by Wendy McGuire Coats and Rochelle Nelson
What kinds of employment-related issues are other restaurants facing? Here’s a quick look this summer’s court activity.
No Deductions in Tips for Cash Deliveries.
A restaurant chain came under fire for violating federal wage and hour laws by deducting cash handling fees from its employee’s tips. The restaurant withheld a percentage of the credit card tips customers gave servers in order to cover the restaurant’s expenses from receiving armored-car cash deliveries. The restaurant used the armored-car delivery service so that its servers could immediately take their tips in cash at the end of a shift, instead of receiving the tips in the employees’ biweekly paychecks. This practice was held unlawful because the using a cash delivery services was a business decision that could not be lawfully “charged back” to the employees and taken out of their credit card tips. Steele v. Leasing Enters., 5th Cir., 15-20139, 6/14/16.
It’s Called “Side Work” for A Reason.
A federal judge in Ohio dismissed the employees’ claim that a restaurant violated federal and state minimum wage law by requiring its wait staff to perform nontipped duties. Under the Federal Labor Standards Act (FLSA) and Ohio’s Minimum Wage Standards Act, employers can pay certain tipped employees a lower hourly rate and take a “tip credit” to meet the minimum wage standards. In order to take the credit, employees cannot spend more than 20% of their time engaged in non-tipped activities. The employees alleged that they spent 45 minutes to an hour of their time engaged in non-tipped activities like setting up chairs, laying down kitchen mats, preparing coffee, and wiping silverware and glasses. Rejecting the employees’ lawsuit, the judge explained that these activities were precisely the type of duties that the Department of Labor envisioned as “incidental” to the employees’ tipped duties. Craig v. Landry’s, Inc., S.D. Ohio, 1:16- CV-277, 6/21/16.
Properly Documenting Meal Credits.
A federal judge in New York found that a local takeout restaurant violated the Federal Labor Standards Act (FLSA) because it did not properly document the food expenses when it took a “meal credit.” The restaurant provided family meals before shifts but it did not document which employees had taken a meal and/or the actual cost of the provided meals. Under the FLSA, an employee’s wage can include the employer’s reasonable cost of a meal, if the meal is customarily provided by the employer. 29 U.S.C. § 203(m). However, this “reasonable cost” meal credit may not be more than the actual cost of the provided meal and the employer must retain records documenting the out-of-pocket costs it incurred. 29 C.F.R. § 516.27(a). The judge also cautioned that under the FLSA, meal credits can only be used to offset an employer’s minimum wage, and not the employer’s obligations to pay overtime. As a result, the restaurant owed wages and other damages for paying its employees sub-minimum wages. Hernandez v. JRPAC Inc., S.D.N.Y., 1:14-cv-04176-PAE, 6/9/16.
This article provides an overview of recent litigation. It is not intended to be, and should not be construed as, legal advice for any particular fact situation. If you have any questions about this article, or would like to receive our regular newsletters, please contact Wendy McGuire Coats (San Francisco) at firstname.lastname@example.org and Rochelle Nelson (Seattle) at email@example.com.
What’s on your plate? Curious about a specific legal trend you’re noticing in the food industry or have a question we could address in Legal Bites? We’d love to hear from you. Send your questions to firstname.lastname@example.org.