Napa, California (707)

Transcription

1 RYBICKI & ASSOCIATES P.C. LABOR AND EMPLOYMENT ATTORNEYS Richard C. Rybicki Napa, California (707) Rybicki & Associates P.C.

2 Many types of hospitality employers: Lodging: Hotels, Resorts and B&B Food and Beverage Winery Hospitality Catering and Event Management Casinos Amusement Themed Destinations Transportation: Tour Services, Limousine Many more related businesses

3 All Share Similarities Basic Wage Laws Sexual Harassment Protection Occupational Safety and Health lh Immigration Posting and Recordkeeping and many more basic requirements. Workers Compensation

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6 State and Federal Laws Apply Federal law sets general minimum wage and overtime requirements Clif California i sets a higher h $8.00 minimum i wage for most hourly employees. And California does more

7 Know Your Wage Order! California applies individual wage orders to specific occupations and industries. Some apply to specific c industries, ies, regulating g all employees within each industry. Others apply to specific occupations worked outside a regulated industry.

8 Not All Wage Orders are the Same Different wage orders have somewhat different requirements. Some permit commissioned inside employees without overtime, Some set different overtime requirements, All employers must post the appropriate wage All employers must post the appropriate wage order!

9 Examples of Wage Orders Purely Estate Wineries: Order 13 Partially Estate Wineries: Order 8 Breweries: Order 1 Restaurants: Order 5 Catering: Order 5 Bk Bakeries: Order 1 or 5! Limousines and Tours: Od Order 9 Food retailers: Order 7 Theme Parks: Order 10 Hotels: Order 5 Casinos: Order 10

10 Which Wage Order? California DLSE (Labor Commissioner) publishes a guide to Wage Orders ( Which Wage Order ) View this sand dall odes: orders: Post in addition to all other state and federal postings not included in all in one posters! And post in multiple languages when necessary.

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12 Choose Supervisors Carefully! Supervisors stand in the shoes of an employer for many laws Unlike federal law, state law imposes strict liability for supervisor harassment. Supervisors are also responsible for ensuring investigation of harassment and may create liability for retaliation tliti and discrimination. i i

13 Definition of Supervisor Varies Labor law (National Labor Relations Act) Wage and hour law Workers compensation and OSH law Broad definition under state Fair Employment and Housing Act ( FEHA )

14 FEHA Definition of Supervisor Hire Transfer Suspend or lay off Recall Promote Discharge Assign (duties or shifts) Reward Discipline Direct (other employees) Adjust grievances or effectively recommend action

15 Poor Supervisor Choices Low level employees not properly trained to handle harassment and discrimination i i i complaints. li Highly skilled employees more focused on production than management. Employee with a history of complaints.

16 Good Supervisor Choices Individuals who receive training on how to handle workplace complaints. Employees trained ta in proper pope wage and hour, a workplace safety, and other compliance issues. People you can trust when nobody else is around!

17 Supervisor Training Required for all employers with fifty or more employees or contractors. Must be provided d within ihi first six months of employment as a supervisor and every two years thereafter.

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19 Injury and Illness Prevention Program Every California program must have a written Injury and Illness Prevention Program ( IIPP ) The requirement is enforced by the California Division of Occupational Safety and Health ( Cal OSHA ) Failure to have a written IIPP results in a penalty even if an investigator finds no dangerous conditions in the workplace

20 IIPP Requirements Management commitment/assignment of responsibilities; Safety communications system with employees; System for assuring employee compliance with safe work practices; Accident investigation; Procedures for correcting unsafe/ unhealthy h conditions; Safety and health training and instruction; ti and Recordkeeping and documentation. Scheduled inspections/evaluation system;

21 IIPP Benefits Preparing the IIPP helps identify and eliminate workplace hazards It can ultimately reduce workers compensation costs and potential OSH penalties It can also reduce the potential for Serious and Willful Workers Compensation claims

22 Creating an IIPP Many workers compensation carriers will provide free consultation Cal OSHA also provides model IIPP forms for highhazard, non high hazard, and intermittent (seasonal) employers I f ti i il bl t C losha Information is available at Cal OSHA:

23 OSH Requirements State and federal law impose a general duty to provide a safe and healthful l workplace There are many additional specific standards applicable to particular equipment, dangerous materials and specific industries Employers should make an effort to identify these specific standards in advance of an accident

24 Examples of Specific Standards Walking Working Surfaces Confined spaces and permits Hand protection ti Wlk Walkways and railings Guarding Hazard Communication

