Tag Archives: wage and hour

New York Employers — Don’t Forget About These Other New Year’s Eve Wage Increases …

As New York employers are undoubtedly aware, New York’s minimum wage is increasing on December 31, 2017 as follows:

Size/Location of Employer Minimum Wage as of 12/31/17
“Upstate” employers (excluding fast food employees) $10.40 per hour
“Downstate” employers (excluding fast food employees) $11.00 per hour
“Small” NYC employers (excluding fast food employees) $12.00 per hour
Fast food employees outside NYC $11.75 per hour
“Large” NYC employers (excluding fast food employees) $13.00 per hour
Fast food employees inside NYC $13.50 per hour
·         “Upstate” = employers in all counties “upstate” from the greater NYC area

·         “Downstate” = employers in Nassau, Suffolk, and Westchester Counties

·         “Small” NYC employers = employers with 10 or fewer employees

·         “Large” NYC employers = employers with 11 or more employees


However, New York employers may be surprised to learn about the other types of wages that are accompanying the increase in minimum wage – specifically:

  • An increase to the salary threshold for exempt employees; and
  • An adjustment to the amounts employers can deduct from employees’ wages for items such as tip credits, uniform allowances and meals

New Salary Threshold for Exempt Employees

Effective December 31, 2017, the salary threshold for exempt employees will increase as follows:

Size/Location of Employer Salary Threshold as of 12/31/17
“Upstate” employers $780 per week
“Downstate” employers $825 per week
“Small” NYC employers $900 per week
“Large” NYC employers $975 per week


Adjustment to Permissible Deductions

Under the New York wage orders (those applicable to hospitality employers, employers in “miscellaneous industries,” and employers in the “building service industry”), employers are permitted to make deduct from employees’ wages for items such as tip credits, uniform allowances and meals.  Starting December 31, 2017, those amounts have been adjusted dependent on employer location and size.  It is recommended that all employers review these summaries to determine how much they can deduct for a uniform allowance and claim as a meal, lodging and tip credits.

Watch for These Wage and Hour Challenges this Holiday Season

It’s the most wonderful time of the year!  While the holiday season certainly brings joy, it can also cause employers a lot of stress – particularly with respect to wage and hour issues that can arise.  Avoid this unwanted holiday headache by keeping an eye out for the following wage and hour challenges that can arise during the holiday season:


  1. Holiday Parties Could Be Considered Working Time.

Everyone enjoys a good party and the holiday season presents a good reason to celebrate a profitable year and boost employee morale.  However, to avoid a potential wage and hour issue, employers need to exercise caution with scheduling and communicating with employees about the holiday party.

Under most state laws, a holiday party that is scheduled during an employee’s regular working hours is considered working time; therefore, employees must receive compensation if they attend the party.  In addition, if an employee is required to attend a holiday party (or made to feel that they are required to attend – e.g. through a manager’s encouragement), the time an employee spends at the party can also be considered compensable.

To avoid these issues, schedule the holiday party outside of regular working hours (and consider holding it in an offsite location).  In addition, make it abundantly clear to your nonexempt employees that attendance at the party is 100% voluntary.

  1. Special Holiday-Related State Wage and Hour Laws

While under federal law (the FLSA) employers are not required to provide any time off or additional compensation (i.e. holiday pay) to employees during the holiday season, there are laws in some states that impose special requirements on employers.

For example, a few states require certain types of employers to provide employees with time off on specific days (i.e. Christmas and New Year’s Day).  Other states require that certain employers pay employees overtime if they are required to work on specific holidays (i.e. Christmas and New Year’s Day) – regardless of the amount of time worked by the employee in that week.

In addition, several states have “day of rest laws” where employers are required to provide a day of rest, which require an employer to provide employees with a day of rest on their Sabbath or when they have worked a certain number of hours or days in a row.  Due to the busyness of the holiday season, an employee’s work schedule can violate a state’s day of rest law.

Finally, some states have enacted “reporting time laws” (where an employer must pay an employee additional wages if he/she shows up for work and is not provided a full shift of work) and several large cities (San Francisco, San Jose, Seattle and, New York City) have enacted “scheduling laws” (which limit how and when employers can change employees’ schedules).  Due to the unpredictable nature of the holidays, employers should be aware of these laws and exercise caution when scheduling employees for the holidays – otherwise they run the risk of wage and hour penalties.

