Kansas City Employment Lawyer Blog

Four former waiters with the famous Peter Luger Steak House in Great Neck, New York are suing the company, claiming the restaurant failed to pay them overtime and minimum wage for work done as far back as 2007.

The lawsuit, which was filed last week in the U.S. District Court in Central Islip, claims that Peter Luger's restaurant did not pay waiters for prep work performed before and after their shifts. The workers claimed that they were also not paid for time they spent working through their breaks. Finally, the workers argue that they had money deducted from a daily tip pool to pay kitchen staff.

The waiters' attorneys claim that the actions on the part of the restaurant management violated both federal and state labor law and should be punished by the Court overseeing the case. The lawsuit also seeks a class action certification to represent other former waiters and waitresses of the restaurant who were denied the money they were owed.

The basic rule of tips is that they belong to employees, not the employer. Employees cannot be obligated to hand over their tips or any part of them to the company, except as part of a legal tip pooling arrangement. Even then, the tip pool must meet certain requirements and the employer cannot be a part of the pool.

Tip pooling is a practice common in many restaurants and something we discussed in an earlier post about a similar lawsuit against Mario Batali that resulted in a whopping $5.25 million wage-and-tip class action settlement. The practice occurs when employees that work for tips, such as servers and bartenders, are required to share tips with others.

A tip pool is valid if and only if two requirements are met. First, the employee must be paid the tipped employee minimum wage (currently, $2.13/hour under federal law and different in each state). Second, and where Peter Luger is alleged to have gone awry, the tip pool must not be shard with managers or supervisors or with other employees who do not interact with customers. This includes those that work in the back of the house, such as kitchen staff, cooks, dishwashers, janitors and chefs. Only those that work in the front of the house, such as waiters, waitresses, bartenders, bussers and hostesses are allowed to share in the tip pool.

Sources:

Former Waiters Sue Peter Luger Steak House Over Pay by Carrie Mason-Draffen, published at NewsDay.com on March 18, 2013.

Former Waiters Are Suing Peter Luger Steakhouse by Linette Lopez, published at BusinessInsider.com on March 19, 2013.

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A former personal assistant of Lady Gaga recently filed a lawsuit against the entertainer and her touring company claiming she was denied hundreds of thousands of dollars in overtime pay under the federal Fair Labor Standards Act (FLSA).

The assistant, Jennifer O'Neill, claims that her position did not qualify for any exception to overtime laws because she did not exercise any independent discretion or judgment in her role. She claimed she worked around the clock for a fixed salary of only $75,000 per year. The woman claimed that she was on call 24/7 and is asking for $380,000 in overtime for the more than 7,100 overtime hours she worked while following the pop star around the world.

The lawsuit has been pending since the end of 2011, but recently received new attention after Lady Gaga's attorneys filed a motion for summary judgment. The case also received renewed attention after a copy of Gaga's deposition surfaced.

According to Lady Gaga, the assistant and she were close friends before she was fired for being lazy and generally bad at her job. Gaga appears to have lost her cool in the deposition, using the "F-word" liberally and referring to Ms. O'Neill as a "disgusting human being." Gaga also claimed that Ms. O'Neill lived in the lap of luxury during the 15 months she worked for her, staying in luxury hotels, eating at the best restaurants and getting free clothing from famous designers.

Though all of these things may be true, the Fair Labor Standards Act is unconcerned about perks associated with demanding jobs. The fact of the matter is that if an employee is non-exempt and worked overtime hours that were not reimbursed, the employer is liable for the back pay.

Some experts believe Gaga hurt herself during the deposition, admitting that the job did not require much if any independent judgment and discretion which means the position likely was non-exempt. Furthermore, Gaga indicated the position required that Ms. O'Neill be on-call 24 hours a day.

The fight will likely be over the nature of Ms. O'Neill's on-call time, whether it was her own time or not. If her off time was for her to use as she pleased, with only periodic interruption, then Gaga may not have to pay up. If not, then Gaga may owe a boatload.

Sources:
Lady Gaga proclaims herself 'queen of the universe' in F-bomb deposition by Debra Cassens Weiss, published at ABAJournal.com on February 5, 2013.

Lady Gaga Rants Under Oath in Pay Battle with Former Personal Assistant by Bruce Golding, published at NYPost.com on February 2, 2013.

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A potentially game changing case is making its way towards a conclusion in California and it could have a serious impact on how internship programs across the country are managed.

The case was launched back in September of 2011 by two interns with Fox Searchlight, a film studio that was working on producing the Oscar nominated hit, Black Swan. The interns sued, claiming that the company's unpaid internship program violated minimum wage and overtime laws. The suit picked up even more steam when, late last year, the plaintiffs attempted to expand the case into a possible class action against the entire Fox Entertainment internship program. Experts speculate that the group is seeking at least $5 million in damages.

