 28, 2017, the U.S. Supreme Court agreed to hear a case in which the Court will be asked to decide whether the FLSA’s overtime exemption covering “any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles.” The case is Encino Motorcars v. Navarro, No. 16-1362.

Supreme Court Grants Certiorari (Again) to Address Circuit Split on FLSA Automobile Dealer Exemption

After effectively “punting” on the issue last year, the U.S. Supreme Court has again granted certiorari to resolve a circuit split regarding whether “service advisors” at automobile dealerships are exempt from receiving overtime under an exemption for “salesmen, partsmen, and mechanics” under the FLSA. Encino Motorcars, LLC v. Navarro, No. 16-1362 (U.S. Sep. 28, 2017).

Do Customer Tips Belong the Employee or Employer?

When a customer leaves a tip for a server, who receives the full amount of the tip at the end of the day? According to a 2011 Department of Labor (DOL) regulation, the tip always belongs to the server, even if the employer pays the server minimum wage. However, a recent DOL announcement in late July has put this issue back on the table and may resolve a conflict between courts across the country as to tip practices within the hospitality industry. The 2011 regulation states that tips are the property of the employee regardless of whether the employer pays the employee minimum wage and claims a tip credit. Now, DOL is rescinding this regulation, which will allow employers more flexibility in their tip pooling practices.

Ninth Circuit Rejects DOL's Interpretation of the "Dual Jobs" Regulation for Tipped Employees

On September 6, 2017, the Ninth Circuit Court of Appeals declined to accord deference to the U.S. Department of Labor's (DOL) interpretation of its "dual jobs" regulation. The court reasoned that the interpretation, as articulated in the DOL's Field Operations Handbook (FOH), was inconsistent with the dual jobs regulation and attempted to create a de facto new regulation. The appellate court rejected the FOH's requirement that employers evaluate employee work on a duty-by-duty and minute-by-minute basis to determine whether an employer may take a tip credit for specific time worked. The court favored the DOL's earlier guidance on the regulation, which instructed employers to look for a "clear dividing line" to distinguish between when an employee is engaged in a customarily tipped occupation versus a second and separate non-tipped occupation.

DOL’s “80/20” Tip Credit Rule Entitled to No Deference, Ninth Circuit Holds, Creating Circuit Split

Finding it wholly inconsistent with the statute and the regulation it purports to interpret, the Ninth Circuit has held invalid the United States Department of Labor’s “80/20” tip credit rule, or “20% Rule,” which limits the availability of the tip credit when tipped employees spend more than 20% of their time performing allegedly non-tip generating duties.

The Ninth Circuit Affords No Deference to the DOL's 80/20 Tip-Credit Guidance—Creating a Circuit Split and Potentially Setting Up a Supreme Court Fight

Executive Summary: On September 6, in Marsh v. J. Alexander’s LLC, the Ninth Circuit Court of Appeals refused to give deference to the U.S. Department of Labor’s (“DOL”) tip-credit guidance under the Fair Labor Standards Act (“FLSA”). The guidance—commonly known as the “80/20 rule”—provides that employers may not take a “tip credit” for time spent performing duties “related” to tip-producing activities (e.g., cleaning tables or rolling silverware) if these duties constitute more than 20 percent of the tipped employee’s time in a given week. In holding that the 80/20 rule is inconsistent with the FLSA because it improperly analyzes an employee’s duties rather than the performance of distinct jobs, the Ninth Circuit created a circuit split on this issue, and potentially paved the way for a U.S. Supreme Court decision with national impact.

eLABORate: 9th Circuit Serves Employers with a Win in Row Over Tip-Credit

In a decision rendered on September 6, 2017, the 9th U.S. Circuit Court of Appeals found that the Department of Labor’s (“DOL”) interpretative guidance on an employer’s obligation to pay tipped workers the federal minimum wage for non-tipped work under the Fair Labor Standards Act (“FLSA”) is not entitled to deference.

The Department of Labor Changes Course on Tip-Pooling Restrictions

Quite a bit of effort goes into making an enjoyable restaurant experience, such as good food, prompt service and, of course, cleanliness. Want to reward the dishwashers for providing you with spotless silverware, expediters for bringing out your food while it is still hot or the chef for cooking the perfect meal by leaving a generous tip? Not so fast. Cooks, expediters and other back-of-the house employees historically have not been able to legally share in the tips that are pooled and distributed among the servers, hosts and others in the front of the house.

What To Know About Proposed Changes To Tip-Pooling Rule

The U.S. Department of Labor plans to propose, sometime in August, a full rescission of the controversial tip-pooling restrictions that impact employers who pay tipped employees the full minimum wage directly, according to a regulatory agenda published July 20. This news should come as a welcome relief to employers in the hospitality industry, especially those operating in the Ninth Circuit — which includes the states of California, Nevada, Washington, Arizona, Oregon, Idaho, Montana, Hawaii, and Alaska — where a divisive 2016 appellate court decision has operated the last several years to handcuff a substantial number of businesses.

The Triumphant Return of Tip Pooling: DOL Announces Repeal of 2011 Regs

In a welcome sea change for the hospitality industry, the U.S. Department of Labor (DOL) announced on July 20, 2017 that it would repeal the Obama administration’s 2011 regulations that severely curtailed tip pooling. The DOL further announced that, as it works to finalize the repeal, its investigators are barred from enforcing the Obama-era rule.

DOL Plans to Repeal Tip-Pooling Restrictions

The US Department of Labor (DOL) has announced that it plans to rescind the current Fair Labor Standards Act (FLSA) restrictions on "tip pooling by employers that pay tipped employees the full minimum wage directly."

Tip-Pooling Restrictions Slated To Be Rescinded, Labor Department Announces

The U.S. Department of Labor plans to propose a full rescission of the controversial tip-pooling restrictions impacting employers who pay tipped employees the full minimum wage directly sometime in August, according to a regulatory agenda published this morning.

Reflections Upon USDOL "Tip Retention" Enforcement

We recently wrote about two federal appellate decisions holding that tipped employees for whom no federal Fair Labor Standards Act Section 3(m) "tip credit" has been taken, and to whom all FLSA minimum wages and overtime compensation due have been paid, may not sue under that law to recover tips that their employers allegedly unlawfully retained.

Department Of Labor To Rescind 2011 Tip Pooling Regulation

Today the Trump Administration, through the Office of Management and Budget’s Office of Information and Regulatory Affairs, released the federal government’s semi-annual Unified Agenda of Regulatory and Deregulatory Actions.

Tenth Circuit Rules Employer That Pays More Than Minimum Wage Does Not Have to Share Customers' Tips With Employees

Executive Summary: On June 30, 2017, the U.S. Court of Appeals for the Tenth Circuit ruled in Marlow v. The New Food Guy, Inc. d/b/a Relish Catering (Relish) that neither the Fair Labor Standards Act (FLSA) nor a Department of Labor (DOL) regulation requires an employer to share customers’ tips with employees so long as the employees are paid more than minimum wage.

Valet Driver's FLSA Tip Claim Fails

In a welcome decision for employers, the Eleventh Circuit U.S. Court of Appeals (having jurisdiction over Alabama, Florida, and Georgia) recently ruled that a tipped employee for whom no federal Fair Labor Standards Act "tip credit" had been taken, and to whom all FLSA wages due had been paid, could not sue her employer under that law for allegedly converting some of her tips to the employer's own uses.

Restaurants: Do your employees know that you take the tip credit?

In 2011, the U.S. DOL published a regulation mandating that restaurants who count tips toward the minimum wage as permitted under the Fair Labor Standards Act have to notify employees that they are taking the credit. (See U.S. DOL Fact Sheet #15 for more information on the current requirement.) Last week, a federal district court in Pennsylvania ruled that a former bartender at Cadillac Ranch All American Bar & Grill could move forward with a hybrid state law / FLSA class/collective action, alleging that the restaurant chain violated the DOL’s notice regulation by failing to tell tipped workers that their wages would be calculated using the tip credit.

Federal Court In Illinois Rules Online Retailer Of Event Tickets Qualifies As “Retail Establishment” Under Section 207(i) Of The FLSA, Refusing to Defer to DOL Regulations

An online ticket broker that sells tickets to concerts, sporting events, and the theater qualifies as a “retail or service establishment” under Section 207(i) of the Fair Labor Standards Act (“FLSA”), Judge John Lee of the United States District Court for the Northern District of Illinois held. Blahnik v. Box Office Ticket Sales, LLC, 2017 U.S. Dist. LEXIS 45158 (N.D. Ill. Mar. 28, 2017).