Even Mickey Mouse Isn’t Immune to Wage and Hour Missteps

The Walt Disney Company has learned an expensive lesson about FLSA compliance. It recently settled a wage and hour claim with the US Department of Labor and has agreed to pay $3.8 million in back wages to more than 16,000 of its Florida employees.

What did Disney purportedly do wrong?

According to the Department of Labor, Disney resorts in Florida committed the following major wage and hour errors:

  1. The resorts deducted a uniform or “costume” expense from employees’ wages and, in some cases, that deduction caused some employees’ hourly rates to fall below the federal minimum wage.
  2. The resorts failed to compensate employees performing duties during a pre-shift period before the designated start of their shifts, and during a post-shift period.
  3. The resorts failed to compensate employees performing duties a post-shift period.
  4. The resorts failed to maintain required time and payroll records.

Take Home For Employers

According to the Department of Labor, “These violations are not uncommon and are found in other industries, as well.” Employers must remember that they cannot make deductions that take workers below the minimum wage and must accurately track and pay for all the hours their employees work, including any time they work before or after their scheduled shifts. It is recommended that employers audit their wage and hour practices and verify they are complying with both state and federal laws.

McDonald’s Corporate Agrees to Pay Wage and Hour Settlement to Franchise Employees

In an unprecedented move, the McDonald’s corporation has agreed to pay $3.75 million to settle a California wage and hour lawsuit wherein the primary claim against the McDonald’s corporation is that the corporation is liable for its franchisee’s violations of California labor law violations.

The lawsuit, which was filed in 2014, claims that the franchisee and the McDonald’s corporation (as the joint employer) violated California wage and hour law by failing to pay overtime, keep accurate pay records and reimburse workers for time spent cleaning uniforms.

The franchisee settled the claims against it in December of 2015 for $700,000, but the lawsuit remained ongoing against the McDonald’s corporation under the theory that it is jointly liable for the violations as the franchise employees’ joint employer.

In May of 2016, a federal judge ruled that the McDonald’s corporation was not the franchise employees’ joint employer under federal and state laws. However, the judge further ruled that the McDonald’s corporation could still be held liable if the workers believed the McDonald’s corporation was their employer.

While the McDonald’s corporation maintains that it is not the joint employer of these franchise employees, McDonald’s spokeswoman Terri Hickey explained that the corporation entered into the settlement agreement “to avoid the costs and disruption associated with continued litigation.”

At this point in time, the settlement agreement is not final because it must be approved by a federal judge. However, there are still important lessons a franchise employer can learn from this case. The key lesson is that franchise businesses are being targeted in wage and hour claims – not only in California, but nationwide. It is extremely important that franchise owners review their wage and hour practices in all of their establishments and verify that their managers are complying with both state and federal wage and hour law.

New to California – Employee Wage Complaint Hotline

On August 31, 2016, the California Labor Commissioner issued a press release announcing the launching of its online Employee Complaint “Hotline” that California employees can access to lodge a complaint with the Labor Commissioner about their employer’s wage payment practices. As a part of this new system, employees have the ability to complete an online form to report an employer’s perceived wage and hour violations.

While this system does not allow an employee to file a claim for the employee’s own wages (that must still be filed separately), it does give employees the ability to quickly alert the Labor Commissioner of potential unlawful wage and hour practices and could lead to more investigations by the Labor Commissioner into California employers’ wage practices.

In light of this new process, it is important for all California employers to keep up-to-date on California’s changing wage-hour requirements and to take the necessary steps to ensure that their practices are compliant with California law.

New York Wage And Hour Liability — This Time Its Personal (At Least For “Top Ten” Shareholders Of Private Corporations)

Are you a “top ten” shareholder (i.e. one of the ten largest shareholders) in a privately held corporation? Does your corporation employ workers in New York? If you answered “yes” to both of these questions, then a new amendment to Section 630 of New York’s Business Corporation Law impacts you.

Section 630 sets forth when a “top ten” shareholder can be held personally liable for the debts of a private corporation, which includes “all debts, wages or salaries due and owing” to any of the corporation’s employees for all services performed for the corporation. For the purpose of Section 630, “wages and salaries” include: all compensation and benefits owed to an employee, including salary, overtime compensation, vacation and holiday pay, severance, and employer contributions to insurance and welfare plans and pension funds (among other things).