Last week the plaintiffs filed a motion for summary judgment as well as a motion for class certification, pushing to have this case act as a test case. Fox filed its own summary judgment motion seeking to have the case tossed.

The plaintiffs' argument boils down to the idea that the interns that worked for the production company displaced paid employees and that the internship program, then in place, was not actually a training program according to the terms laid out by the Labor Department.

One issue that complicates the case is the unusual structure created when studios begin producing a new picture. Rather than having Fox directly responsible for hiring and firing employees, a new corporation is created that has little if any assets and is assigned to manage the task. That new corporation exists only for the duration of the production and once the film is finished, the corporate entity is completely disbanded. Fox has argued that the company created to handle production of Black Swan was the real employer and, as such, Fox should be excused. The plaintiffs claim that the company was a mere figment only intended to avoid liability on the part of Fox. The plaintiffs' complaint points out all the ways that Fox still controlled the details of the film and acted as a puppet master, pulling all the strings of the company created to manage the film production.

One of the interns at the center of the case is said to have frequently done work that others were being paid to do and that the internship program was in fact an excuse to not pay young workers who were willing to do grunt work as needed. They said that had the intern not done the work, then other paid employees would have had to do it. Both interns reported working five days a week from 9 in the morning to 7 at night, all without pay.

Oral arguments in the case have been set for May and many companies, not just those in Hollywood, will be watching to see the outcome. If the court certifies the class action or issues a summary judgment, sweeping changes to internship/trainee programs across the country could be in store.

Sources:
Hollywood Interns: Fox Lawsuit Likely to Break Ground by Eriq Gardner, published at HollywoodReporter.com on February 21, 2013.

Fox Intern Lawsuit Could Mean 'Swan' Song For Unpaid Labor In Glamour Industries by Christopher Zara, published at IBTimes.com on August 14, 2012.

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It was recently announced that a wage-and-hour lawsuit by a group of Indianapolis hotel workers against the major national staffing company that employed them has been settled. The workers had argued they were never fully paid for housekeeping and other work they did for nine hotels in the Indianapolis area that were staffed by Hospitality Staffing Solutions.

The wage-and-hour claim was filed last January in federal court and totaled between several hundred and several thousand dollars per worker. Originally, the nine hotels at issue were named as defendants, but they were eventually dropped from the case. The actual terms of the settlement remain confidential.

The hotel workers filed suit after they say Hospitality Staffing Solutions violated several labor laws. Some of these violations included HSS telling workers to continue working off the clock and requiring some workers to clean a certain number of rooms even if that meant working through scheduled break times or finishing after they had already clocked out. The complaint also alleged that HSS routinely failed to pay overtime for work done after normal working hours.

Since the lawsuit was filed it has been revealed that all the workers in the case were Latinos and that many did not speak English. Such groups are especially vulnerable to exploitation by those violating labor laws. Immigrants, or those without a perfect grasp of the English language, may not fully understand their rights or feel comfortable speaking up when they are treated in a way they do not like. That's why it's critical if you're a part of such an easily victimized group to seek the advice of an experienced wage-and-hour attorney who can offer guidance on what steps you should take to protect yourself.

Unite Here, the group that worked with and organized the plaintiffs, says that the lawsuit was a positive thing for the workers who now feel like they have held the company responsible for its actions. Moreover, the hotels where the work took place have since given raises to employees and now offer better benefits to housekeeping staff. One such hotel, the Marriott Indianapolis Downtown, has stopped working with HSS entirely and has given its housekeeping staff raises of between 7 and 10 percent.

Though it's a shame the 16 workers had to spend any time working without proper compensation, it appears as if their lawsuit has accomplished a lot, not only for themselves, but also for many other hotel employees in the Indianapolis area now benefitting from more attentive employers.

Sources:
Indianapolis Hotel Workers Net Settlement in Union-Backed Wage-and-Hour Lawsuit published at Businessweek.com on December 12, 2012.

Indianapolis Hotel Workers Settle Lawsuit Over Wage Theft Allegations by Dave Jamieson, published at HuffingtonPost.com on December 12, 2012.

Historic Lawsuit Settled for Hotel Workers published at UniteHere.org on December 12, 2012.

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A new lawsuit accused Wal-Mart Stores and two cooperating staffing agencies of forcing temporary employees to show up early for work, stay late, and work through lunch. The suit further alleges that the staffing agencies, Labor Ready-Midwest Inc. and QPS Employment Group Inc., failed to provide workers assigned to Wal-Mart with proper wage payment notices that are required by the Illinois Day and Temporary Labor Services Act.