Scaling The Wall Of Conflicting "Tip Credit" Provisions

We've all struggled with what to do when we're given conflicting orders. Grandma says "have some pudding," and Pink Floyd's Roger Waters responds, "how can you have any pudding if you don't eat your meat?!" Employers are increasingly facing similar (though perhaps less-existential) wage-related conflicts.

Ninth Circuit Rules Service Advisors at Automotive Dealerships Are Not Exempt From Overtime Pay

xecutive Summary: On January 9, 2017, the U.S. Ninth Circuit Court of Appeals ruled in Navarro v. Encino Motorcars, for the second time, that service advisors at automotive dealerships are not exempt from overtime. In 2015, the Ninth Circuit relied on U.S. Department of Labor regulations to hold that service advisors are not exempt. In June 2016, the U.S. Supreme Court reversed that ruling, finding that the regulations were not entitled to deference, and directed the Ninth Circuit to reconsider the issue without regard to the DOL regulations.

Ninth Circuit Reaffirms Service Advisors Eligible for Overtime, Setting Up Second Potential Trip to Supreme Court

The U.S. Supreme Court in 2016 granted certiorari in Encino Motorcars, LLC v. Navarro to resolve a circuit split regarding whether “service advisors” at automobile dealerships are exempt from receiving overtime under the Fair Labor Standard Act pursuant to an exemption for any “salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles.” The federal appeals court in San Francisco, deferring to a 2011 Department of Labor regulation, had held service advisors are not covered by the exemption and, therefore, are entitled to overtime.

Groundhog Day Comes Early For West Coast Auto Dealers: Another Loss In Service Advisor Exemption Battle

In a disappointing but perhaps unsurprising decision, the 9th Circuit Court of Appeals once again ruled that service advisors employed by automobile dealerships do not qualify for the Section 13(b)(10)(A) overtime exemption under the federal Fair Labor Standards Act (FLSA). For dealers on the west coast, this might sound like a familiar story. In fact, you would be forgiven if you feel like you are reliving an early version of Groundhog Day and hearing the same story once again. You wouldn’t be far off.

What Is The Section 7(i) Exemption And Does It Apply To Auto Dealer Service Advisers?

Over the summer, the U.S. Supreme Court punted on the question of whether “Service Advisers” or “Service Writers” at auto dealerships fall within the Fair Labor Standards Act’s exemption for “any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles.” For those outside of the auto industry, these are the people who greet you when you pull into the service department and communicate with you about what work your car might need. Since the question of whether service advisers count as “salesmen” may not be definitively resolved for some time yet, many auto dealers find themselves looking for other overtime exemptions that may apply to these positions.

Ninth Circuit Stands By Tip-Pooling Restrictions

The U.S. Court of Appeals for the Ninth Circuit has denied petitions for rehearing, as a panel or en banc, its opinion earlier this year holding that the U.S. Department of Labor could extend the Fair Labor Standards Act’s tip-pooling restrictions to instances where the tipped employees received the minimum wage without reliance on the Section 203(m) tip credit. Circuit Judge Diarmuid O’Scannlian’s highly critical dissent, in which he was joined by nine others, could serve as a tempting invitation for the U.S. Supreme Court to accept review of the matter.

Federal Appeals Court Refuses To Reinstate Tip-Pooling Policies

Restaurants and other hospitality businesses in the Western U.S. received bad news late yesterday as a federal appeals court refused to strike down a controversial tip-pooling regulation. The U.S. Department of Labor’s (USDOL’s) rule prohibits businesses from requiring employees to share their tips even if the tipped employees are paid minimum wage, and although a group of hospitality employers hoped that a court would reject the rule as running contrary to well-established law, the 9th Circuit Court of Appeals once again upheld the rule.

eLABORate: Interpretation of FLSA 'Tip Credit' Provision Continues to Unfold

A federal district court in the Southern District of Florida joined a growing number of district courts in holding that the Department of Labor’s interpretation of the “tip credit” provision of the Fair Labor Standards Act, 29 U.S.C. § 203(m), is invalid. See Aguila v. Corporate Caterers II, Inc., No. 1:15-cv-24350-KMM, 2016 WL 4196656, *1 (S.D. Fla. Aug. 9, 2016).

FLSA Conditional Certification Denied in NYS for 5,000 Home Care Workers

Executive Summary. In a case with far reaching implications, Cowell v. Utopia Home Care, Inc., 2:14-cv-00736-LDW-SIL, Magistrate Judge Steven Locke of the Eastern District of New York (covering Brooklyn, Queens and Long island) ruled that claims of failure to pay home care workers for hours worked and overtime are not suitable for a collective action where the workers' conditions of employment vary so much between different home care workers and even for the same worker when working for different patients. This could prove to be a very important decision for the home care industry in New York, which has been battered by collective and class action complaints by a very active plaintiff attorneys bar. Every home care agency in New York is a potential target because home care workers can recover double damages and their attorneys' fees if they prevail.

Federal Court In Florida Is Latest To Reject DOL Regulation, Finds FLSA Does Not Require That Employees Receiving Full Minimum Wage Retain All Tips

While Department of Labor regulations interpreting the FLSA remain the primary source of employer guidance regarding the Act’s requirements, they are not necessarily the final word on what federal wage law requires. This is so even where they have been subject to “notice and comment,” triggering a higher level of judicial deference.

Individuals, Families, and Households and Those Who Jointly Employ Home Care Workers With Them are All Liable for Unpaid Overtime

Executive Summary: Claims by home care workers for unpaid overtime have risen steadily since the U.S. Department of Labor, in 2015, eliminated the federal overtime exemptions that allowed agency employers essentially to pay no overtime wage premiums. This has greatly affected agency employers In New York, who are increasingly seeing class action suits being filed against them. It has also affected individuals, families and households in New York who hire home care workers directly, especially when the home care worker is an agency-employer worker who is continued for extra hours in a workweek. Since 2010, the New York Domestic Workers Bill of Rights has required "direct-hire" employers of home care workers to pay overtime at time and one half the worker's regular rate. When an agency worker is continued for extra hours by an individual, family or household, both can be held liable for unpaid overtime on all hours worked over 40 in a workweek, regardless of who scheduled the hours. Beyond the agency and individual, family, or household, others who have the power, whether or not exercised, to hire, employ, or pay the worker, such as a child or relative who takes care of a client's affairs or an attorney acting under a power of attorney or as a legal guardian, conservator, or trustee, are also at risk of being held liable.

Seventh Circuit Issues Employer-Friendly Ruling on FLSA Tip Credit

The Fair Labor Standards Act has long provided that an employer may satisfy its federal minimum wage obligations for a tipped employee by applying the employee’s tips as a credit toward the minimum wage and, in doing so, directly pay such employee less than the general minimum wage. If the employer’s wages plus the employee’s tips do not equal or exceed the minimum wage, the employer must make up the difference. Moreover, in order to take advantage of the tip credit, the employer is required to notify its tipped employees that it is taking the tip credit and to provide certain information pertaining to the credit.

Federal Court In Georgia Rejects DOL Regulation, Rules FLSA Does Not Require That Employees Receiving Full Minimum Wage Retain All Tips

On July 26, 2016, Judge William S. Duffey of the United States District Court for the Northern District of Georgia issued a decision holding that an employer does not have to ensure tipped employees retain all of their tips if the company is not using the employee’s tips to satisfy part of the minimum wage pursuant to the FLSA’s “tip credit” provision, 29 U.S.C. § 203(m). In Malivuk v. AmeriPark, LLC, the plaintiff sued defendant AmeriPark, LLC (a provider of valet parking services) under the FLSA claiming that Ameripark illegally withheld tips paid to her and other valets. Malivuk v. AmeriPark, LLC, 2016 U.S. Dist. LEXIS 97093 (N.D. Ga. July 26, 2016).

Employers Can Claim Tip Credit Even When Employees Perform 'Related Duties,' 7th Circuit Rules

Restaurants and other employers that require wait staff, bartenders and other tipped employees to clean tables, make coffee or perform other similar duties can draw comfort from a new appeals court ruling.

Supreme Court Leaves Intact Limited Overtime Exemption for Companionship Services Providers

An overtime exemption for companionship services providers -- such as home health aides, personal care aides and certified nursing assistants -- will remain limited only to those workers who are not directly employed by the family or household using their services.

