Articles Posted in Wage and Hour Laws

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This week, the Supreme Court held in the Epic Systems case that corporations may legally force employees to choose between their jobs and their right to bring class or collective actions for wage theft—which really is not a choice at all. The vast majority of employees cannot refuse their employers’ demands to relinquish their rights to bring class or collective actions  because they cannot afford to lose their jobs.

The Supreme Court Justices split 5-4 in this controversial decision. Justice Gorsuch wrote the Court’s opinion and Justice Ginsburg wrote a dissenting opinion that Justices Breyer, Kagan, and Sotomayor joined. Justice Ginsburg’s dissent described the horrible injustices that will occur due to this wrongly decided case. Because of the Court’s decision, many employees will have no choice but to pursue wage theft claims against their employers on an individual basis, which, as Justice Ginsburg explained, will allow an increasing number of corporations to get away with wage theft.

Justice Ginsburg’s description of the events likely to unfold as result of this decision was spot on:

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social-media-2786261_1920-300x200A member of the New York City Council has introduced a bill that would prohibit retaliation against workers in the private sector who do not check their email after work hours.  The bill is modeled after a similar law in France that went into effect last year.

“Technology has made it easy for companies and employers to blur the line on the amount of time employers are working,” Councilman Rafael Espinal said in an interview. “The essence and spirit of this bill is to go after employers who are harassing employees to the point they are being retaliated against.”

There is no doubt that due, in part, to technologies like email, text messaging, and cloud computing, many employees can do much of their jobs from anyplace at any time.  And many employers expect their employees to do just that.  But this technology can be both a blessing and a curse.

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dollar-1362243_1920-300x200This week, Maine’s House of Representatives voted down a bill that would have slowed the rise of the minimum wage.  In 2016, Maine voters approved a referendum to increase the minimum wage.  The referendum calls for gradual annual increases up to $12 per hour in 2020.  The bill voted down would have frozen the minimum wage at $10 per hour until 2020 and allowed it to increase by $.50 per hour annually after that.  The bill also would have created a special “youth wage” which would allow businesses to pay younger workers less than older workers.

Supporters of the bill that was voted down point to complaints from some small business owners about rising labor costs which they say will require layoffs and increased prices.  Opponents of the bill pointed out that employment and wage numbers seem to be doing well under the current law; and they, thus, see no reason to change it.  Indeed, in February 2018 Maine’s unemployment rate was 2.9% compared to 4.1% nationally.

Some opponents of this bill have also focused on the fact that the bill runs counter to the will of the voters.  “These are the same citizens who, in the face of gridlock in Augusta, exercised their constitutional right to use the citizen’s initiative process to create law,” Rep. Kent Ackley (I-Monmouth) said. “And that was because the leaders here could not do so.”

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Minimum wage workers in Maine will receive a pay increase to $10 per hour starting on January 1. This is a scheduled increase mandated by minimum-wage legislation enacted after a voter referendum in 2016. The minimum wage will continue to increase to $12 per hour by 2020 and then will increase yearly after 2020 to keep pace with inflation. As we previously reported, there is an exception to the minimum wage increase for tipped workers and some lawmakers want to make further changes to the law.

Maine’s minimum wage is in the middle of the pack both nationally and in New England. New Hampshire’s minimum wage is pegged to the federal minimum wage of $7.25 per hour while Massachusetts’ minimum wage is $11 per hour.

Unemployment is relatively low nationally and in Maine.  That low unemployment rate also creates some upward pressure on wages. With fewer workers to choose from, employers have to offer higher wages to attract applicants. This is a particular issue in the hospitality industry in southern Maine. “I think that for most of the industry, the labor shortage is so acute that people are paying above minimum wage anyhow,” said Steve Hewins, president and CEO of the Maine Restaurant Association and Maine Innkeepers Association.

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After Maine recently passed an increase to the minimum wage, many Maine restaurant workers who depend on tips voiced serious concerns. They believed that the increased minimum wage would actually cause them to make less money. They feared that restaurant owners would raise prices and cut workers’ shifts. Some said that customers had begun to tip less because the customers assumed that the increased minimum wage made tips less important to servers. Due to these concerns, the Maine legislature recently passed a bill that reversed the increase in minimum wage that employers must pay to tipped workers and the Governor has signed that bill.

If the minimum wage increase for tipped workers had not been reversed, employers of tipped workers would have went from paying tipped workers a minimum wage of $3.75/hour in 2016 to $12/hour by 2024.  Employers of tipped workers will have to pay workers a minimum of $5/hour this year but in future years they will only have to pay them half of the minimum wage that non-tipped workers must receive.  What will not change is that if tips do not result in a tipped worker making at least the same minimum wage as a non-tipped worker, the employer of the tipped worker will have to make up the difference.

One of the Maine restaurant workers who organized the movement to reverse the rise in the minimum wage for tipped workers was Jason Buckwalter. He is now saying that he wants to take this movement to other places in the country where the minimum wages of tipped workers may be raised or have already been raised. But those who advocate for a higher minimum wage for restaurant workers say that they disagree with Buckwalter and others in his camp. “We do not believe what we see in Maine is representative of the majority of workers,” said Dave Palmer, the managing director of Restaurant Opportunities Centers United, a national group of low-wage restaurant workers.

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In an important decision for transportation workers, the U.S. First Circuit Court of Appeals has held that a trucking company cannot use the Federal Arbitration Act (FAA) to force its truckers to bring their claims against the company in arbitration. As we have previously discussed, companies often force workers to sign arbitration agreements because the arbitration system is stacked in those companies’ favor. When workers forced to sign one of these arbitration agreements file their claims in court, instead of in arbitration, companies often rely on the FAA to get the cases thrown out of court and into arbitration. But in this case, the First Circuit held that the FAA did not apply.