The proposed class action suit against the world's largest retailer was filed in a Chicago, Illinois federal court. The suit claims that since October 2009, Wal-Mart and the staffing companies violated minimum wage and overtime laws in instances involving several hundred temporary workers. Wal-Mart did not keep accurate records of workers' time as required by federal and state law and never provided workers with forms verifying the hours they worked. The filing also says that Wal-Mart failed to pay temporary workers a minimum of four hours' pay on days a laborer was contracted to work, but was not utilized for a minimum of four hours. Wal-Mart has so far declined to comment, saying it needs time to review the lawsuit.

The lawsuit claims violations of the Fair Labor Standards Act, the Illinois Wage Payment and Collection, and the Illinois Day and Temporary Labor Services acts. It also claims a violation of the Illinois Minimum Wage Law. The plaintiffs are asking for all unpaid wages for the workers and an injunction that prevents Wal-Mart and the staffing agencies from violating such laws in the future.

The suit is just the latest trouble for Wal-Mart which has faced protests across the country as workers walked off the job on Black Friday to protest the ever-increasing hours they are forced to work over the Thanksgiving holiday weekend. The groups have complained generally about the difficult working conditions faced by those at the giant retailer.

Back in 2008, Wal-Mart agreed to pay as much as $640 million to settle multiple federal and state class-action lawsuits alleging it treated workers unfairly by depriving them of wages. In separate litigation last year, the U.S. Supreme Court shot down an attempt at suing the company for gender discrimination against its female employees.

Sources:
Wal-Mart Hit with Minimum Wage Lawsuit as Walkout Threat Looms published at Reuters.com on October 22, 2012.

Temp Workers File Class-Action Lawsuit Against Wal-Mart Over Wages by Allison Horton and Michael Lansu, published at SunTimes.com on October 22, 2012.

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Department of Labor Finds that Employees who Wear Safety Equipment Must be Paid to Don and Doff that Equipment

According to a recent lawsuit, Darden Restaurants, the company behind the success of restaurants such as Olive Garden, LongHorn Steakhouse, The Capital Grille and Red Lobster, violated federal labor laws by underpaying thousands of servers across the country. The company has more than 2,000 restaurants in North America that employ about 180,000 people.

The lawsuit was filed in a Miami federal court and seeks to create a class action to represent all current and past employees who have worked for Darden from August 2009 through the present. Attorneys have said they believe the affected group of Darden employees will easily top 1,000 people. The suit seeks potentially tens of millions of dollars in back pay and other compensation, plus interest and attorney's fees.

The filing states that servers frequently arrived for shifts as scheduled, but were not allowed to clock in until customers began arriving. Some were even forced to clock out and continue working without pay. Additionally, employees who worked beyond 40 hours a week were not paid 1.5 times their regular pay as required by law. Tipped employees refilled salt shakers, rolled silverware in napkins and vacuumed for more than 20 percent of their work time. Engaging in such "side work" for more than 20 percent of your day for tipped employees entitles them to receiving at least the minimum wage; something Darden did not pay.

An attorney representing the plaintiffs said that Darden consistently exhibits behavior of not paying its employees the minimum wage and fails to follow federal labor laws. For its part, Darden issued a statement saying that the suit flies in the face of the company's values. The company spokesman said that, "Each of our brands complies with all federal and state labor and employment laws, and we're proud of our standing as an employer of choice."

However, the recent suit is not the first time such allegations have arisen. The Department of Labor found violations similar to those claimed in the lawsuit in several investigations, including a 2011 probe where the company agreed to pay more than $25,000 in back wages to Olive Garden workers in Texas. Darden was eventually given a $30,800 fine in that case. In another 2011 incident, Darden paid out more than $27,000 in back pay and a $24,000 fine for labor violations involving 109 current and former workers from Red Lobster in Lubbock, Texas.

There are currently lawsuits pending against Darden in several states, including some in Illinois and New York, though the recent suit in Florida is the first to seek representation of employees across all of Darden's major restaurant brands.

Sources:
Olive Garden, LongHorn Workers Sue Company Alleging Wage Violations by Curt Anderson, published at HuffingtonPost.com on September 6, 2012.

Olive Garden Parent Company Sued for Underpaying Workers by Steve Barnes, published at TimesUnion.com, September 6, 2012.

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According to USA Today, a new law recently passed by Congress and signed by the President will allow companies to avoid contributing billions of dollars owed to the already underfunded employee pension funds. Though this is meant to free up money for the companies in the short-term, the long-term health of the pension funds that millions of Americans count on for their retirement is in jeopardy.

That change also includes language which will allow companies to estimate their pension fund earnings by assuming the interest rate will be near the average of the past 25 years, rather than the past two years when interest rates have been extremely low. Since they will now be able to assume that their pension investments are earning higher profits, they will not be required to contribute as much money as before. The Society of Actuaries, a group which assesses financial risk, estimates that the new law will cut the $80 billion in required company pension contributions this year by no more than $35 billion. Though it's certainly a big number, it should be viewed in the context of the $1.9 trillion companies have invested in these plans.