Fifth Circuit Declines to Broaden Permitted Deduction of Credit Card Fees from Tips

The U.S. Court of Appeals for the Fifth Circuit concluded on June 14, 2016 that an employer may not deduct more than the actual credit card fees associated with liquidated credit card tips for employees without compromising the tip credit taken by the employer against the employee’s wages. Steele v. Leasing Enterprises, Ltd., No. 15, 20139 is an important decision for employers with operations in the Fifth Circuit because it endorses for the first time other courts’ conclusions that certain deductions may be made against an employee’s tips by an employer without disturbing the tip credit, but illustrates the danger in overreaching in those deductions.

USDOL's Tipped-Employee "Subminimum Wage" Fiction

A recent U.S. Labor Department blog post re-casts the agency's long-running campaign against an alleged "subminimum wage for tipped workers" under the federal Fair Labor Standards Act. Although this latest pitch introduces a different phrase, USDOL also recycles last year's canard that "[t]he current federal tipped minimum wage . . . still stands at just $2.13 per hour."

Supreme Court Declines Review of D.C. Circuit’s Decision Upholding DOL Home Care Rule as Regulatory and Litigation Focus on Home Care Industry Intensifies

On June 27, 2016, the U.S. Supreme Court denied the plaintiffs’ petition for a writ of certiorari in Home Care Association of America v. Weil, leaving the U.S. Department of Labor’s (“DOL”) Home Care Rule intact.1 The Home Care Rule has extended minimum wage and overtime requirements to the vast majority of home care workers by eliminating the availability to third-party agencies of the companionship and live-in domestic service worker exemptions and by dramatically narrowing the definition of companionship services.

Overtime Exemption for Auto Dealership 'Service Advisors' Back on the Table

Auto dealership "service advisors," who are responsible for evaluating vehicles and suggesting repairs to their owners, may once again qualify for an exemption from the overtime requirements of the Fair Labor Standards Act (FLSA).

Supreme Court Rejects Deference to DOL Regulation on FLSA Exemption Due to Failure to Provide Reasoned Explanation for Change

The Supreme Court granted certiorari in Encino Motorcars, LLC v. Navarro, No. 15-415 (June 20, 2016), to resolve a circuit court split regarding whether “service advisors” are exempt from receiving overtime pay under the Fair Labor Standards Act (FLSA). Although the parties thoroughly briefed the issue, the Court did not resolve the question. Instead, as Justice Clarence Thomas noted in his dissent, the Court decided to “punt” (likely due to an inability to garner a majority opinion because of the vacancy at the Court caused by Justice Antonin Scalia’s death that has left it with just eight members since February). Automobile dealers are likely to face uncertainty a while longer.

Here's a tip: Don't skim from employee tips

Hospitality industry employers take note: If you claim a “tip credit” toward the minimum wage for any of your employees, you need to make sure that all tips are properly distributed to employees. A recent case from the Fifth Circuit Court of Appeals involving a Texas restaurant chain illustrates the hazards of making a mistake with the tip credit rules. Steele v. Leasing Enterprises, Ltd. (.pdf)

The Supreme Court Shoots Down DOL Regulations, But Declines To Rule Whether Service Advisors are Exempt From Overtime Pay Requirements

Yesterday, the United States Supreme Court issued its long-awaited decision in the Encino Motorcars, LLC v. Navarro case, that many hoped would resolve the issue as to whether Service Advisors at auto dealerships are exempt from the overtime provisions of the Fair Labor Standards Act (FLSA).

Car Dealership’s Service Advisors’ Overtime Controversy Stalls in the Supreme Court

On June 20, 2016, the Supreme Court of the United States issued a ruling regarding the Fair Labor Standards Act’s (FLSA) overtime exemption for “any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles” at a covered dealership under section 213(b)(10)(A) of the FLSA. A 1970 U.S. Department of Labor (DOL) regulation limited this overtime exemption to salesmen (who primarily obtained orders or made sales of vehicles) and excluded service advisors (who sold service and maintenance services) from its coverage. After several courts rejected this interpretation, the DOL’s Wage and Hour Division (WHD) issued an opinion letter in 1978 and amended its Field Operations Handbook in 1987 stating that service advisors could be exempt from overtime under section 213(b)(10)(A).

Supreme Court Calls “Do Over” On FLSA Service Advisor Exemption Rule

In a 6 to 2 decision, the U.S. Supreme Court today continued the flip-flop-flip on determining whether an automobile dealership’s service advisors are exempt from the FLSA’s overtime requirements. The Court vacated and remanded the case back to the 9th Circuit Court of Appeals for further proceedings, essentially calling a “do over.” For dealerships in the 9th Circuit – those in California, Washington, Nevada, Arizona, Oregon, Alaska, Hawaii, Idaho, and Montana – this case provides a hopeful reprieve (Encino Motorcars, LLC v. Navarro et al).

Split Ninth Circuit Decision Clarifies the Limitations of Tip Pooling

In a split 2-1 decision, the Ninth Circuit Court of Appeals ruled in Oregon Restaurant and Lodging Association v. Perez (February 2016) that its 2010 decision in Cumbie v. Woody Woo, Inc. did not prevent the U. S. Department of Labor (DOL) from implementing regulations prohibiting all employers—even those that do not take advantage of a “tip credit”—from requiring tipped employees to participate in a tip pool that includes employees who are not “customarily and regularly” tipped.

Ninth Circuit Approves DOL Rule that Restricts Tip Pooling

Section 203(m) of the Fair Labor Standards Act (FLSA) allows employers of tipped employees to take a tip credit against the employer's minimum wage obligation if: (a) notice of the tip credit is provided, and (b) tipped employees are allowed to retain all of their tips, except in the case of tipped employees participating in a valid tip pool that only includes other tipped employees. The DOL's 2011 Regulations provided that employers who do not take a tip credit pursuant to § 3(m) must pay their employees the full cash minimum wage, may not retain employees' tips, and may not require employees to participate in a tip pool that includes non-tipped employees. The 2011 Regulations were a direct response to, and rejection of, the Ninth Circuit Court of Appeals' decision in Cumbie v. Woody Woo, 596 F.3d 577 (9th Cir. 2010), which held that § 3(m) does not preclude employers who do not take a tip credit from maintaining a tip pool that includes non-tipped employees (e.g. cooks, dishwashers and other back-of-the-house employees).

Ninth Circuit "Tips" Against Tip-Pooling Policies

In a surprising decision that may require many restaurants and other hospitality businesses in the Western U.S. to alter their labor practices, the 9th Circuit Court of Appeals upheld a 2011 U.S. Department of Labor (USDOL) rule that prohibits businesses from requiring employees to share their tips even if the tipped employees are paid minimum wage. The February 23, 2016 decision applies to all businesses operating in the 9th Circuit, which includes the states of California, Nevada, Washington, Arizona, Oregon, Idaho, Montana, Hawaii, and Alaska (Oregon Rest. & Lodging Association v. Perez).

Car Leasing Employee’s Equal Pay Discrimination Claim Proceeds, Federal Court Rules

A car leasing company’s manager will go to trial on her Equal Pay Act claim because the employer failed in its burden to show the manager’s gender provided “no basis” for the pay differential between her and her male counterpart, a Mississippi federal district court has ruled. White v. Checker Leasing, Inc., No. 1:14CV172-SA-DAS, 2016 U.S. Dist. LEXIS 17066 (N.D. Miss. Feb. 11, 2016).

The Supreme Court Will Decide Service Advisor's Exempt Status

Dealerships will soon get a decisive ruling from the U.S. Supreme Court about an issue that has become a thorn in the side for many dealers. The issue: whether Service Advisors are exempt from overtime requirements under Section 13(b)(10)(A) of the Fair Labor Standards Act (FLSA), which exempts “any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles, trucks, or farm implements, if he is employed by a nonmanufacturing establishment primarily engaged in the business of selling such vehicles or implements to ultimate purchasers.”

Supreme Court Agrees to Hear Service Advisor OT Pay Split

As we reported back in October 2015 a car dealership, Encino Motorcars, petitioned the Supreme Court to “restore uniformity” to the enforcement of legal precedent and hold that service advisors are exempt from the FLSA’s overtime requirements. On Friday, the Supreme Court agreed to hear the case and hopefully resolve the issue once and for all as to whether service advisors are entitled to overtime pay.

