Bars, Meals and Breaks, Restaurants, Tips

RESTAURANTS AND BAR LABOR ISSUES

All general labor laws apply to restaurants and bars.  However, a few of those laws have raised some special issues for them.

In the year 2000, the legislature amended the gratuity statute, Labor Code §350.  It clarified how the house and servers handle tips.

The house may not share tips with servers (Labor Code §351), and the employer must track all tips that it collects for employees (Labor Code §353).  An employer cannot credit tips against wages it has agreed to pay to servers, and servers must earn at least minimum wage.

However, an employer may require tip pooling.  The tip pool arrangement must be fair and reasonable.  Only those who are in the chain of service can be in the pool.  For instance, an employer cannot require servers to include cooks and dishwashers in the pool.

Finally, tips are taxable income.  The IRS now requires all tips to be declared.  Technically, all persons who receive tips, or a share of the tips, must report it as income.  Unfortunately for certain servers, some employers allocate the entire tip to the waiter or waitress even when a portion of the tip is shared with others.  In that case, the server appears to the IRS as the only person who earned the tip.  In contrast, the employer should report shared tips and should tell the IRS how much each person in the chain of service received from the tip.

Meal periods and rest periods are sometimes a problem in the serving industry.  Typically, a server does not like to leave tables for meal periods and breaks when a tip is due from those tables.  For that reason, some servers like to skip breaks.  A few years ago, the California Supreme Court clarified the laws in that area.  (Brinker Restaurant Corporation v. Superior Court, (2012) 53 Cal.4th 1004)

In Brinker, the Supreme Court said that employers have a duty to “provide” meal periods for its qualifying employees.  The plaintiffs had argued that employers had to “ensure” that employees got meal periods.  The Court declined to place that burden on employers and found that an employer only needed to provide an opportunity to take a meal break.

In the Brinker case, the California Supreme Court also clarified the law pertaining to rest periods.  According to the regulations, employers must “authorized and permit all employees to take rest periods.”  The Brinker Court defined the meaning of “authorize” in that context.  It said that an employee is entitled to a 10 minute, uninterrupted rest period if the employee’s shift is at least 3.5 hours.  An employee is entitled to a second rest period if his or her shift is at least 6 hours and is entitled to a third rest period if the shift is at least 10 hours long.

Employees can elect not to take their meal periods and rest periods, but allowing them to not take them can create the appearance of violations.  One method for guarding against that appearance is to keep a break log.  If the employee did not take one, the employee should explain why not on the log.  The downside of keeping a break log is the written log could potentially be used to prove the employee’s case, but, on the other hand, good management techniques can address potential problems before they become serious.

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Telecommuting, Work-at-home

Working from Home

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As a society, Americans are finding more opportunities to work from home.  In fact, the work-at-home trend has been growing steadily over the past two decades.  While this trend creates opportunities, it also creates problems for both employees and employers.

Have you seen emails claiming to offer work opportunities that provide thousands of dollars of monthly income in your spare time while working from home?  Many of those emails are scams.  Employees should watch out for offers that make unrealistic claims.  Those offers may simply be trying to get personal information to use in identity theft.  More likely, the email is simply a disguised sales pitch.  Regardless, neither are offers most job hunters welcome.

Some websites try to sift through the at-home work offers to present only the most reliable ones.  One of those websites is: http://www.flexjobs.com/.  Flexjobs makes a top one hundred list of companies who offer the best quality telecommuting jobs.  According to the list, some of the top telecommuting industries are: healthcare, sales, marketing, information technology, and education.

Working from home can test how we apply our employment law regulations.  For instance, can at-home workers be classified as independent contractors, or are they employees?  Generally, employers want to pay workers as independent contractors because employers need not pay for workers’ compensation insurance, withhold taxes, pay overtime, and adhere to break regulations, etc. for independent contractors.  The tests that determine whether a worker is an independent contractor or an employee are fairly complicated and fact intensive.  Please review our blog post to get a better idea of how those tests work: https://backstromandheinrichsblog.wordpress.com/2013/11/13/independent-contractor-or-employee/.

Essentially, an independent contractor controls the manner and method of completing a job.  On the other hand, an employer controls how, when, where, etc. an employee does the work.  For example, an attorney who has his or her own clients works as an independent contractor.  In that case, an attorney can elect to work from home and the client will have no say about that.  In addition, the client does not need to worry about whether the attorney is working overtime hours or is taking meal and rest periods.  In contrast, an hourly worker who works from home sorting through and organizing emails for several managers of a business is probably a non-exempt employee.  In that case, the employer will need to abide by applicable labor laws, such as: break times, minimum wage, overtime premium pay, wage withholding, etc.

Employers, who have work-at-home employees, lose some control over work product because no manager is on site to make sure that the work is getting done.  In those cases, a wise employer will have systems in place to monitor work efficiency.  In our example above, the employer might require the employee to read and organize 30 emails an hour.  Depending on the situation, many other methods of employee monitoring can apply.

