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New York City Fast Food Workers Should be Aware of New Wage and Hour Protections

Over 65,000 Americans are employed as hourly fast-food workers in the City of New York.  The industry can be challenging for employees, who are generally paid at or just above the minimum wage.  These employees rely heavily on being paid for the work they do and being permitted to work the shifts they are scheduled to work.  Recently, in recognition of the challenges these workers face, lawmakers in the City of New York have signed into law multiple bills to protect these workers from abuse by their employer.

New Protections for Fast Food Workers in New York

Fast-food employers in the City of New York are now required to schedule employees at least two weeks in advance, or pay them for any changes made to their schedule.    Mayor Bill de Blasio recognized that scheduling is a serious issue for hourly fast-food workers.  From the employer’s perspective, if business is slow, overhead expenses can easily be cut by simply sending employees home or canceling their shift altogether.  However, for an employee, this can cause extreme hardship because they count on the earnings from the canceled or shortened shift to cover their living expenses.

The law also requires fast-food employers to offer part-time staff additional work before hiring new employees, pay workers extra when they work closing and opening shifts back-to-back, and provide them with a good faith estimate of the hours they can expect to work.  Additionally, fast-food employers must now provide employees with an 11-hour break in between their shifts.

A separate bill passed by New York City lawmakers also prevents employers that employ 20 or more retail workers from scheduling workers for “on call” shifts.

NY Minimum Wage Increase

The minimum wage in New York City for employers of more than 11 employees is currently $13.00 per hour.  That amount is set to increase to $15.00 per hour on December 31, 2018.  The fast-food industry has been fertile ground for wage and hour lawsuits in recent years, particularly, where employees are forced to work off-the-clock, misclassified as exempt from overtime, or in situations where an employer otherwise does not pay overtime premiums in accordance with the law.

Restaurants in a Budget Crunch May be Tempted to Cheat Workers

It’s no secret that most restaurants operate on razor-thin profit margins. To be successful, restaurant owners and operators must budget carefully and plan for every expense. That is their responsibility.

Unfortunately, some establishments do not take budgeting seriously – and try to make up shortfalls on the backs of restaurant workers. Some may not budget for the actual cost of paying employees their proper wages and overtime, which can lead to wage theft.

Misclassifying Workers

Restaurant owners caught in a budget crunch, for example, might be tempted to misclassify workers as being exempt from overtime. They will call a server or host an assistant manager, or give a cook the title sous chef, and say they are now exempt. If that employee’s duties are still those of an hourly worker, however, and they do not have any managerial responsibilities or personal discretion over how they do their job, then they are not exempt from overtime. The employer has merely used that title to make up for a budget shortfall.

Unlawful Tip-Pooling

Tip-sharing violations are another way for restaurants that are short on cash to cheat their employees. Under the federal Fair Labor Standards Act (FLSA), tipped employees are entitled to their tips and do not have to turn them over to an employer. That does not mean an employer can’t have a tip-pooling program, but this must be done in compliance with the FLSA. Tip-pooling policies must be clearly laid out to tipped employees, for example. The percentage that servers, bartenders, and others are expected to tip out should also be clear and consistent.

Employers also can’t use tip sharing to top up the wages of cooks and dishwashers who are not normally tipped. Facing a cash flow problem, some restaurant owners are often tempted to use shared tips as a way of making it look like all staff are being paid minimum wage. They will underpay kitchen staff and use tip-pooling to make up the difference.

If a restaurant is dodging overtime, underpaying workers, or messing with tips, that can constitute wage theft under the FLSA. Restaurant staffs have tough, demanding jobs and deserve to receive every penny they have earned. It is not their fault that their employer has failed to budget properly for crucial expenses such as wages and overtime.

When Tip-Pooling Becomes Wage Theft

What do Chili’s, Red Robin, Starbucks and even New York’s ritzy Le Cirque have in common? All have been accused of illegal tip-pooling practices that deprived restaurant workers of their rightful wages.

These restaurants have faced class action lawsuits brought by workers claiming tip-sharing violations, and some have paid significant settlements as a result:

When Is Tip-Pooling Wage Theft?