25 Safety of Minors Additional safety standards apply to minors. Example: Minors may not operate or assist with bakery machines or meat slicing equipment e See, for example:

26 Downsides of Noncompliance Noncompliance can result in penalties for all unsafe conditions observed during an inspection Much larger penalties apply to conditions where, if an injury occurs, it is likely to be serious even if the injury is itself unlikely! Violation of specific standards may result in uninsured serious and willful misconduct liability

27 Advice Consult with a safety expert (or your workers compensation carrier) to identify applicable standards d and hazards Communicate your policies and standards to all supervisors and leads Review the workplace regularly to identify any new hazards or industry developments

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29 Employing Minors State and federal law restrict the hours minors work and the duties they perform. These restrictions vary through the school year. Familiarize your supervisors with these requirements and monitor compliance.

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31 Size Matters Most basic employment law obligations affect all employers. Small and very small employers covered by most of the same laws as very large employers.

32 All Employers Face: Wages and overtime Time records Breaks and Meal Periods I 9 and immigration Unemployment Insurance Workers compensation OSHA/Cal OSHA

33 5 Employee FEHA Threshold: All FEHA categories are protected against discrimination (age, race, marital status, gender, etc.) Four months of pregnancy related disability leave. Reasonable accommodation of qualified individuals with disabilities Specific Duties: Duty to investigate violations Duty to take reasonable efforts to prevent unlawful discrimination Duty to engage in an interactive process with potentially disabled employees Duty to publish rights in any handbook

34 Advice Identify the laws applicable to the business at its current size Be aware of the number of employees the business maintains on its payroll at all times Anticipate changes from one threshold to another Do not assume that any particular type of law does not apply to small employers!

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36 Meal & Rest Periods Non exempt employees must have an opportunity to take meal and rest periods when required by law. Fil Failure to provide breaks = 1 hour penalty every day! HUGE ISSUE IN HOSPITALITY: California i Supreme Court considering what it means to provide breaks must take, or must only have an opportunity to take?

37 Meal & Rest Periods Rest Period 10 minutes paid break for each 4 hour period where an employee works at least 3.5 hours Meal Period 30 minute unpaid period when employee works five or more hours (and ten or more hours) Meal periods almost always require that employees be relieved of all duties (no phone answering!). Penalty for missed breaks is now deemed a wage penalties may go back three or four years!

38 Some Hospitality Issues Hotel and Resort: Single employees working through the evening or night. Restaurants: Front of the house staff who do not want to lose tip income, back of the house staff who do not want to lose production. Wineries: Crush season and misclassified wine club and marketing kti staff. tff

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40 Who is Exempt from Overtime? A salary alone does not exempt employees from overtime! Employees must fall within an appropriate exemption category to be overtime exempt. Exempt employees must also receive two times the state minimum wage: $33,280 per year

41 Exemption Issues Employees must perform their exempt duties most of the time that is, more than half their total work time. There are no part time salaried employees; the minimum i pay requirement is an absolute minimum so long as an employee works once during the week. The law assumes employees are non exempt without proof to the contrary.

42 Common Hospitality Issues Culinary workers who spend more than half their time actively preparing food Event managers whose primary duties are inside sales and working events Hospitality and housekeeping supervisors who perform the same work as other staff Inside sales and marketing staff paid on a commission basis (who are not exempt under any wage orders except in some cases Nos. 4 and 7).

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44 Proper Wage Treatment Be careful not to follow practices (such as industry association guidelines) that do not comply with California law. There is no California Tip Credit toward state minimum wage or overtime. Note: Credit toward local minimum wages may be adopted (such as in San Francisco) California regulates tip sharing as well.

45 Manage Tips Properly! Unlike service charges, tips belong solely to employees. (Cal. Labor Code 350, 351) Neither the employer nor a supervisor may share employee tips Tip pooling can only be required in a manner customary in the industry

46 State Laws Many states do not address tip sharing Some do: New York and Oregon, for example, prohibit sharing with employer Recent: Nevada labor sponsoring tip sharing prohibition Recent: Washington law requires disclosure on menus and receipts how much of a service charge goes to employees

47 California Labor Code 351 California prohibits employers and their agents from taking any part of a gratuity California Labor Code section 351 declares tips the sole property of the employee or employees to whom it was paid, given or left for Gratuities may not be used as part of a tip credit or as an offset of any part of wages owed to an employee (Note recent San Francisco overtures re its minimum wage)