Monitoring work schedules and work hours may also be a very important issue.  If an hourly employee works more than 8 hours in a day, the employer must pay overtime in California.  That same California employee will be entitled to at least two rest periods and a meal period during that shift.  If the employee works through those break times, the employer will be liable for additional penalties and wages.  One way of helping to ensure compliance with overtime, rest period, and meal period regulations is to have an online time clock.  Again, without a manager present, ensuring that an employee is actually working the hours that are tallied in the online program may be a challenge.

Working from home is not the norm, but it is becoming increasingly popular.  Commonly, we see good at-home work opportunities, but workers seeking those jobs must be careful of scams.  Likewise, employers need to carefully navigate the world of employment regulations after adding at home workers to its roles.  Employers need to decide whether those workers are independent contractors or employees.  If they are employees, then the employer must put into place systems and policies that will check work efficiency and monitor adherence to employment regulations.

S. Ward Heinrichs, Esq.
BACKSTROM & HEINRICHS
Attorneys at Law
A Professional Corporation
4565 Ruffner Street, Suite 206
San Diego, CA 92111
(858) 292-0792
(858) 874-8850 (fax)

http://www.backstromandheinrichs.com

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Meals and Breaks

Motor Carriers do not Need to Provide Drivers with California Meal and Rest Periods, for Now.

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California meal and rest period laws do not apply to drivers who work for motor carriers, according to two Federal District Courts which found that the Federal Aviation Administration Authorization Act (FAAAA) exempts drivers from that type of regulation.  (Dilts v. Penske Logistics, LLC, 2011 U.S. Dist. LEXIS 122421, *26 (S.D. Cal. Oct. 19, 2011); Esquivel et al. v. Vistar Corp. et al., Case No. 2:11-cv-07284 (C.D. Cal. Feb. 8, 2012).)  That means, motor carries do not need to give their drivers breaks to eat or rest, other than what Department of Transportation regulations require.  Essentially, California law cannot require employers to give drivers 30 minute, duty free meal periods or 10 minute, duty free breaks.

Exemption from California meal and break regulations gives employers greater flexibility and can lower costs significantly.  Drivers who do not need to stop their trucks to eat or rest can work more efficiently for the company, unhindered by detailed California regulations.  Frequent stops while driving routes can make administering those routes very difficult.  The increased time and attention required almost always increases the cost of doing business.  In addition, if an employer mistakenly violates California meal and rest period laws, the owed wages and penalties can add up to large sums of money, especially if the violations lead to a class action  where many drivers claim owed wages for similar violations.

Drivers may also prefer the flexibility provided by the FAAAA exemption.  Some employers have employees who drive routes that typically take about 10 or 11 hours to complete.  Unfortunately for those drivers, sometimes traffic jams prevent them from getting back to their designated places of origin before 12 hours.  They get paid for the entire time even if traffic extends their driving time, but California law requires a second meal period when the work day extends beyond 12 hours.  The FAAAA exemption saves them from being required to pull over to take an unpaid meal period at the end  of the day when they would rather be sitting at home.

What about driver comfort and humane treatment?  Both the Dilts court and the Esquivel court say that the FAAAA requires the market place to care for those considerations.  They use identical reasoning to support that conclusion and the conclusion that the FAAAA preempts California’s meal and rest period laws.  In fact, Esquivel simply quoted large portions of the Dilts order.

The Dilts Court said that the FAAAA defines “motor carrier” broadly: “Plaintiffs, as Penske drivers/installers, operated commercial motor vehicles which transported property and conducted services related to that movement. That they performed other services in addition to the transportation of property, such as installing appliances, is not enough to exempt them from regulation under the FAAA Act.”  It then said that the FAAAA exempts the motor carriers from providing meal and rest periods to drivers because it has a significant, indirect effect on route management, something the FAAAA language arguably prohibits: “Thus, the Court finds state regulation of details significantly impacting the routes or services of the carrier’s transportation itself preempted by the FAAA Act.”   The Court also found that the Congress intended the FAAAA to preempt state laws even in cases where the state law only has an indirect regulatory effect on motor carriers, such as meal and rest period laws.

Both of the above cited cases are being appealed to the Ninth Circuit Federal Court of Appeal.  The Ninth Circuit could overturn the lower court rulings.  Regardless, for the time being, the FAAA appears to exempt many truck drivers from breaks and meals required by California law.

S. Ward Heinrichs, Esq.
BACKSTROM & HEINRICHS
Attorneys at Law
A Professional Corporation
4565 Ruffner Street, Suite 207
San Diego, CA 92111
(858) 292-0792
(858) 408-7543 (fax)

http://bestemploymentattorneysandiego.com/

http://twitter.com/#!/WardHeinrichs

www.facebook.com/BackstromandHeinrichs

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