Earlier this month, the U.S. Department of Labor’s Wage and Hour Division issued a Notice of Proposed Rulemaking (“NPRM”) seeking to repeal a 2011 rule that significantly impacted the compensation of hospitality workers. Specifically, the NPRM proposes to allow hospitality employers to control the distribution of the tips they pool assuming their employees are paid the full minimum wage. By way of background, the FLSA requires employers to pay employees a minimum wage (currently $7.25 per hour) plus overtime for all hours worked over 40 in a single workweek. Employees who “customarily and regularly receive tips” must still receive the minimum wage, but employers may elect to take a “tip credit” by counting up to $5.12 per hour of those employees’ tips toward the minimum wage, meaning employers may pay a reduced wage of $2.13 to tipped employees. Historically, employers that take the tip credit have been prohibited from sharing money from a tip-pooling system to employees who do not traditionally receive direct tips (cooks, dish washers, etc.). In 2011, the DOL extended the tip-pooling prohibition to apply to employers even if they do not take the tip credit and pay their employees the full federal minimum wage.
On November 10, 2017, the New York Department of Labor released a set of proposed regulations affecting the Minimum Wage Order for Miscellaneous Industries and Occupations, which applies to most employers, except hotels and restaurants. The regulations propose the following call-in pay requirements for employers:
- Reporting to work. An employee who, by request or permission of the employer, reports for work on any shift must be paid for at least four hours of call-in pay.
- Unscheduled shift. An employee who, by request or permission of the employer, reports to work for any shift for hours that have not been scheduled at least 14 days in advance of the shift must be paid an additional two hours of call-in pay.
- Cancelled shift. An employee whose shift is cancelled within 72 hours of the scheduled start of such shift must be paid for at least four hours of call-in pay.
- On-call. An employee who, by request or permission of the employer, is required to be available to report to work for any shift must be paid for at least four hours of call-in pay.
- Call for schedule. An employee who, by request or permission of the employer, is required to be in contact with the employer within 72 hours of start of the shift to confirm whether to report to work must be paid for at least four hours of call-in pay.
With Christmas falling on a Sunday this year, employers should be mindful of state blue laws, which sometimes require premium pay to hourly employees working on Sundays or holidays. Although most state laws, as well as federal law, do not require premium pay for work performed on holidays (unless, of course, the employee has worked more than 40 hours that week), there are a few exceptions, such as Massachusetts and Rhode Island.
On November 14, 2016, a federal judge in California denied summary judgment to Hanover Insurance Co. (Hanover), finding that class claims alleging a failure to reimburse reasonable business expenses were not excluded by a “wage-and-hour” exclusion contained in EPLI policies issued by Hanover. The lawsuit, brought by a former student of the Bellus Academy beauty school, alleged that Poway Academy (the owner of Bellus) and Beauty Boutique, Inc. (BBI) (operator of two other schools under the “Bellus” name), failed to compensate students for working on paying clients at an onsite salon and also failed to reimburse them for out-of-pocket costs to purchase necessary supplies. The lawsuit alleged a variety of wage-related claims. The lawsuit also alleged that the schools failed to reimburse necessary business expenses in violation of Section 2802 of the California Labor Code.