Advocates of the plan are saying that the law will hopefully keep some companies from dropping their pension plans entirely and that, in the end, it will prove to be a good thing for many people. Moreover, business representatives said by freeing up money, the law will allow them to hire more workers, build more factories and generally help lift up the ailing economy.

Employee advocates and union leaders were opposed to the measure but found themselves outgunned given the current stalled economy. A spokesperson from the AFL-CIO said they supported the legislation. They say that forcing companies already in precarious positions to make pension contributions they cannot afford would not do their members any good. AARP lobbyist Debbie Chalfie echoed the same feelings, saying that while the organization is concerned about contributions to pension plans, "We want to make sure employers continue offering these plans."

According to a poll by the Associated Press, almost 50% of Americans have said they are counting on their pension to fund their retirement. Despite this, it is clear that times are rough for pension funds across the country. In 2008, barely 15% of private sector employees participated in a defined benefit plan - those plans that guarantee monthly retirement payments. This represents a major decline from the 38% that participated in such plans in 1979.

Four of every five of the 27,000 pension plans insured by the government's Pension Benefit Guaranty Corporation were deemed underfunded in 2009, meaning their liabilities exceeded their assets. According to the PBGC, the average plan carried just 81 percent of the money it needed, a record low. More bad news is that one in four companies has frozen benefits, meaning employees can no longer receive bigger checks in their retirement by working longer or getting promotions.

Workers have not been totally left out in the cold though, as this period saw a dramatic rise in the number participating in defined contribution plans, such as 401(k)s. However, these plans are seen as less beneficial to workers because workers themselves contribute the bulk of the money and bear the risk of poor investment decisions.

Sources:
New Law to Give Companies a Break on Pensions by Alan Fram, Associated Press, published at USAToday.com, July 9, 2012.

Looking for Cash, Congress Finds Some in a Corporate Pension Rule Tweak by Mary Williams Walsh, The New York Times, June 29, 2012.

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According to a recent article by NBC News, an increasing number of workers believe that putting in time at work does not result in more financial benefit for them. Studies indicate there has recently been a spike in wage and hour violation claims by employees. The spike has several likely causes: the down economy, an increase in enforcement by government officials and a disregard on the part of employer's of overtime pay provisions.

So far this year a record has been broken for the number of suits filed under the Fair Labor Standards Act (FLSA), a federal law which governs wage and hour requirements. Thus far 7,064 cases have been filed, that's up from the 7,006 cases that were filed for the entirety of last year and drastically up from the 2,035 cases filed only a decade ago.

The increase in number of complaints has also resulted in an increase in the amount of damages collected by the Department of Labor's wage and hour division. The last fiscal year saw the agency raking in over $224 million in back wages from employers affecting more than 275,000 workers.

Though the increase in claims and compensation are a good thing, there's still much room for improvement. Legal experts agree that many workers still have a difficult time asserting their legal rights. Those employees who work for low wages are especially vulnerable and often do not make enough money to attract the interest of an attorney. It's precisely these instances that attract the DOL's attention. The agency typically handles between 125 and 150 cases each year, but lately has been stepping up its efforts to pursue litigation against employers breaking the law. The DOL has been agreeing to take on more cases affecting low-wage workers, migrant and seasonal laborers, workers with limited English language skills and those who are otherwise unaware of their legal rights.

The majority of wage and hour cases revolve around misclassification of employees, uncompensated work done off the clock and a miscalculation of overtime pay. One headline-grabbing case involved Wal-Mart's decision to pay nearly $5 million in back wages and damages to more than 4,500 employees who were misclassified as exempt from overtime pay. Though this was a big settlement, it was dwarfed by a 2008 deal where the retail giant agreed to pay $352 million to settle claims that it did not allow workers to take required meal and rest breaks.

The DOL has said that such misclassification issues will not be swept under the rug and will instead be receiving increased attention. When violations are discovered, the DOL says it will take action to remedy the problem. To avoid continued problems, federal and state laws should be clarified to make it obvious how to classify certain employees, taking the guesswork out of paying overtime.

Source:
Growing Number of Workers Complain about Being Shortchanged by Eve Tahmincioglu, published at Today.com, July 26, 2012.

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More Developments Regarding "Gang Time" Violations in the Meatpacking Industry

According to a recent decision handed down by the U.S. Supreme Court, pharmaceutical sales representatives fall under the U.S. Department of Labor's (DOL) definition of "outside salesmen" and are not owed overtime compensation.