Supreme Court to Decide Whether Car Dealership 'Service Advisors' Are Exempt From Overtime

The US Supreme Court has agreed to hear a case that will determine whether auto dealership "service advisors," who are responsible for evaluating vehicles and suggesting repairs to their owners, qualify for an exemption from the overtime requirements of the Fair Labor Standards Act (FLSA).

SCOTUS to Resolve Circuit Split Regarding Whether “Service Advisors” Are Exempt From Overtime and Consider Deference Owed to USDOL

On Friday, the United States Supreme Court agreed to resolve the current split among the Circuit Courts regarding whether “service advisors” are exempt from overtime under the 213(b)(10) exemption, an exemption applicable to any “salesman, partsman, or mechanic” who is primarily engaged in “selling or servicing automobiles.”

Supreme Court to Reexamine Service Advisor Exemption

Last October, we reported on a petition by an auto dealership asking the U.S. Supreme Court to overturn a ruling by the 9th Circuit Court of Appeals holding that the dealership's service advisors did not qualify for the FLSA's exemption for any "salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles.” Last Friday, the Supreme Court granted that petition. Oral arguments in the case, Encino Motorcars, LLC v. Navarro, will likely be scheduled for Spring 2016.

DOL Issues Guidance on Room and Board Deductions for Home Care Workers

On December 17, 2015, the U.S. Department of Labor’s (DOL) Wage and Hour Division issued guidance on permissible deductions for lodging under the Fair Labor Standards Act (FLSA), with particular emphasis on the law’s effect on home care workers. Section 203(m) of the FLSA permits employers to count as wages the “reasonable cost” of room and board. The recently issued guidance attempts to clarify the “fair value” of such room and board. This is an issue of particular relevance to employers of home care workers, as those workers are now covered by federal minimum wage and overtime laws under federal regulations issued in 2013.

Ohio Federal Court Rules Home Care Agency Not Required To Pay Overtime To “Companions” During Temporary Vacatur Of New Federal Rules

Providing much needed guidance to industry employers still wrestling with fallout from the United States Department of Labor’s drastic reduction to the scope of the companionship exemption, District Court Judge Sandra S. Beckwith held this week that a home care agency properly relied on the temporary vacatur of the DOL’s new federal regulations in electing not to pay overtime to its home healthcare employees during the period while the vacatur was in effect. Bangoy, et al. v. Total Homecare Solutions, LLC, S.D. Ohio No. 1:15-CV-573 12/21/15.

A Legal Tipping Point – Are No-Tip Policies the Wave of the Future?

In this country, there are thousands of employees who earn their living off tips or gratuities they receive from customers. Over the last several years, there has been a movement afoot, particularly in the restaurant industry, to eliminate tipping from the workplace. Most recently, Joe's Crab Shack became the first major restaurant chain to test a "no-tipping" policy at more than a dozen of its locations. Servers, hosts, and bartenders at test locations of Joe's Crab Shack are now being paid a higher, fixed, hourly wage well above the current federal minimum wage of $7.25 per hour. Joe's Crab Shack is not the only restaurant experimenting with no-tipping policies. Union Square Hospitality Group announced earlier this year that 13 of its New York City restaurants will go to a no-tipping policy. "No-tipping" restaurants are still far from the norm in the United States but it is definitely a trend to watch.

Home Care Industry Coalition Seeks Supreme Court Review of DOL's Home Care Rule

In the latest litigation chapter involving the U.S. Department of Labor’s rule extending minimum wage and overtime requirements to certain home care workers, a home care industry coalition has taken its challenge of the rule to the U.S. Supreme Court. On November 18, 2015, the plaintiffs in Home Care Association of America v. Weil filed a petition for a writ of certiorari with the Supreme Court seeking review of the U.S. Court of Appeals for the D.C. Circuit’s decision upholding the DOL’s Home Care Rule and reversing the lower court’s decisions vacating the new rule. The Home Care Rule, among other things, prevents third-party employers of home care “companions” or live-in caregivers for the elderly and disabled from availing themselves of the longstanding statutory exemptions from the federal Fair Labor Standards Act's minimum wage and/or overtime requirements. The Supreme Court has the discretion to grant or deny review of the D.C. Circuit’s decision.

Home Care Fallout: Increased Institutionalization?

Five days into the DOL’s enforcement of the new rule rendering most home health aides eligible for overtime under the FLSA, questions abound regarding how state Medicaid and Medicare-funded programs will comply with the rule within their current budgets. One new report cautions consumers of home health care and their advocates to be aware of the rule so they can stave off “unintended harms” including, among others, the potential for “cuts in service hours [to] make it very difficult to remain in the community and avoid institutionalization, particularly if [consumers] cannot find additional workers to fill their [needed] hours.”

Coffee and Tipping Do Not Mix: Fifth Circuit Rejects Behind-the-Scenes Baristas’ Tip Pooling Arrangement

In Montano v. Montrose Restaurant Associates., Inc., 800 F.3d 186 (5th Cir. Aug. 28, 2015), the Fifth Circuit Court of Appeals reversed and remanded a decision of the Southern District of Texas in which the trial court had granted summary judgment in favor of a restaurant. The issue was whether it was permissible under the Fair Labor Standards Act (FLSA) for the restaurant to include a “coffeeman” (also known as a “barista”) in a mandatory tip pooling arrangement with lead waiters, front waiters, back waiters, busboys, and bartenders.

DOL Enforcement of Home Care Rule to Commence November 12, Subject to “Prosecutorial Discretion”

Chief Justice Roberts’ denial of the Home Care Association of America’s request for stay of issuance of mandate confirms that the new rule rendering many home health aides overtime-eligible is effective, pending appeal. In response to that denial, Wage-and-Hour Administrator David Weil issued a new policy statement confirming that the Department’s “non-enforcement period” for the new rule will end on November 12, 2015. After that, the policy statement indicates the Department will “exercise prosecutorial discretion pursuant to its previously announced time-limited non-enforcement policy” through December 31, 2015.

Supreme Court to Resolve Circuit Split on OT Pay for Car Dealerships?

As you have read in our blog over the years, the misclassification of employees as exempt is one of the primary claims in wage and hour litigation. Misclassification claims can arise in many forms, including the classification of a certain job in a particular industry. Mortgage loan officers anyone? Today’s post is focused on the world of car dealerships – specifically the job of service advisors.

Court Enters Summary Judgment in Favor of DOL in Home Care Rule Challenge

In an order dated October 20, 2015, pursuant to the D.C. Circuit’s mandate issued on October 13, 2015, U.S. District Court Judge Richard Leon entered summary judgment in favor of the U.S. Department of Labor (DOL) in Home Care Association of America v. Weil. In this case, the U.S. Court of Appeals for the District of Columbia Circuit upheld the DOL's Home Care Rule, which, among other things, prevents third-party employers of home care “companions” or live-in caregivers for the elderly and disabled from availing themselves of the longstanding statutory exemptions from the federal Fair Labor Standards Act's minimum wage and/or overtime requirements.

U.S. Supreme Court Denies Stay of the DOL Wage Rule for Home Care Workers

The Department of Labor (DOL) promulgated a rule that brings home care workers, employed by third parties, within the protection of the Fair Labor Standards Act (FLSA). As a result, those home care workers employed by an entity other than the individual, or the family of the individual for whom they are caring, will be entitled to be paid minimum wage and overtime under the new rule.

Prominent NY Restaurateur Eliminates Tipping

As New York’s hospitality industry prepares for a reduced tip credit and a fast food minimum wage, one New York restaurateur has announced its intention to eliminate tipping and thus, by extension, use of the tip credit: New York City’s Danny Meyer. This lengthy Eater feature discusses Meyer’s audacious new Hospitality Included program, noting the pitfalls encountered by other fine dining establishments which have moved away from American dining’s deep-rooted tipping conventions. Watch this space for further developments regarding NYS Department of Labor regulation of the hospitality industry and industry responses thereto.

United States Supreme Court Denies Stay of Appeals Court Ruling Validating USDOL's Final Rule

Executive Summary. The United States Supreme Court has denied a request for a stay of the United States Court of Appeals for the District Of Columbia's ruling in the lawsuit challenging the U.S. Department of Labor's ("USDOL") "Final Rule" affecting minimum wage and overtime compensation for home care aides and live-in personal care services (known as the "companionship exemption" of the Fair Labor Standards Act, or FLSA). With this ruling, the Final Rule is expected to take effect on or about October 13, 2015, though the USDOL has formally stated that it will not begin enforcement proceedings under the Final Rule for 30 days following its effective date.