Under the federal Fair Labor Standards Act (FLSA), a tip is the sole property of the tipped employee and he or she cannot be forced to give it up. The FLSA prohibits any arrangement between the employer and the tipped employee whereby any part of the tip received becomes the property of the employer.

Restaurants are, however, allowed to implement tip-pooling policies. It’s not illegal if tips are shared among restaurant workers who customarily and regularly receive tips. The FLSA does not regulate how the sharing is calculated.

Which Restaurant Employees May Be Required to Share Tips?

The key language here, though, is “employees who customarily and regularly receive tips.” Some restaurants mandate tip-pooling with kitchen staff, such as cooks and dishwashers, who do not have a role in serving customers directly. In other words, as a general rule of thumb, “front of the house” employees cannot be required to share tips with “back of the house” employees. This can be a problem if the restaurant is using tip-pooling to avoid having to pay those workers minimum wage. Under the FLSA, that is illegal and tipped workers should not be forced to share tips with those employees.

Any violation of the FLSA when it comes to tip-pooling is wage theft – and restaurants can be held liable for depriving restaurant workers of their rightful earnings.

How Restaurants Avoid Paying Overtime by Misclassifying Workers

Under the federal Fair Labor Standards Act (FLSA), restaurant workers paid by the hour should receive overtime if they work more than 40 hours a week. That’s the law.

Some restaurants, however, try to dodge paying overtime by misclassifying some employees as “management” when, in fact, they are not. It is true that salaried workers in supervisory or managerial positions are sometimes exempt from overtime. But the FLSA has strict rules around who can and cannot be classified as exempt – and it comes down to the exact duties performed.

Not All Managers Are Exempt from Receiving Overtime

A restaurant can’t simply give an hourly worker a title such as “manager” or “assistant manager” to avoid paying them overtime. If that restaurant employee has similar duties as other nonexempt workers – working a till, serving customers, preparing food, cleaning – then he or she is owed overtime. An employee can only be considered exempt if he or she supervises others and has what’s known as “personal discretion” over their work.

FLSA Class Actions Against Restaurants

Many restaurants learn this the hard way. An Arby’s franchise in Florida, for example, currently faces a class action lawsuit on behalf of current and former non-exempt employees. The restaurant worker bringing the suit alleges she regularly worked more than 40 hours a week without being paid overtime because the restaurant misclassified her as exempt. She did not perform any managerial or supervisory duties. Rather, her work consisted of running the cash register, helping customers with orders, preparing food and cleaning. The lawsuit says the Arby’s franchisee owes her unpaid overtime for approximately 870 hours, and seeks compensation for other misclassified workers at that same location.

Also in Florida, a sous chef working for Kona Grill has filed his own class action lawsuit over unpaid overtime. He alleges the chain routinely misclassifies sous chefs and assistant managers as exempt, when they are, in fact, hourly employees and owed overtime. These workers did not have supervisory roles and did not exercise personal discretion in determining their duties.

In April, Carrabba’s Italian Grill LLC was sued in a national class action alleging it, too, misclassified nonexempt restaurant employees to avoid paying overtime. The lead plaintiff in that case, who is suing on behalf of all similarly situated Carrabba’s workers, alleges she often works more than 60 hours a week but never receives overtime. The suit alleges that, though her title was “restaurant manager,” she performed the same duties as a non-exempt employee. As such, she is owed overtime.

Damages in FLSA Misclassification Lawsuits

Plaintiffs in these lawsuits can be entitled to not only their unpaid overtime but also liquidated damages, attorneys’ fees, and costs. The amounts can be significant. Bob Evans Farms paid $16.5 million to settle a suit brought by assistant managers, and Panda Express paid a $3 million settlement to store managers.

Misclassifying employees is a serious problem in the restaurant industry and costs an average worker hundreds, if not thousands, of dollars a year in unpaid overtime. This is tough, demanding work and restaurant employees have a right to be paid all of what they are owed – especially when they sacrifice personal time by working more than 40 hours a week.