In this case, two sales representatives of a large pharmaceutical company sued their employer, alleging that they were owed overtime wages. GlaxoSmithKline hired Michael Christopher and Frank Buchanan as pharmaceutical sales reps (PSRs) in 2003. GSK uses PSRs to call on physicians and encourage them to prescribe GSK's products. PSRs typically work outside of a normal GSK office and spend most of their time traveling around visiting doctors. Christopher and Buchanan say they visited eight to 10 physicians each day and worked an extra 10 to 20 hours extra per week with no overtime wages. Christopher and Buchanan filed a class action claim against GSK in the U.S. District Court for the District of Arizona in August 2008, seeking unpaid overtime

The pharmaceutical company argued the sales representatives were not entitled to overtime wages because they were classified as "outside salesmen," who are exempt from the federal law that requires payment of overtime wages. The Court agreed, holding that the sales representatives were outside salesmen and, as such, were not entitled to overtime wages.

The split decision by the high court was a surprise given that it meant rejecting the DOL's interpretation of its own regulations. The justices wrote that they found the DOL's interpretation "quite unpersuasive." They said that the offered interpretation was "flatly inconsistent" with the Fair Labor Standards Act. The majority opinion also rejected the claim that drug reps should be classified as nonexempt promotional employees. The reps claim they merely stimulate sales made by others and are not the same as outside salesmen. The Court said this was ridiculous, claiming that by the same logic a car salesman who asks his assistant to type up an order form should also be treated as a nonexempt promotional employee.

Justice Stephen G. Breyer wrote a dissent wherein he expressed his opinion that drug reps do not fall under the DOL's "outside salesman" definition. Breyer believes that drug reps provide information to doctors and, based on that information, doctors enter into nonbinding commitments to advise patients to take the recommended drugs. Breyer asks, "Where does the sale comes in?" He goes on to say that obtaining "a commitment to advise a client to buy a product is not to obtain a commitment to sell that product.

The Supreme Court decision is published for Christopher et al. v. Smithkline Beecham Corp., dba Glaxosmithkline.

Source:
Christopher et al. v. Smithkline Beecham Corp., dba Glaxosmithkline Argued April 16, 2012 - Decided June 18, 2012.

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More Developments Regarding "Gang Time" Violations in the Meatpacking Industry

Slaughterhouses Keep Churning Out Meat, but Workers are Often Injured in the Process

As we told you in our earlier article, Wage Lawsuit Filed Against Creekstone Farms, in April of last year, our Kansas City Overtime Law Firm filed a lawsuit in the U.S. District Court on behalf of workers Paz Sanchez and Elvis Posadas against Creekstone Farms Premium for unpaid wages and overtime.

Our lawsuit received a fair bit of national press attention at the time, as has a subsequent suit recently covered by The Associated Press. In an article that appeared in the Syracuse Post-Standard, the author described a new suit by our firm against a slaughterhouse operated by the National Beef Packing Co. for unpaid wages and overtime. A suit has been filed in federal court against the Kansas meat-processing company's Liberal plant. The suit involves a class action representing some 2,000 workers who were wrongfully denied money to which they were entitled.

The issue, much the same as the previous Creekstone case, involves a practice that is all too common in the meat-packing industry, so-called "gang time," which pays workers only for the time that the production line is actually running. This cheats workers out of the significant time they must spend at the beginning and end of each shift, day in, day out, putting on and taking off protective gear. Though it may not seem like much, the monotonous task amounts to significant time lost for people that truly need the money.

The filings before the U.S. District Court in Kansas request certification of class-action status. Our firm sought to make this case a class action to best represent the interest of the thousands of employees at the Liberal plant. As in the Creekstone case, plaintiffs here are "similarly situated" meaning that they "...were together the victims of a single decision, policy, or plan." Bishop vs. Heartland Services, Inc., 242 F.R.D. 612, 614. Employees Valente Sandoval Barbosa and Carolina Gaytan were designated as representatives of the class, a group defined as all hourly meat-processing workers at the plant.

Our suit alleges that employees of the Liberal plant were systematically underpaid for their time. This includes the time it takes them to put on and take off their required protective gear during unpaid meal breaks, the time spent walking to and from production lines, waiting in line to use equipment and time spent waiting to clean and service equipment. We also intend to show that workers were not paid for time spent waiting while the production line was not running.

Our own Mark Kistler, said that the practice is often used by employers in the meatpacking industry saying that he is "well aware violations of the law in this industry are pervasive." Kistler added, "Unless and until meat processing employers stop breaking the law, I will be more than happy to sue them."

National Beef, the defendant in the new case, as well as the American Meat Institute, have not yet released any comment on the suit.

Source:

Kansas workers sue meat-packing plant over wages, by The Associated Press, published at Syracuse.com.

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Ongoing Lawsuit Against Creekstone Farms
Slaughterhouses Keep Churning Out Meat, but Workers are Often Injured in the Process

In April of last year, our unpaid overtime lawfirm, Brady & Associates, filed a lawsuit in the U.S. District Court on behalf of workers Paz Sanchez and Elvis Posadas against Creekstone Farms Premium Beef. Ms. Sanchez and Mr. Posadas were designated the representative plaintiffs for this potential class action suit. The plaintiffs seek to recover unpaid wages and overtime, as well as legal costs.