This case involved a class of truck drivers who sued New Prime, Inc. for minimum wage violations. New Prime allegedly engaged in a practice of encouraging truck drivers to become “independent contractors” instead of employees of the company. One of the issues in this case is whether the truck drivers were, actually, independent contractors or were employees. If they were employees, the federal Fair Labor Standards Act (FLSA) would entitle them to minimum wage; but if they were independent contractors, FLSA would not cover them.

The FAA does not apply in cases involving transportation workers and, thus, companies cannot use the FAA to force cases brought by transportation workers into arbitration. New Prime argued that the exemption for transportation workers only applies to cases involving employees and does not apply to cases involving independent contractors. New Prime also argued that an arbitrator, instead of a court, should decide whether the FAA applied to this case. The First Circuited rejected both of New Prime’s arguments.

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There are going to be changes to Maine’s wage and hour laws in 2017. Starting on January 7, 2017, the minimum wage in Maine will rise to $9 per hour and it will rise each year until it reaches $12 per hour in 2020. (The wages for tipped employees are also going up and will continue to rise until 2020.) The minimum salary necessary for employees to be exempt from overtime pay requirements is also going to rise to $519.24 per week and will also continue to rise until 2020.  Your employer is required to display new posters in the workplace that reflect these changes.

To avoid paying these increased wages, more employers may be tempted to game the system by, for instance, misclassifying employees as exempt salaried employees or independent contractors. By misclassifying employees as exempt, employers can avoid paying them overtime; and by misclassifying them as independent contractors, employers can avoid paying them overtime pay and minimum wage. Misclassification is a diplomatic term for “wage theft.” Gaming the system this way enables employers to pocket money that employees have earned and should legally receive.

To protect yourself, don’t just accept your employer’s classification at face value. Just because you receive a salary, instead of hourly pay, does not mean that you are exempt from overtime pay when you work over 40 hours per week. Similarly, just because your employer says that you are an independent contractor does not mean you are.

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Do you have a job where your work schedule unpredictably changes every week or every other week? If so, a new study shows that you’re more likely than someone with a more predictable work schedule to suffer adverse health effects. The researchers from the University of Pennsylvania and UC Berkeley who conducted the study found that workers with unpredictable schedules exhibit higher levels of stress, poorer health, and worse sleeping habits than workers with more predictable schedules.

Of course, this makes total sense. If you don’t know what your work schedule is going to be next week, you obviously experience a lot of stress in planning your life. You might have to make last minute childcare arrangements. You might have to put off doctor appointments because you don’t know if you’ll have to work at the time of your appointment. You also can’t get a second job because you don’t know if the schedules at the two jobs are going to conflict. All of these complications, and more, obviously cause a lot of stress.

Some states and cities have laws that require employers to give more notice when they change workers’ schedules. There was a bill in Maine last year that would have added more predictably to some workers’ schedules. However, that bill did not pass. Employers complained that a requirement to provide more notice on work schedules would be too burdensome; but the costs associated with that burden could be recouped if workers were healthier and more productive due to more predictable work schedules.

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Thousands of current and former employees of the restaurant chain Chipotle have reportedly returned paperwork indicating their intent to join a lawsuit against Chipotle for wage theft.  The paperwork went out to current and former Chipotle employees in April and indicated that employees who worked “off the clock” for Chipotle could join the lawsuit.  Since then, nearly 10,000 current and former employees have joined the lawsuit.

The lawsuit alleges that Chipotle employees who worked the closing shift were automatically and routinely clocked out before they finished working.  Some managers even allegedly asked Chipotle employees to work after they were clocked out.  This is a classic form of wage theft and, given the number of workers who have opted-in to the lawsuit so far, it may have been a pervasive practice at Chipotle.

Unfortunately, many employers engage in wage theft in order to keep labor costs low.  Wage theft can take many forms such as requiring employees to work off the clock, refusing to pay time-and-a-half for all overtime worked, and improperly paying the same weekly salary to non-exempt employees even when they work overtime.  These practices are called wage theft because they involve the employers keeping wages that employees earned and are legally entitled to receive.

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The New York Attorney General recently filed a lawsuit against Domino’s Pizza, Inc. for wage theft.  This lawsuit is noteworthy for many reasons but perhaps the most noteworthy is that Domino’s argues that it does not employ the workers whose wages were allegedly stolen.  Instead, Domino’s claims that its franchise operators, who contract with Dominos, employ the workers.  The New York Attorney General maintains that Domino’s and the franchises jointly employed the workers and, thus, Domino’s is responsible for the wage theft.

One of the reasons corporations like Domino’s use a franchise business model is to limit the liability of the corporation.  This is perfectly legitimate if done correctly but the New York Attorney General argues that Domino’s exercised so much control over its franchises’ employees that Domino’s was also the employer of the workers and, as such, it is responsible for the alleged wage theft.  A statement from the New York Attorney General’s Office claims that their “investigation found, [Domino’s] played a role in the hiring, firing, and discipline of workers; pushed an anti-union position on franchisees; and closely monitored employee job performance through onsite and electronic reviews.”

“At some point, a company has to take responsibility for its actions and for its workers’ well-being. We’ve found rampant wage violations at Domino’s franchise stores. And, as our suit alleges, we’ve discovered that Domino’s headquarters was intensely involved in store operations, and even caused many of these violations,” said the New York Attorney General.  “Under these circumstances, New York law – as well as basic human decency – holds Domino’s responsible for the alleged mistreatment of the workers who make and deliver the company’s pizza. Domino’s can, and must, fix this problem.”