Overtime Rules for Companionship Services to Take Effect Next Week, Despite Efforts to Delay

The Supreme Court recently denied a coalition of industry groups' request to postpone new regulations that make direct care workers -- such as home health aides, personal care aides and certified nursing assistants -- eligible for overtime pay.

Chief Justice Denial of Stay Request Clears Way for New FLSA Regulations Affecting Home Care Agencies to Go Into Effect October 13, 2015

On October 6, 2015, Chief Justice John Roberts of the Supreme Court of the United States summarily denied the emergency stay application filed by the association plaintiffs in Home Care Association of America v. Weil. In the absence of a stay, the new U.S. Department of Labor’s (DOL) regulations extending the federal minimum wage and overtime requirements for home health care workers employed by third-party employers are expected to go into effect on October 13, 2015.

FLSA Overtime Exemption for Agricultural Employees Broad Enough to Cover Worm Farmers

Agricultural employees are exempt from federal overtime requirements under the Fair Labor Standards Act (FLSA).

October 13 Effective Date of the Home Care Rule Stands—For Now

On August 21, 2015, the U.S. Court of Appeals for the District of Columbia Circuit upheld the Department of Labor's Home Care Rule.1 Based on that decision, the effective date of the Home Care Rule is October 13, 2015.

Many Home Companionship Workers No Longer Exempt

Agencies and other third-party employers of live-in household employees and home companionship providers, take note: the long-delayed regulations reclassifying many of these workers as non-exempt employees entitled to minimum wage and overtime under the FLSA are now in effect.

October 13 Effective Date of the Home Care Rule Stands—For Now

On August 21, 2015, the U.S. Court of Appeals for the District of Columbia Circuit upheld the Department of Labor's Home Care Rule.1 Based on that decision, the effective date of the Home Care Rule is October 13, 2015.

Home Health Care Agencies, DOL Continue to Wrangle Over FLSA Regs Effective Date

As we previously reported, on August 21, 2015, the United States Court of Appeals for the D.C. Circuit in Home Care Association of America v. Weil reinstated the U.S. Department of Labor’s (DOL) regulations extending the federal minimum wage and overtime requirements for home health care workers employed by third-party employers. The federal appeals court decision overturned a lower court decision that struck down the new regulations just before they were scheduled to go into effect at the beginning of 2015.

USDOL Delays Its "Companionship", "Live-In Domestic" Enforcement

As we recently reported, the U.S. Department of Labor's changes in its regulations governing the Fair Labor Standard Act's Section 13(a)(15) "companionship" exemption and Section 13(b)(21) overtime exemption for "live-in domestics" are once again in effect following a recent decision from the U.S. Court of Appeals for the District of Columbia. One of the most-important revisions is that third-party employers may no longer rely upon these exemptions.

Fifth Circuit Rules on Tip Pooling

In Montano v. Montrose Restaurant Associates, Inc., the U.S. Court of Appeals for the Fifth Circuit was presented with what may seem like an easy issue: does including a “coffeeman” in a tip pool invalidate the tip credit? The Fifth Circuit’s answer? It depends. While the court attempted to articulate a test that would provide some clarity, it may be such a fact-intensive inquiry that it does not provide employers much guidance.

'Interaction With Customers' Key to Employees' Eligibility for Minimum Wage Tip Credit, 5th Cir. Rules

A new appeals court ruling offers guidance for employers in Louisiana, Mississippi and Texas about how to determine which employees are eligible for the minimum wage tip credit.

D.C. Court of Appeals Backs DOL Reversal of Long-Standing Overtime Exemption for Home Care Agency Workers

Until recently, the U.S. Department of Labor (DOL) had long interpreted the federal Fair Labor Standards Act (FLSA) as exempting companionship-services workers and live-in domestic service workers employed by third-party employers (i.e., “home care agencies”) from the FLSA’s minimum wage and/or overtime requirements. In 2013, however, the DOL adopted regulations reversing that established position, finding that the FLSA’s minimum wage and overtime requirements protect home care agency workers and sending shockwaves throughout an entire industry.

D.C. Circuit Upholds DOL’s Home Care Rule; Further Appeals Likely

On August 21, 2015, the U.S. Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) upheld the United States Department of Labor’s (“DOL’s”) Home Care Rule and reversed the lower court’s decisions vacating the new Rule. In the Home Care Rule, issued in October 2013, the DOL declared that third-party employers of home care “companions” or live-in caregivers for the elderly and disabled could no longer avail themselves of the longstanding statutory exemption from overtime requirements. The new Rule also set a maximum 20 percent threshold for any caregiving services to be provided by home care companions, regardless of their employer, to qualify for exempt status. The effect of the new Home Care Rule(s) is to require overtime to be paid for the first time to more than 90% of all home caregivers throughout the country.

Companionship Exemption Changes In Effect

The latest twist in the ongoing saga involving the U.S. Department of Labor's changes in its regulatory provisions affecting the Fair Labor Standard Act's Section 13(a)(15) "companionship" exemption and the FLSA's Section 13(b)(21) overtime exemption for "live-in domestics" came from the U.S. Court of Appeals for the District of Columbia Circuit.

Companionship Services Providers Once Again Eligible for Overtime

An estimated 2 million direct care workers -- such as home health aides, personal care aides and certified nursing assistants -- who are not directly employed by the family or household using their services are no longer exempt from the minimum wage and overtime requirements of the Fair Labor Standards Act (FLSA).

DOL's Final Rule Upheld By D.C. Court Of Appeals

BREAKING NEWS: The D.C. Court of Appeals ruled today that the US Department of Labor's ("DOL") Final Rule on the Application of the Fair Labor Standards Act to Domestic Service (the "Final Rule") is valid, because it is "grounded in a reasonable interpretation of the statute (FLSA) and is neither arbitrary nor capricious." Under the Final Rule, home care agency workers are no longer covered by the FLSA's companionship services exemption or its live-in domestic worker exemption. This decision is of serious concern to the home care industry. Whether the decision will be appealed to the U.S. Supreme Court remains to be seen.

Federal Appeals Court Reinstates New Federal Minimum Wage and Overtime Requirements for Home Health Care Workers Employed By Third-Party Employers

The United States Court of Appeals for the D.C. Circuit in Home Care Association of America v. Weil reinstated the U.S. Department of Labor’s regulations extending the federal minimum wage and overtime requirements for home health care workers employed by third-party employers. Today’s federal appeals court decision overturns a lower court decision that struck down the new regulation just before it was scheduled to go into effect at the beginning of 2015. The appeals court decision does not mean that the minimum wage and overtime requirements will go into effect immediately. The case will likely now return to the district court with instructions by the federal court of appeals for the court to issue a decision upholding the regulations unless there is further review of the case by either the full panel of the District of Columbia Circuit or the Supreme Court of the United States.

DC Circuit Upholds DOL's End to Companionship Exemption for Third-Party Agencies

The U.S. Court of Appeals for the D.C. Circuit today ruled that the U.S. Department of Labor’s decision to reverse its prior position and extend the FLSA’s minimum wage and overtime protections to employees of third-party agencies who provide companionship services and live-in care within a home was a reasonable interpretation of the law.

Joining Ninth Circuit, Fourth Circuit Rejects Cause of Action to Recover Gratuities Under FLSA

In accordance with the Ninth Circuit and several other federal court rulings, the Court of Appeals for the Fourth Circuit yesterday held that an employee cannot bring a claim for wages based on allegedly misappropriated gratuities under the FLSA. Trejo v. Ryman Hospitality Props., 2015 U.S. App. LEXIS 13204 (4th Cir. July 29, 2015).

"Tipped Minimum Wage" Nonsense Continues

A recent post appearing on the U.S. Labor Department’s blog begins, “The federal tipped minimum wage has been $2.13/hour since 1991. That’s right – it’s been the same for nearly a quarter century.”

Automobile Service Advisers Are Not Exempt Under the FLSA—At Least Not According to the Ninth Circuit

Navarro v. Encino Motorcars, LLC, No. 13-55323 (March 24, 2015): The plaintiffs in Navarro v. Encino Motorcars, LLC were “service advisors” at a Mercedes Benz dealership. The main duties of service advisors are to evaluate the repair needs of customers’ vehicles and then to recommend and sell service.