The Fair Labor Standards Act (FLSA) 29 U.S.C. § 216(b) provides the following for a cause of action:

Any employer who violates the provisions of section 206 or section 207 of this title shall be liable to the employee or employees affected in the amount of their unpaid minimum wages, or their unpaid overtime compensation, as the case may be, and in an additional equal amount as liquidated damages.

The practice at issue is that of "gang time." Creekstone Farms typically pays workers based on the time they are assigned to production lines, plus an extra ten minutes to get into the necessary protective gear for a meat-processing plant. Ms. Sanchez and Mr. Posadas contend that they, along with hundreds of other production employees of Creekstone, routinely spent far more than 10 minutes per day engaged in various work-related activities concerning protective gear and equipment during unpaid pre-shift, post-shift, and meal break times.

As our own Mark Kistler told the Associated Press, "the failure of an employer of food processing employees to pay the employees for all their compensable time is a common occurrence.... It seems the employers have an attitude of 'catch me if you can.'"

Our firm has achieved two victories since this lawsuit began. The first victory was in achieving a protective order against Creekstone when they made a discovery request for documents pertaining to the immigration status of our plaintiffs. We argued that courts have disallowed such requests under FLSA due to the "damage and prejudice" that would occur if discovery into immigration status was allowed. Magistrate Judge Gale agreed with us. As explained by the numerous federal judges who have made similar rulings, allowing such discovery would create the perverse incentive for an employer to violate both immigration and labor laws--the employer could hire undocumented workers with a wink and a nod, violate labor laws such as minimum wage and overtime statutes, then scare off workers from asserting their minimum wage and overtime rights with the threat of immigration-related discovery requests.

Our next victory was the conditional certification of our class this past February. Under federal law, the Fair Labor Standards Act provides to employees minimum wage and overtime rights. Section 216(b) of the FLSA allows for a "collective action" whereby "similarly situated" employees can opt into the case along with the original plaintiffs. We sought to have this suit certified as an FLSA class action on behalf of approximately 700 employees. Ms. Sanchez and Mr. Posadas were just two of many employees "similarly situated," i.e., all such employees were injured in the same way by the "gang time" practices of Creekstone. District Court Judge Melgren granted our motion for conditional certification.

Currently pending is our motion for class certification of related state-law claims for Creekstone's violations of the Kansas Wage Payment Act. That motion has profound implications for the case because if it is granted, members of the class of the hundreds of affected "gang time" employees will be entitled to participate in the success of the case unless they affirmatively opt out of participating.

In the meantime we encourage anyone who has worked for Creekstone Farms since 2008 to contact our labor law office by May 17, 2012, about being part of this class action.

Source:

Workers file lawsuit against Creekstone Farms, by the Associated Press, published at CJOnline.com.

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Workers in slaughterhouses face hard and relentless work. According to statistics, the meatpacking industry is one of the most dangerous industries. The stats reveal that it has the highest injury rate of any industry, including five times the national average of serious injuries. Because of the risk of a devastating injury to workers in the meatpacking industry, one would think that responsible employers would do everything they can do ensure that their employees are safe while they are working. That, however, has not proven to be the case.

Eric Schlosser reported back in 2001 that the meatpacking industry is notorious for discouraging injured workers from filing claims and seeking proper medical treatment. In an exclusive exposé on the ways that meat companies treat their employees, Schlosser told the story of Kenny Dobbins who worked for a subsidiary of ConAgra, the Montfort Beef Company. After spending two decades as a loyal employee, experiencing countless work-related injuries and continuing to work there, one day he suffered a heart attack on the job and was permanently disabled. As he was at home recovering and waiting to be compensated for his injuries, Montfort Beef Company fired him. Later, they agreed that a $35,000 settlement was sufficient for his 20-plus years of dedicated service. Now, Dobbins lives on a fixed income, with barely enough money to meet his monthly expenses.

Dobbins's story is just one of many sad cases in the meatpacking industry, showing that the major companies seem to value their bottom line over the safety and security of their employees. The company's profits are determined by how much meat is processed on a given day. That amount is determined by the rate or speed of the production line. Schlosser reports, "Once a plant is fully staffed and running, the more head of cattle slaughtered per hour, the less it costs to process each one. If the production line stops, for any reason, costs go up. Faster means cheaper--and more profitable." Obviously, the faster the chain runs, the more employees are at risk of injuries.

Several factors work to the advantage of the meatpacking employers. The demographics of the industry have changed over the years. It is now staffed mostly by migrant workers who do not speak English as a first language. Many may be in the country illegally and therefore they do not want to bring attention to their situation by complaining about unsafe working conditions. As a result, the employer can be fairly confident that an injured worker will not report his or her injury if the company actively discourages him or her from doing so.

