Tag Archives: wage and hour

Wage and Hour Violations at Restaurants

A couple of days ago, the New York Times published an article about wage and hour violations at Urasawa, a very trendy — and expensive — sushi restaurant in Beverly Hills. According to the article, workers were not paid overtime and not allowed to take legally required breaks. An employee interviewed for the article also noted that he was required to buy his own $700 set of knives, at a time when he was earning between $9 and $11 an hour. (Although the article didn’t mention it, this is a separate violation of California law, which requires employers to bear the cost of uniforms, tools, and other items necessary for employees to do their jobs.)

Restaurants are too frequently in violation of wage and hour laws, from overtime and break rules to minimum wage, uniform, and tip requirements. If the violator is extremely upscale, like the restaurant cited in the Times article, employees are often willing to put up with substandard conditions in exchange for the opportunity to gain the experience and cachet that stem from working at a trendy spot. (Apparently, diners are also willing to put up with a lot to eat there, from a $1,000 price tag for dinner for two to rules about how the food must be treated that would make Sienfeld’s Soup Nazi blush.) At the other end of the spectrum, employees working at fast-food franchises and low-budget eateries often don’t know their rights and work for an owner who is operating on a financial shoestring.

In recent years, the Department of Labor has taken steps to remedy this situation, from revising the regulations on tip credits to partnering with the Subway restaurant chain to make sure that employees know their rights. Let’s hope it works! Because I don’t know about you, but for my own selfish reasons, I’d prefer to have my food prepared by workers who are allowed to go to the bathroom when they need to.

Supreme Court’s FLSA Decision on Collective Actions

Last week, the Supreme Court decided a case about collective actions under the Fair Labor Standards Act (FLSA). Collective actions are similar to class actions, in that they give an employee the right to file a lawsuit on behalf of a group of employees who have the same basic claim against the employer. The Court’s decision took a strange turn, resulting in a victory for the employer that skirted a primary issue in the case.

Here’s what happened: Laura Symczyk filed a collective action against her employer, Genesis Healthcare, claiming that it had an unfair policy of docking employees for a 30-minute meal break every shift, whether or not the employee had to work during that time. (If an employee must work through a meal, the employee is entitled to be paid; nobody disputes this basic assertion underlying the employee’s case.) Symczyk was the only named employee in the case, but anticipated that others would join in once the collective action was conditionally certified: that is, once the court found that the group of employees were similarly situated to Symczyk because they were subject to the same policy or practice.

Before Symczyk tried to certify the collective action, Genesis offered to settle her claim. Genesis said it would pay her $7,500, plus fees and costs. Symczyk didn’t respond, and Genesis withdrew the offer.

This settlement offer was made under Rule 68 of the Federal Rules of Civil Procedure. Under Rule 68, if one party doesn’t accept a settlement offer, that party will be responsible for all of its lawsuit costs after the date the offer was made, unless that party gets a judgment that’s better than the settlement offer. The purpose of this Rule is to give both sides a strong incentive to settle: The defendant has good reason to offer a generous settlement, both to get out of the lawsuit and to make it more likely that the plaintiff won’t do better at trial. The plaintiff has a good reason to accept, both because the offer is likely to be generous and because the plaintiff may have to foot a large litigation bill if the judgment isn’t better than the settlement.

With me so far? Because here’s where things get weird. The trial court threw out the lawsuit, finding that Symczyk no longer had an active dispute against the company because she had been offered all of the relief to which she was entitled. Because Symczyk no longer had a claim, she couldn’t represent other employees, and so the whole case got tossed.

The problem is that Symczyk didn’t accept the settlement offer; she turned it down. She didn’t get any money in settlement and, because the court tossed her case, she won’t get any money at trial. This should not be possible: Plaintiffs who turn down a Rule 64 settlement offer have a right to take their chances in court. The plaintiffs may win or they may lose, but they buy the opportunity to take their best shot by forgoing the settlement. It isn’t fair to throw a case out when the plaintiffs have neither settlement nor judgment in hand. Nonetheless, one federal judiciary circuit has interpreted Rule 64 to allow this type of penalty, presumably in an effort to put a stop to unnecessary litigation.