9th Circuit Splits with 4th, 5th Circuits, Finds Auto Dealer Service Advisors Not Exempt Under FLSA

Reversing a district court decision, and declining to follow decisions from a number of other courts, including the Fourth and Fifth Circuits, the Ninth Circuit has deferred to the Department of Labor's (DOL) "flip-flopped" view of whether the FLSA's exemption for "any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles," applies to auto dealer service advisors/service writers.

More Erroneous Nonsense on Tipped Wages, Courtesy of the Labor Dept.

A recent post appearing on the U.S. Department of Labor’s blog begins, “The federal tipped minimum wage has been $2.13/hour since 1991. That’s right – it’s been the same for nearly a quarter century.”

"Tipped Minimum Wage" Nonsense Continues

A recent post appearing on U.S. Labor Department's blog begins, "The federal tipped minimum wage has been $2.13/hour since 1991. That's right - it's been the same for nearly a quarter century."

Judge Vacates Parts of USDOL Home-Care Regulation

A federal judge has scuttled key aspects of the U.S. Department of Labor's rule that would have extended the federal Fair Labor Standards Act's minimum-wage and overtime requirements to many home care workers starting January 1, 2015. Although USDOL will likely appeal the court's rulings, for now home care agencies may anticipate that USDOL will not be enforcing those requirements as to home care aides and personal care attendants who fall within that law's companionship and live-in-domestic exemptions under the regulations that USDOL sought to change.

Court Vacates DOL’s New “Companionship Services” Definition

On January 14, 2015, the court in Home Care Association of America v. Weil vacated the U.S. Department of Labor’s (DOL) regulation narrowing the definition of “companionship services” under the Fair Labor Standards Act (FLSA). In doing so, the court reinstated the status quo for home health care businesses on the question of whether and how they can avail themselves of the FLSA’s minimum wage and overtime exemption for caregivers. Though home health care businesses are breathing a sigh of relief, it remains to be seen whether the DOL will appeal the court’s rulings and, if so, the outcome of that appeal.

Court Stays New FLSA Companionship Regulation From Going Into Effect

The court in Home Care Association of America v. Weil dealt another setback to the U.S. Department of Labor’s (DOL) amendments to the Fair Labor Standards Act’s (FLSA) regulations affecting home health care businesses. On December 31, 2014, the court issued an order temporarily staying the DOL’s new regulation narrowing the definition of “companionship services.” The order stops that regulation from going into effect until January 15, 2015. In the meantime, on January 9, 2015, the court will hear argument on whether the stay should be continued beyond January 15, 2015.

Court Vacates DOL’s Regulations Mandating Minimum Wage and Overtime Payments to Home Health Care Employees

Just as many home health care agencies were gearing up for a major change to their businesses, a federal judge in Washington D.C. struck down the new U.S. Department of Labor (DOL) regulation extending the federal overtime and minimum wage requirements to home care workers employed by third-party businesses. The court’s December 22, 2014 ruling in Home Care Association of America v. Weil (No. 14-cv-967) vacates the new regulation and means that the amendment will not take effect on January 1, 2015, unless it is stayed or otherwise reversed by an appellate court. The DOL has not stated how it intends to respond to the court’s ruling, though an appeal is expected. The court’s ruling does not affect the other parts of the new regulation, including its narrowed definition of what constitutes “companionship services” and its recordkeeping requirements.

Can Your Home Care Agency Afford to Employ "Sleep-Ins"?

Under the Department of Labor's Final Rule on Domestic Service, a "Sleep-In" worker is one who is required to be on duty for 24 hours or more. This worker differs from a "Live-In Domestic Services Employee" ("Live-In") who (1) provides services in a private home, and (2) resides on the employer's premises on a "permanent basis" (works and sleeps at the employer's premises and has no home of his or her own), or for "extended periods of time" (works and sleeps at the employer's premises for five days a week (120 hours or more)) or resides there for five consecutive nights or days at a time.

Feed Me! Thanksgiving Turkeys, Free Lunches, and Wage and Hour Law

With the Thanksgiving holiday ahead of us, we have reached the time of year where some employers start handing out Thanksgiving turkeys, holiday hams, and other gifts to employees, while others provide free or discounted lunches or other meals. You will find plenty of articles extolling the productivity virtues of well-fed employees. Employers in various industries—from hospitality to high technology to manufacturing—often have many good business reasons to provide meals, from cutting back on waste to teambuilding.

Home Companionship Industry Will Feel FLSA Exemption Fix

Although announced in the latter part of 2013, the U.S. Department of Labor rule changes affecting the companionship exemption in the Fair Labor Standards Act are finally set to take effect on Jan. 1, 2015. The changes will significantly impact the home companionship industry, which currently employs about 2 million people. With the rule change imminent, home companion companies only have a few weeks remaining to ensure compliance.

On-Premises Fringe Benefits, Part I: Is There Such a Thing as a Free Lunch?

It is no secret that many Silicon Valley employers serve free gourmet meals to their employees—the Wall Street Journal, Bon Appétit magazine, Time, Forbes, and other media sources have reported on this benefit. In addition, the number and variety of cafés and foods provided by these employers, the healthfulness of the meals served, the positive culinary reviews, famous executive chefs involved, cleanliness of the facilities, and the favorable benefit cost-estimates have been the subject of news stories for years.

FAQs on Compliance With the Federal Tip Credit

Many employers in the hospitality industry employ individuals who receive customer tips or gratuities in the ordinary course of their work day. These tips may serve as an offset against an employer’s minimum wage obligations under the federal Fair Labor Standards Act (FLSA)—but only if certain criteria are met.

Health Law Alert: Department of Labor Delays FLSA Enforcement and Penalties Against Home Healthcare Companies

Employers in the home healthcare industry will be getting a brief delay in the enforcement of new regulations extending minimum wage and overtime requirements to home healthcare workers under the Fair Labor Standards Act (“FLSA”).

USDOL Defers Enforcement Action On "Companionship" Changes

For some time now, we have followed the U.S. Labor Department's efforts to curtail the federal Fair Labor Standards Act's Section 13(a)(15) "companionship" exemption. Those efforts culminated in a Final Rule published in October 2013. The revisions will effectively eliminate the exemption in many current-day scenarios, primarily by making it unavailable to third-party employers such as home-care agencies.

Are You Paying Home Health Workers Federal Minimum Wage and Overtime? If Not, It’s Time to Start

Traditionally, home health workers who have provided for the care, fellowship, and protection of persons who, because of their advanced age or physical or mental infirmity could not care for themselves, have been exempt from the federal minimum wage and overtime requirements. These workers are exempt from these wage and hour protections under the “companionship” or “live-in domestic” services exemptions of the Fair Labor Standards Act (FLSA).

Restaurant Industry Alert - Fast Food Strikes Announced for Global Workforce

Executive Summary: In an attempt to draw attention to their ongoing efforts to raise the minimum wage to $15 per hour, union organizers have announced another walkout/strike for May 15th. The latest push, an international effort headed by the International Union of Food, Agricultural, Hotel, Restaurant, Catering, Tobacco and Allied Workers' Associations (IUF), was announced last week at a press conference in New York City. Walkouts are currently slated for Oakland, Raleigh, Philadelphia, Sacramento, Miami and Orlando, with workers in other cities potentially joining in. Globally, there will be strikes and protests in cities like Rabat; Morocco; Hong Kong; Seoul; Bangkok; Auckland; Brussels; Dublin; Rome; and Buenos Aires, among many others. With thousands of fast-food workers in the U.S. expected to take part in the one-day strike, employers in the fast food industry would be wise to make sure they are prepared to respond appropriately to these efforts.

Ongoing Confusion about Tips, Even from the White House

Recently, I explained that revising the FLSA regulations will not be easy, and highlighted tip credits as one such area in particular. In my last post, I discussed yet another case involving the miscalculation of wages for tipped employees.

The 20% Rule for Tips is Back in the News

We’ve covered tips and tip credits at length in the past here, here, here, and here, and I could probably blog all day, every day just to keep up with the volume of tip-related cases and actions that are filed nationwide, some high profile and others not. I want to highlight one of them here.

Disinformation And The "Tipped-Employee Minimum Wage"

A White House report promoting a substantial jump in the federal Fair Labor Standards Act's minimum wage perpetuates now-widely-disseminated propaganda about an alleged "tipped employee minimum wage" of $2.13 per hour.