Workers' compensation laws were enacted for just this kind of problem, to make sure that when an employee was injured on the job, they could receive adequate medical treatment, income during the recovery process and disability payments if necessary. However, recent reforms to workers' compensation laws have made it difficult for injured employees to receive these intended benefits. In Texas, the hub of the meatpacking industry, private companies are not required to participate in the workers' compensation program and injured employees are presented with a waiver to sign that waives the right to sue the company for any injuries. The employee can refuse to sign the waiver, which may result in the loss of employment and no access to proper medical care. The situation presents a Catch-22 for most employees. Workers in the meatpacking industry all over the country may potentially face this dilemma, while employers in the industry sit back and rake in the cash.

Source:
"The Chain Never Stops," by Eric Schlosser, published by MotherJones.com.

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Chinese Overtime, Bonuses and Incentive Pay: Not a Good Mix
Famous Chef, Mario Batali, Settles Tip Case for $5.25M

Most employers are required to pay time and a half to non-exempt employees for any work performed over forty hours in a workweek. One exception is the fluctuating workweek (FWW) method of paying overtime, known to many workers as "Chinese overtime." Under the FWW method, employees are paid a guaranteed straight salary for all work done during the week, no matter how few or how many hours were actually worked, as long as some work was done that week.

FWW employees are paid overtime according to the following method: For each workweek in which the employee works more than 40 hours, the employee's regular rate for that week is calculated by dividing her weekly salary amount by the total number of hours worked in that particular week. The employee is then paid one half of that rate for all time worked over forty hours in that workweek. This amount is then added to the employee's normal weekly salary, the total amount being the employee's gross salary for that week. The way this works out is that, the more hours an FWW employee works over forty in a week, the less she is actually making per hour.

Last year, the Department of Labor (DOL) considered a proposal to allow employers to pay FWW employees non-overtime bonuses and incentive pay, including payment of shift differentials, "without invalidating the guaranteed salary criterion required for the half-time overtime pay computation." Federal Register, Vol. 76, No. 65, at 18848 (Apr. 5, 2011). Many employers were in favor of this proposal, and the DOL was initially leaning towards its adoption.

On April 5, 2011, however, after receiving and reviewing public comments on the proposal, the DOL decided against adopting the proposed rule, finding as follows: "While the Department continues to believe that the payment of bonus and premium payments can be beneficial for employees in many other contexts, we have concluded that unless such payments are overtime premiums, they are incompatible with the fluctuating workweek method of computing overtime under section 778.114." Federal Register, Vol. 76, No. 65, at 18850 (Apr. 5, 2011). According to the DOL,

[T]he proposed regulation could have had the unintended effect of permitting employers to pay a greatly reduced fixed salary and shift a large portion of employees' compensation into bonus and premium payments, potentially resulting in wide disparities in employees' weekly pay depending on the particular hours worked. It is just this type of wide disparity in weekly pay that the fluctuating workweek method was intended to avoid by requiring the payment of a fixed amount as straight time pay for all hours in the workweek, whether few or many.

Federal Register, Vol. 76, No. 65, at 18850 (Apr. 5, 2011).

What does this mean for employees? If an employee is paid under the FWW and also receives bonuses or premium pay, such as shift differentials, from her employer, her employer's use of the FWW method may have been invalidated--meaning that her employer has been illegally paying her Chinese overtime and may well, therefore, owe her unpaid overtime wages. Employees paid under the FWW who suspect those payments may be invalid should seek the advice of an employment attorney.

What does this mean for employers? Employers who use both the FWW and some form of bonus or premium pay should reevaluate their pay policies. They may be exposing themselves to considerable liability.

Source:

Federal Register, Vol. 76, No. 65, at 18850 (Apr. 5, 2011).

In New York, it is reported that celebrity chef Mario Batali has settled a wage-and-tip class action law suit, believed to be the largest-ever in a New York wage-and-tip suit, by agreeing to pay $5.25 million on behalf of approximately 1,100 current and former workers, including waiters, captains and other employees that accused the restaurants of illegally deducting a portion of their tips to increase profitability. The law suit alleges that at eight restaurants that Mr. Batali co-owns with Joseph Bastianich, tip-skimming was commonly practiced. The restaurateurs did not respond for comment; however lawyers on both sides stated that, "The matter has been resolved to the satisfaction of all parties."

The suit alleged that Batali and Bastianich "misappropriated" 4 to 5 percent of each shift's wine and drink sales from the workers' tip pool. It is also alleged that the restaurants' unlawful "tip credit" practice caused employees' pay to fall below minimum wage and employees were not paid extra for their shifts that were more than 10 hours in duration.