48 Section 351 History 1917: Initial version of law prohibited employers from demanding or receiving any part of tips or gratuities 1918: Law struck down by California Supreme Court as a violation of freedom of contract Last remnants of California s laissez faire period 1918 decision identified both (1) employee protection and (2) ()preventing deception of the public leaving tips

49 Section 351 History 1929: New law requires employers keeping tips to post a notice or notices [explaining the disposition of tips] 1937: Law moved to Labor Code sections 351, 352 & 356, requiring postings and declaring fraud upon the public against the social public policy of the state 1968: IWC adopts Wage Order No. 5 68, allowing a tip credit for employers up to twenty cents per hour

50 Section 351 History 1972 Legislation introduced declaring gratuities the sole property of the employee to whom it was [given] Legislative Counsel concludes this would invalidate tip credits Legislation does not pass 1973 Identical legislation introduced Passes, but with a provision retaining tip credit allowance

51 Section 351 History 1975: Section 351 successfully amended to eliminate tip credits 1987: Industrial Welfare Commission (reversing course) argues that a California tip credit is still legal if approved by the IWC 1988: Supreme Court disagrees Section 351 bars tip credits of any type in California (Henning v. Industrial Welfare Commission, 46 Cal. 3d 1262 (1988))

52 Section 351 Policies Two Policies Identified Over Time First: Public Deception/Information avoiding public confusion over to whom they were leaving a tip Second: Protecting ti gratuities as employees property

53 Section 351 Questions Who is the employer or agent? Who are the employee or employees to whom the gratuity was paid, given or left for? Do tip pools l violate the rule that t tips are the sole property of the employee or employees for whom they were left?

54 Slow for almost two decades; no further Supreme Court opinions.

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56 Lu v. Hawaiian Gardens Casino, Inc. (Jan. 22, 2009; review granted 94 Cal. Rptr. 3d 1 (2009))

57 2009: Casino Tip Sharing Lu was a dealer in a California card room Argued that tips were handed directly to dealers and thus belonged solely to dealers Tips were shared with chip runners, poker tournament p p p coordinators, hosts, floormen, and concierges

58 2009: Casino Tip Sharing Court rejected theory that Section 351 distinguishes between a group tip and tips handed directly to an employee Court also found that tip pooling was customary in casinos, and that it would be difficult dff to discern patrons specific intent But the court followed Jameson s conclusion that supervisors qualifying as agents may never participate in tip pools.

59 2009: Casino Tip Sharing Principle One: The court continued Leighton v. Old Heidelberg's position that customer intent is almost impossible to gauge accurately, and that greater weight should be placed on industry custom Principle Two: The court began to depart fully from the concept of direct chain of service: by allowing tips broadly across the floor Principle Three: Supervisors completely barred from participating p in tip pools

60 2009: Casino Tip Sharing THIS CASE HAS BEEN DEPUBLISHED Review was granted by the California Supreme Court on April 29, 2009 Review limited to a single issue: whether Section 351 creates a private right of action (or must be pursued through other means, such as an equitable action under California s unfair business practices law)

61 Budrow v. Dave & Busters of California, Inc. 171 Cal. App. 4 th 875 (2009)

62 2009: Chain of Service Server challenged requirement that she share tips with bartenders Argued that bartenders do not provide direct service; they make drinks, servers deliver the drinks to customers Claimed that Section 351 and Old Heidelberg permit tip sharing only among employees providing direct service

63 2009: Chain of Service Court rejects this argument (and the Labor Commissioner s position on chain of service) Notes there is no direct table service requirement in the plan text of Section 351 Notes that comments in Old Heidelberg about direct Notes that comments in Old Heidelberg about direct service did not, and were not intended to, limit tip pooling to such employees.

64 2009: Chain of Service Court discusses the ability of a restaurant to adopt a tip pooling policy that reflects the experience of each restaurant with the reasons and patterns of tipping at that restaurant. Leaves in place a vague rule that employees not engaging in direct table service, but otherwise providing some service passed to the customer, may share in tips. Court also states (in dicta) that agents may not share in a tip pool

65 Grodensky v. Artichoke Joe s Casino March 11, 2009; review granted Cal. S. Ct. Docket No. S (April 21, 2009)

66 2009: Another Casino Case Lawsuit brought by same counsel as in Lu v. Hawaiian Gardens This court found there is a private right of action under Labor Code section 351 But the court rejected several creative arguments by But the court rejected several creative arguments by counsel

67 2009: Another Casino Case The court rejected an argument that pooling arrangements need be longstanding to be valid; It also allowed the employer to take possession of the money and then distribute it to employees (though the employer had to exchange chips in this case); The court rejected an argument that all participating employees must also contribute to the tip pool, allowing a dealer only system Noted that Section 351 does not expressly require all pool beneficiaries Noted that Section 351 does not expressly require all pool beneficiaries to contribute their own tips to the pool; And noted that Section 351 s purpose to protect the public was not violated by the arrangement.