Will Automatic Gratuities at Restaurants Be a Thing of the Past?

Automatic gratuities for large parties are commonplace in many restaurants, bars, and hotels throughout the country. However, as of January 2014, the Internal Revenue Service (IRS) now classifies these automatic gratuities as “service charges.” As a result, the automatic tips will be treated as regular wages and subject to payroll tax withholding.

Department of Labor Clarifies FLSA Coverage for Domestic Service Employees

In September 2013, the U.S. Department of Labor (DOL) published revised regulations concerning application of the federal Fair Labor Standards Act (FLSA) to employees providing in-home companionship services to adults. According to the DOL, the new regulations reflect the fact that the home care industry for elderly or otherwise compromised individuals has grown significantly since 1975, the year in which the DOL last promulgated regulations concerning such domestic service employees. The new regulations, which go into effect on January 1, 2015, extend coverage to a significant number of workers in the home care industry who were previously considered exempt from the FLSA's minimum wage and overtime requirements.

U.S. DOL's Final Rule Limiting Domestic Services Imposes Heavy Burden on Household Direct Hires

Executive Summary: Individuals and families who for years have directly employed domestic workers to care for elderly or ill family members will see their labor costs increase dramatically beginning January 1, 2015. Under the U.S. DOL's Final Rule Limiting Domestic Services, the Fair Labor Standards Act's "companionship exemption" will only cover workers whose primary duty is "eldersitting" and not "care" services. The Final Rule also provides detailed interpretations of "hours worked" rules as applied to these workers. Even before January 1, 2015, in states that follow U.S. DOL hours worked rules, this may expose individuals and families to claims by state Departments of Labor and lawsuits by plaintiffs' lawyers under state law.

Final Rule Expands Application of the Fair Labor Standards Act’s Minimum Wage and Overtime Pay Provisions to Domestic Service Workers

The U.S. Department of Labor (DOL) recently revised its own regulations to significantly narrow the definition of what it called “companionship services” so that many direct care workers — such as certified nursing assistants, home health aides, personal care aides, and other caregivers — will be protected by the Fair Labor Standards Act (FLSA) as of January 1, 2015.

2015 Will Usher In Increased FLSA Liability for Home Health Care Agencies

On Tuesday, September 17, 2013, the U.S. Department of Labor (DOL) issued a final rule extending the Fair Labor Standard Act’s (FLSA) minimum wage and overtime protections to an estimated two million home health care workers. Scheduled to take effect on January 1, 2015, this amendment narrows the FLSA’s “companionship” exemption.

Legal Alert: Companionship Exemption for Agency Employed Home Care Workers Ends Effective January 1, 2015

Executive Summary: On September 17, 2013, the U.S. Department of Labor (DOL) issued its long-delayed Final Rule revising its regulations to eliminate the Fair Labor Standards Act's (FLSA) companionship exemption for agency-employed direct care workers. While the effective date of the revisions is postponed until January 1, 2015, home care agencies will be exposed to significant wage and hour liability they never had before.

Coyote Ugly Bouncers Join the Tip-Pool Dance

A federal judge in the Middle District of Tennessee recently held that bouncers (sometimes referred to as “security guards”) at Coyote Ugly Saloons were properly permitted to participate in tip pools with bartenders, barbacks, and waitresses. The holding in Stewart v. CUS Nashville, LLC turns on the Coyote Ugly bouncers’ unique job duties, which require them to have significant customer interactions that differ from the duties of most bouncers in restaurant and retail settings.

Healthcare Industry Legal Alert: The Companionship Exemption for Agency Employed Home Care Workers May End As Early As This Month. Are You Prepared to Defend Your Agency Against the Lawsuits That Will Follow?

Executive Summary: It has been reported that the Department of Labor (DOL) will issue a rule this month revising its regulations to eliminate the Fair Labor Standards Act's (FLSA) companionship exemption for agency-employed home care workers. This rule will expose home care agencies to significant wage and hour liability they never had before. Yet, agencies can take steps to limit their exposure to individual and class action lawsuits for overtime, other violations of the FLSA, and accompanying state law claims.

USDOL Still Barred From Challenging "Service Writer" Exemption

Readers will recall that, in April 2011, the U.S. Labor Department declined to adopt an interpretation proposed in 2008 that would have acknowledged the federal Fair Labor Standards Act overtime-exempt status of employees doing the typical work of service writers, service advisors, etc. in automobile dealerships and truck dealerships. Prospects were that USDOL would reverse an enforcement policy of two decades' standing and would begin challenging the FLSA Section 13(b)(10)(A) overtime exemption as applied to these workers.

Appellate Court Invalidates Auto Dealership's Method Of Paying Service Technicians

In an unpublished decision, the California 2nd District Court of Appeal held that that piece-rate-paid employees are entitled to separate hourly pay for “waiting” time. The case involved a class of 108 automobile service technicians who worked for Downtown LA Motors, LP (DTLA), a Mercedes-Benz dealership. Gonzalez v. downtown LA Motors, LP.

Another Celebrity Chef Runs Afoul of Tip Pooling Rules

Shortly after my co-author, Bill Pokorny, wrote about celebrity and Iron Chef Mario Batali’s multi-million dollar settlement of a class action tip pooling lawsuit, another celebrity chef here in Chicago was sued for violating tip pooling laws. In March 2012, a lawsuit was filed against Master Chef Graham Elliot by 14 former employees over tip pooling requirements at his self-titled restaurant.

Enforcement Push Coming On "Service Writers", "Service Advisors"?

Readers will recall our April 2011 newsletter and blog post regarding the U.S. Labor Department's having declined to recognize the overtime-exempt status of vehicle-dealership employees typically called "service writers", "service advisors", or "service salesmen". In so doing, USDOL appears to have revived its previously-abandoned interpretation that the federal Fair Labor Standards Act's Section 13(b)(10)(A) does not apply to employees whose role is to diagnose the mechanical condition of or to determine service needed by a vehicle, to assign service work to employees, to monitor their progress and results, and otherwise to take responsibility for the service work.

Legal Alert: New Authority Concerning Tax Treatment of Tips

The Revenue Ruling discusses the assessment of employer FICA taxes on tips, including the application of section 3121(q) of the Internal Revenue Code (the "Code") and the application of the credit allowed under section 45B of the Code, but warns that it is first necessary to determine whether a payment is actually a "tip" for these purposes, noting that it makes no difference what the payment might be called. Even though described as a "tip," a payment that constitutes a "service charge" is wages, and is subject to withholding and reporting as such.

Senators Move To Preserve FLSA's "Companionship" Exemption

There have been further developments regarding the U.S. Department of Labor's proposed regulation that would drastically limit the Fair Labor Standard Act's Section 13(a)(15) "companionship" exemption. A collection of our posts relating to these matters can be accessed here.

Court Rejects Challenge to DOL's Interpretation That Mortgage Loan Officers are Non-exempt

I wanted to give our readers a quick update on the status of mortgage loan officers. In Mortgage Bankers Ass’n v. Solis, a federal district court in Washington D.C. recently rejected a challenge to the March 2010 DOL administrator’s interpretation that mortgage loan officers do not generally meet the administrative exemption under the FLSA. As previously mentioned, on March 24, 2010, the Wage and Hour Division (WHD) announced it was no longer issuing opinion letters in response to specific questions but would issue administrative interpretations containing general interpretations of the law and regulations.

Mario Batali Restaurants Settle Tip Pool Lawsuit For $5.25 Million

The latest news in celebrity chef wage and hour litigation is that eight New York restaurants owned by Mario Batali have agreed to settle $5.25 million to settle a class action lawsuit alleging that they illegally withheld tips from hourly service workers.

Justices Deny Review of Applebee's Tip Credit Ruling

In May, my partner Staci reported on a ruling against Applebee's by the 8th Circuit Court of Appeals, holding that tipped employees who spent more than 20 percent of their working time on nontipped activities like cleaning restrooms were entitled to the federal minimum wage of $7.25 per hour. Applebee's asked the U.S. Supreme Court to review the ruling, arguing that the Eighth Circuit incorrectly deferred to the U.S. Department of Labor's "informal interpretation" of its FLSA regulations in its 1988 Field Operations Handbook, and that as a result it applied an "utterly unworkable standard that has no basis in the text or purpose of the FLSA and that will impose crushing administrative and financial burdens on restaurants and other employers of tipped employees." Last week, the Supreme Court turned down Applebee's petition, leaving the Court of Appeals' ruling intact.