With regard to the tip pool mismanagement, Richard J. Holwell, a judge in the matter, wrote in a ruling of a bartender informing he was told that "it was a policy across the Batali restaurant group" and that the funds "went to the house." The judge noted that the explanation to employees regarding this practice was that the tip money was taken to cover expenses for wine research and to pay for damages such as broken glassware. Judge Holwell went on to write that at a staff meeting, one of the executives "refused to justify the policy and said it was not going to change."

Other similar law suits have been filed recently, alleging that famous chefs and restaurants violated labor laws in New York and other locations. According to the filing, the settlement defines employees that are eligible to be included as any employee who worked at the restaurants as "captains, servers, waiters, bussers, back waiters, bartenders and/or barbacks from July 22, 2004 to Feb. 14, 2012."

The filing explains that, "Class members will receive a proportional share of the fund based on the number of hours they worked, the restaurant at which they worked, the percentage of total tips received during their employment, and whether they opted in to the collective."

Mr. Bastianich, who is the son of Lidia Bastianich, a featured cooking instructor on Public television, was also accused of encouraging employees at the Italian restaurant, Babbo, to retaliate against employees and named plaintiffs for filing the law suit. There are 10 named plaintiffs in the lawsuit and since the case was certified last year as a class-action case, 117 people have joined the case.

In a quote published last year by The Post, Bastianich said that he and Batali would not open another restaurant in New York, saying: "Money-hungry lawyers, through frivolous lawsuits, are shaking down the very foundation of Manhattan's restaurant industry."

Sources:

Mario Batali, Partner to Fork Over $5.25M to Waiters in Tip Dispute, by Bruce Golding, New York Post, March 7, 2012.

Mario Batali Agrees to $5.25 Million Settlement Over Employee Tips, by BENJAMIN WEISER, New York Times, March 7, 2012.

During the last few years, which represent the worst economic downturn since the Great Depression, many workers have been able to benefit from state unemployment insurance (UI) programs. UI benefits prevent middle class Americans from sliding into the depths of poverty by providing them a portion of their former wages while they look for new work. These programs not only serve the worker, but also help shore up local economies.

Recently, Congressional House Republicans have proposed several changes within H.R. 3630, Middle Class Tax Relief and Job Creation Act of 2011. These proposals would present new obstacles to obtaining state UI benefits as well as reducing the duration of federal benefits. The argument is that the UI program does not need fixing. It is operating as intended, not only by keeping Americans out of poverty, but by working to keep the unemployed more active in pursuing new work.

Under the newly proposed provisions, workers are subjected to mandatory drug tests and they are disqualified if they have not finished high school. It also provides for states to investigate new workfare-type requirements. The point is that participation in UI programs by unemployed Americans has already been insured through their work. The new requirements make it more difficult to get help and increases costs at the state level. Workers need help with re-entry into the workforce, oftentimes after long periods of unemployment.

Rather than institute new barriers and increase administrative expenses by requiring drug testing and inquiries with regard to high school completion, all of which cost money, Congress should be funding programs that offer help with job search and training. Under the new proposals, states would absorb the cost of drug testing unemployed workers. It is estimated that each test would cost between $25 and $75. In the state of Texas, according to estimates by Texas Legislative Budget Board, implementation of this type of program is projected to be almost $30 million for one year. This is hardly a wise expenditure of limited budget dollars, considering that of those recipients of federal assistance in the state of Florida that underwent drug testing, only 2% tested positive for drug use.

More perplexing than building additional barriers to entry, the legislation would give the states carte blanche, through the granting of waivers, to utilize UI funds for purposes other than paying UI benefits. This denies benefits to workers who have been working for years. The fact of the matter is that unemployment insurance is a social insurance program whereby federal law provides that payroll taxes can be withdrawn from dedicated UI trust funds "solely for payment of unemployment compensation." So the program would eventually unravel as more and more states begin to use these trust funds for "demonstration projects," and not related to the specific payment of UI benefits to the jobless. These demonstration projects place conditions such as income limits and education requirements on the payment of unemployment benefits, conditions that are not related to any particular claimant's unemployment. Trust funds could be raided by the states.

It is imperative that scarce resources be utilized to help the unemployed obtain the necessary skills for re-entry into the job market and to obtain new employment. Imposing federally mandated rules on state unemployment insurance programs that increase state administrative expenses resolves nothing. It diverts dollars that could be used for training and job search programs. It only pushes those Americans, already surviving in the margins, even further to the edge and consequently, worsens state and local economic conditions.

Sources:

House Republican Proposal Would Undermine Foundation of Unemployment Insurance System, by Hanna Shaw and Chad Stone, Center on Budget and Policy Priorities, January 17, 2012.

Sticking to Principles: Congress Should Oppose Barriers to Unemployment Insurance and Instead Provide Meaningful Reemployment Tools, NELP National Employment Law Project, Legislative Update, January 12, 2012.