But the Court skipped right past this issue to decide that, if Symczyk’s case was properly dismissed, then she can no longer represent the group. Employee attorneys take issue with this, arguing that employees should have a chance to replace the named plaintiff-employee when this happens and continue with the lawsuit. Otherwise, defendant-employers could “pick off” the named employee (by making a Rule 68 offer) and get any collective action filed against it thrown out of court.

This is an interesting argument, but not the one the Court should have decided. In almost any federal court, Symczyk’s case would not have been dismissed and she would still be capable of representing the group. By leaving this fundamental issue undecided, the Court hasn’t clarified things very much for those on either side of an FLSA collective action.

Meal and Rest Break Guidance from California Supreme Court

Last week, the California Supreme Court issued a long-awaited decision in Brinker Restaurant Corp. v. Superior Court, a huge class action lawsuit alleging that employees were denied meal and rest breaks and required to work off the clock. Brinker owns a number of restaurant chains, including Chili’s and Romano’s Macaroni Grill. The lawsuit, initially filed by five employees, turned into a class action on behalf of almost 60,000 Brinker employees statewide. That group was divided into three subclasses: employees who were required to work more than five hours without a meal break; employees who were required to work more than three-and-a-half hours without a rest break; and employees who were forced to work off the clock (that is, to do work for which they were not paid).

California law requires employers to provide a ten-minute paid rest break for every four hours “or major fraction thereof” an employee works. However, no rest break need be provided to employees who work less than three-and-a-half hours total. As for meals, California law prohibits employers from requiring employees to work more than five hours without giving them a 30-minute meal break; this time is unpaid. In the Brinker case, the parties argued about when (that is, in what part of an employee’s shift) these breaks must be provided and what obligation the employer had to make sure the employee didn’t work through breaks. They also disputed whether these issues could properly be decided for the whole class or whether they should instead be decided on a case by case basis.

The Court issued a broad opinion, deciding not only the issues directly before it but a few more that are sure to come up as the lawsuit proceeds. Here’s the upshot:

Rest breaks: The Court had a math fight with the Court of Appeals on the “major fraction” language. (The Court of Appeals found that an employer could provide only one break in a seven-and-a-half hour shift.) The Supreme Court concluded that employees who work at least three-and-a-half hours but no more than six hours are entitled to one rest break; employees who work at least six hours but no more than ten are entitled to a second rest break; and so on. The Court also rejected the employees’ argument that one rest break must be provided before the meal period and one after in an eight-hour shift. Although the Court agreed that this made sense “as a general matter,” it declined to state a rigid rule regarding the timing of meals and breaks.

Meal breaks: There were a couple of big questions here. First, what is the employer’s duty during meal breaks? The Court found that the employer must provide a 30-minute meal break, during which the employee is entirely relieved of duties and is free to leave the work site. The employees wanted to impose an additional requirement that employers ensure employees do no work during their lunch, but the Court refused. If the employer pressures employees to work through their breaks, however, it violates this provision, and is liable not only to pay the employee for the break time, but also to pay a penalty. Second, the employees wanted the Court to require a meal break every five hours, so that if the first one was taken toward the start of a shift, the employee would be entitled to a second break five hours later. The Court disagreed: Employees are entitled to a meal break before they finish five hours of work; if an employee works ten hours, the employee is entitled to a second break. There is no requirement that the meal breaks be no more than five hours apart.

Class claims: The Court decided that the rest break claims could proceed as a class action, because they were based on the employer’s policies and procedures. The Court sent back the meal break claim so the trial court could decide whether a class should be certified under the Court’s interpretation of the five-hour rule. The Court rejected the idea of class certification on the employees’ claim that they were required to work off the clock, finding that it was based not on a company-wide policy, but on the actions of individual employees and managers.

This case has been touted as a win for employers, and it is — but mostly in the sense that adopting the employees’ arguments would have greatly expanded their rights as previously understood under California law. The Court didn’t take away any established employee rights with this opinion. While it’s not fun to have to take your “lunch” shortly after starting an eight-hour shift, then work on without a substantial break for many hours (and trust me, I’ve been there), it’s also a fairly common practice, especially in service industries where employees can’t all take their breaks at the same time. In this case, the trial court found entirely for the employees, then the Court of Appeal reversed and went entirely for the employer. The Supreme Court’s opinion seems to just rebalance the scales to where most people thought they were in the first place.