Supreme Court Refuses "Tip Credit" Appeal

In a move that could have a significant impact on employers with tipped employees, the Supreme Court rejected an appeal over "tip credit" practices.

Clock Now Ticking On "Companionship", Live-In Domestic Restrictions December 31, 2011 02:52

The U.S. Labor Department has officially published the proposed provisions that would drastically limit the federal Fair Labor Standards Act's exemptions for "companionship" workers and live-in domestic employees. As we have reported, adopting these proposals in their current form will mean that the proportion of such companions and domestic-service workers who are exempt from that law's minimum-wage and/or overtime requirements will be far smaller than it is today.

"Service Writers" And Similar Workers: Good News/Bad News

Various news items published last Friday afternoon intimated that a part of the 2012 federal omnibus appropriations law now exempts automobile-dealership service writers and similar employees* from the federal Fair Labor Standards Act's overtime requirements. Those reports appear to have been mistaken so far as we can tell, but the spending provision does contain at least some good news in this respect.

Regulation Proposed to Limit FLSA's "Companionship" Exemption

As we suspected, efforts to eviscerate the federal Fair Labor Standards Act's Section 13(a)(15) "companionship" exemption have now formally moved to the regulatory arena. The U.S. Labor Department has proposed a regulation that would limit the exemption to a far-narrower segment of those employees who work as in-home caregivers. This move no doubt reflects a political judgment that legislative measures to amend the FLSA itself (about which we wrote in June) would not emerge from Congress.

The Future of Tip Credit – And The Businesses That Depend Upon It

The U.S. Supreme Court is being asked to decide what amounts to the future of tip credit for many businesses – particularly in the hospitality industry. In short, the issue is whether an employer can continue to pay tip credit employees on a tip credit basis if they spend more than 20% of their work time on duties that did not produce tips.

Is Your "Tip Credit" A Time Bomb?

Section 3(m) of the federal Fair Labor Standards Act allows a portion of the employee's FLSA-required minimum wages to consist of tips. Unfortunately, it is all-too-common for employers to make expensive mistakes where tips are concerned.

"Fissured Industry" Homebuilders Feel FLSA Heat

News that some of the nation's preeminent homebuilders have received information demands from the U.S. Labor Department under the federal Fair Labor Standards Act has drawn a variety of unhappy reactions. But whatever one thinks about the wisdom, appropriateness, timing, or manner of DOL's move, the fact is that the administration has had the construction industry in its FLSA sights for some time now.

Wage and Hour Division Issues New Regulations Affecting Tip Credits

New regulations issued by the Wage and Hour Division of the Department of Labor (DOL) interpreting the Fair Labor Standards Act (FLSA) recently went into effect; but the National Restaurant Association (NRA) and other industry groups are challenging the regulations.

Restaurant Association Sues to Block Tip Credit Rules

On April 5, 2011, the U.S. Department of Labor published new final regulations that among other things require employers to give new detailed notices to tipped employees in order to credit tips toward the minimum wage. The new regulations took effect on June 5, 2011. Yesterday, June 16, 2011, the National Restaurant Association, the Council of State Restaurant Associations and the National Federation of Independent Businesses filed a lawsuit against the DOLseeking to block enforcement of the new rules. National Restaurant Association v Solis (PDF).

DOL's New Tip-Credit Interpretations

The federal Fair Labor Standards Act's "tip credit" was among the many topics addressed by the U.S. Labor Department's recent final rule. DOL's tip-related pronouncements are a mixed-bag for employers.

USDOL Changes Tip-Credit Interpretations

The federal Fair Labor Standards Act's "tip credit" was among the many topics addressed by the U.S. Labor Department's recent Final Rule. DOL's tip-related pronouncements are a mixed-bag for employers.

What To Do About "Service Writers" And Similar Employees?

The federal Fair Labor Standards Act's Section 13(b)(10)(A) provides an overtime exemption for "any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles, trucks, or farm implements, if he is employed by a nonmanufacturing establishment primarily engaged in the business of selling such vehicles or implements to ultimate purchasers."

Bill Would Compel Higher Cash Wages For Tipped Employees

A bill introduced recently by U.S. Representative Donna Edwards (D. Md.) would amend the federal Fair Labor Standards Act to require many employers to boost their direct cash payments to tipped employees by 76% within 90 days after passage, even though these employees are already receiving (by law) at least the FLSA minimum wage in combined tips and cash wages. A year later, the cash-wage requirement would be $5.00 (135% higher than the current level). In two years, the figure would increase to $5.50 (158% higher than today) or 70% of the FLSA minimum wage, whichever is more. H.R. 631 would be known as the WAGES Act ("Working for Adequate Gains for Employment in Services").

Auto Dealers: "It's Always Something!"

Just when you think you have everything under control, some new problem or challenge comes along. It is that way with many things and the law is no exception. The federal-wage hour law, called the Fair Labor Standards Act (FLSA), was passed in 1938, so you would think that in the last 70+ years, the courts and the Department of Labor have resolved every issue once and for all. Unfortunately, that is not the case.

Dealership Update: Extra Pay For A Courtesy Inspection?

A dealership recently received a demand letter from an attorney for a former technician. In the letter, the attorney threatened to sue the dealership because it had failed to pay the technician extra money to conduct "courtesy inspections." Even though the technician had earned well in excess of the minimum wage and was exempt from overtime, the attorney insisted that the dealership was legally obligated to pay the technician for the extra work performed.

FLSA's "Companionship" Exemption In Peril.

If a recently proposed amendment becomes law, the federal Fair Labor Standards Act's Section 13(a)(15) exemption for certain "companionship" employees will essentially be eliminated.

Dealerships Working 24/7: Issues to Keep In Mind.

Many Toyota dealerships have announced that they will remain open 24 hours a day in order to fix the accelerator problem that has prompted the recent recall of several models. This unprecedented step is likely to raise a number of employment law issues for the affected dealerships, and may serve as a model for any other companies that may face similar issues in the future.

Are Your Tipped Employees Doing Tipped Work?

The wage and hour laws are outdated and compliance is exceedingly difficult in light of the way in which most hotels and restaurants are required to operate. But, you already knew these facts. Recent tip credit and tip pooling cases continue to highlight the problems and we will be addressing tipped employee issues in this and future editions of the Hospitality eAuthority.

Retail Industry Update: How Did They Manage? Part Two.

In the last issue of Retail Industry Update (March, 2009) we looked at the facts of Morgan v. Family Dollar Stores, an overtime lawsuit, which resulted in a jury verdict of over $35 million. The case was affirmed on appeal, and turned principally on the issue of how much actual control store managers had over the day-to-day operations in their outlets.

Dealership Update: Out of the Frying Pan, Into the Fire.

As the economy shows no immediate sign of recovery, dealers continue to look for ways to reduce their expenses. One area that they usually focus on is labor costs. Most dealers have already trimmed their workforces by not replacing employees who have left, or by out-and-out layoffs or reductions-in-force. Some dealers have also revised or restructured employee pay plans to reflect the current economy.

Hospitality Labor Letter: Sailing Away With the Tips.

Cutting into potential profits, New York's highest court rules that restaurants may not pocket mandatory service charges that are represented to customers as gratuities for the wait staff.

Implications in Applebee's Case Still Worrying the [Hospitality] Industry.

In our October/November issue, we reported on a troubling interim decision by a federal district court judge in Missouri. The case involved pay for bartender Gerald Fast, and focused on two issues: whether the restaurant's automated timekeeping resulted in off-the-clock work (referred to as "Appletime"); and whether the restaurant unlawfully applied the federal tip credit to non-tipped work the bartender was required to do, in addition to his other duties.

Is $2.13 An Hour Enough? Higher State Minimum Wage Rates Impact Tip Credit.

With employers making adjustments in their payroll systems, some of those in the hospitality industry are wondering how a state’s higher minimum wage rate impacts the tip credit.

Is $2.13 An Hour Enough? Higher State Minimum Wage Rates Impact Tip Credit.

Many employers are nervously awaiting the possibility of a new federal minimum wage under the FLSA, while others must deal with increases already passed at the state level.

Both Workers and Employers Should Know Tip-Pooling Laws.

Tip pooling is a way of life in certain establishments. Tip-oriented businesses from restaurants to golf courses can, under the law, require tipped employees to share that money with other employees.