68 2009: Another Casino Case THIS CASE HAS ALSO BEEN DEPUBLISHED Review was granted, and briefing has been held pending the outcome of Lu v. Hawaiian Gardens B t th C t dd f th i But the Court may address some of these issues on review after Lu addresses the private right of action issue

69 Etheridge v. Reins Int l Calif., Inc. 172 Cal. App. 4 th 908 (2009)

70 Another Direct Service Case Etheridge was required to share tips with kitchen staff, bartenders and dishwashers First: Court clearly affirmed that tip pooling is itself legal under California law. Second: Court again addressed the concept of direct Second: Court again addressed the concept of direct vs. indirect service

71 Another Direct Service Case The court returned to the concept in Leighton v. Old Hidlb Heidelberg that customers do not consciously i l determine exactly which persons are responsible for [a tip]. It also noted that people leave tips today expecting that, p p p y p g, without a tip, they will not receive good service

72 Another Direct Service Case The court also discussed Old Heidelberg's observations that (1) tips generally are left for employees, not an individual, and (2) sharing tips encourages all employees to work ( ) g p g p y harder, benefitting the public and Section 351 s goal of protecting public intent

73 Contribute to Service Court rejected the direct table service concept Applied a broad chain of service rule instead Court recognized that clean plates, presentation, special orders, and taste can all impact the size of a tip Participants need only contribute to the patron s service

74 Additional Observations The court rejected looking to federal tip credit guidance, holding that the two contexts are wholly distinguishable Concurrence: Justice Croskey, who wrote opinion, also wrote a concurring opinion that tip pools must equitably distribute a fair share of tips to employees

75 Additional Observations The majority opinion and Justice Croskey s concurrence state that an employer may not use a tip pool to subsidize part of other employees market rate wages Recognized that employers good faith allocation should be upheld, but that employees should be able to claim that a tip pool was inequitableit Another prominent justice (Klein) dissented!

76 Additional Observations 2010 Federal Decision: Cumbie v. Woody Woo, Inc. (9 th Cir. 2010) Local federal appellate courts allows employer to require employees to share tips with back of house personnel But only if the employer does not claim a tip credit under federal law Does not affect California law, but clarifies that broad policies to not automatically violate federal law

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78 An Uncertain Future? It is unclear whether the Supreme Court will ultimately address all these issues in addition to the private right of action question The concept of direct table service appears discredited But the concept of customer expectations probably will remain a primary issue

79 An Uncertain Future? Etheridge suggests a broad definition of service extending even to dishwashers and potentially maintenance/housekeepers But it does more, suggesting that tips could not be given to these other employees if used to subsidize market wages a very poor analysis, as tip credits apply to minimum wage, not market wages

80 An Uncertain Future? Overall, Etheridge provides the greatest flexibility, but its logic is seriously flawed Employers should expect a greater emphasis on customer intent and industry practice in the future as these provide markers to the public expectations issues originally protected by Section 351. Employers should also avoid including any agent in a tip pool or tip allocation program, as most cases hold that they may never share in a pooling arrangement.

81 An Uncertain Future? The farther an employee is from actual customer interaction, or from the types of employees a customer might expect to tip, the less likely a pool will be upheld. Back of the house staff have traditionally been excluded from tip pool arrangements and probably will be in the future. Other industries should follow the same rule: is an employee truly part of the group an average customer would expect to benefit from the tip?

82 Possible Alternatives? Post the tip allocation policy so it can be read by customers before they leave a tip; Draft policies or analyses showing the role each employee plays in the chain of customer service; allocate tips according to the bona fide contribution of each; Consider whether an employee would traditionally rely on tip income as part of his or her take home pay; Review the federal DOL opinions on employees regularly and customarily tipped. This may provide guidance as to whom customers mean to tip when leaving a gratuity.

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84 Richard C. Rybicki biki 975 B First Street Napa, CA Tel (707) Fax (707) Rybicki & Associates P.C.