Prior to its amendment, only a top ten shareholder in a New York State corporation (i.e. a corporation incorporated in New York) could be held personally liable for these debts. However, under the amended statute, now “top ten” shareholders in all privately held corporations operating in New York (regardless of its state of incorporation) can be held liable for these debts.

Impact of the Amendment

The amended law removes the shield against personal liability in wage and hour claims for individual shareholders from “foreign” corporations (those not incorporated in New York). As a result, these shareholders now have a personal incentive to verify that their corporation is complying with New York wage and hour laws. To reduce your risk of exposure to personal lability for an employee’s wage claims, it is recommended that corporate shareholders take steps to ensure that any corporate actions are in compliance with all applicable wage and hour laws before making corporate decisions that directly relate to the corporation’s employees and their wages and compensation.

New York Employers Can Face Jail Time For Overtime Violations

Failing to pay employees overtime wages can be an incredibly expensive mistake, but is this a mistake that can send you to jail? For New York employers, the answer is a surprising yes.

Recently, an owner of a chain of Papa John’s franchises in New York City was sentenced to 60 days in jail because falsified business records relating to the payment of overtime wages to his employees.

Specifically, the owner failed to pay overtime to his employees. Instead, the owner paid his employees the same, “straight time” regular rate of pay for all hours worked, including hours in excess of forty. In order to conceal this practice of intentionally not paying overtime, the owner created fictitious names for employees to use in the company’s computerized timekeeping system. The owner also filed fraudulent tax returns with the State of New York that omitted the cash payments made under fictitious names.

While this particular employer’s method to avoid paying overtime was extreme, the take-home message to New York employers is clear – wage theft is a crime and the New York Attorney General (who prosecuted this case) will do everything in his power to insure that New York employers pay their employees properly.

In addition, this ruling should serve as a warning for employers in California and Oklahoma, both of which have statutes imposing criminal liability for certain wage and hour violations. Like New York, these states may resort to the available criminal penalties in order to protect their workers from wage theft.

New York’s Wage Deduction Law Extended

In early November 2015, New York Governor Andrew Cuomo signed legislation, Assembly Bill A07594/S05623, which extended the 2012 amendments to section 193 of the New York Labor Law relating to permissible deductions from employee wages. The amendments were set to expire on November 6, 2015 but have been extended by the legislation to November 6, 2018.

These amendments to section 193 of the New York Labor Law allow employers to make deductions from wages for items such as overpayments and advances against wages, subject to certain procedures governed by Labor Department regulations. The amendments also allow employers to make deductions from wages for additional items such as parking passes, health club memberships and employee cafeterias with the written permission of the employee.

Oklahoma Federal Court Clarifies Regular Rate Of Pay Calculation

In a recent decision (Sharp v. CGG Land (U.S.) Inc.), the Oklahoma Federal District Court held that payment for travel expenses may be excluded from an employer’s calculation of the regular rate of pay for purposes of calculating the employee’s overtime rate.

In this case, the employer paid its employees a “fixed” travel expense reimbursement (i.e. a per diem) of $35, which was intended to compensate employees for the meal expenses they incurred when they travelled to remote work sites.   The employee argued that the payment was a wage and should have been included in the employer’s calculation of the employee’s regular rate of pay. The Court disagreed and held that the payments were reasonable payments for travel expenses and should be excluded from the calculation of the regular rate of pay.

Cosmetology and Hair Design Students Are Not “Employees”

In a recent federal court case (Benjamin v. B & H Education, Inc.), the California federal court held that cosmetology and “hair design” students were not “employees” under the Fair Labor Standards Act or the wage-and-hour laws of California and Nevada and therefore were not required to receive minimum wage for the work they performed as a part of their educational program.

In this case, the plaintiffs were cosmetology and “hair design” students who, as a part of their program, participated in a clinical training program where they were required to cut hair, apply make-up, perform the various clean-up activities and/or administrative tasks (i.e. laundry, sweeping, cleaning their work stations, covering the phones, booking appointments). The plaintiffs claimed that their time spent in the clinical training program was compensable time under both state and federal law.

The court disagreed and held that the work performed in the clinical training program was for the educational benefits of the plaintiffs and was relevant to preparing the plaintiffs for their chosen professions as cosmetologists and hair stylists. Therefore, the fact that the students were unpaid for the work they performed during the clinical training program did not violate either the FLSA or state wage and hour law.