Tag Archives: flaster greenberg

The Department of Labor Goes to Church – Tips for Employers with Charitable Components

Adam Gersh Provides Tips for Employers with Charitable ComponentsThe U.S. Court of Appeals for the Sixth Circuit sided with a church operating the Lord’s Buffet and against the Department of Labor (“DOL”) in a case testing the reach of the Fair Labor Standards Act (“FLSA”). In Acosta v. Cathedral Buffet, Inc., the appellate court reversed a trial court ruling and held that volunteers who staffed a church-operated buffet are not employees and the Grace Cathedral Church did not run afoul of the FLSA by failing to pay the volunteers minimum wage.  The DOL claimed the church and its televangelist pastor illegally used unpaid labor by staffing its buffet with volunteers from the congregation.  In this case, the church operated the buffet restaurant for a religious purpose: to allow church members to proselytize to patrons.  Its operations relied heavily on church volunteers who worked alongside paid employees performing the same work. While the work performed was comparable to that of an employee, the Sixth Circuit held the DOL overstepped the bounds of the FLSA by applying it to the volunteer workforce.  In part, the Court’s decision relied on a determination that the volunteers had no expectation of payment and were not economically reliant on the work of the church.  

Savvy employer takeaways: Employers with charitable missions and those who support charities must be careful to delineate work from volunteer activities to avoid claims that the volunteers should have been paid for their activities.

Questions? Let me know.

 

Not-So Silent Partner May Have Individual Liability Under the FLSA

restaurant employees.jpgIn Malee v. Anthony & Frank Ditomaso, Inc., the Court served a surprise to a shareholder of a corporation that owned a restaurant, who sought to be dismissed from a FLSA case brought by employees of the restaurant.  The shareholder alleged he did not participate in the business on a day-to-day basis and, therefore, was not an “employer” within the meaning of the FLSA.  The Court refused to dismiss the claims, finding that the shareholder’s attendance at staff meetings, and advice on operating the business created a triable issue of fact as to whether the shareholder was, in fact, an employer within the meaning of the FLSA.

Savvy employer takeaways: The FLSA and overlapping state wage and hour laws often impose individual liability on officers, owners, and others involved in decisions to deprive employees of wages owed.

Questions? Let me know.

Severance Agreement Requirements for Older Workers

During a layoff or non-voluntary reduction in force, the topic of how much time employers need to give employees to consider severance packages and what disclosures must be made creates considerable confusion in the media, with much being made of employers’ supposed failure to make required disclosures (see example). Here is the deal: if employers are subject to the Age Discrimination in Employment Act (“ADEA”) (generally, private employers with 20 or more employees), and ask employees who are 40 years of age or older to release ADEA claims in exchange for a severance package that is part of a termination, then they must abide by specific regulations. Those regulations are meant as safeguards for employees protected under the Older Worker Benefit Protection Act (“OWBPA”) which amended the ADEA. That means covered employers may need to give employees up to 21 days to consider the severance offer, or 45 days in the case of a layoff of more than one employee, and a seven-day period after signing to revoke the release of the ADEA/OWBPA claims. Also, employers have a duty to disclose the age and title of the workers who are chosen for layoff and the selection criteria. The OWBPA has additional requirements and there are other best practices an employer’s counsel can and should use when drafting a release to help guard against challenges, so it is always best to consult an attorney familiar with these types of matters so that the employer gets the broad release they are seeking in exchange for severance. Employers who are not covered by the ADEA and employers who are conducting a layoff of employees who are not protected by the ADEA do not have to rigidly adhere to these requirements. In the case of a separation that is not part of a reduction in force, (for instance, a termination for cause) the employer may not need to abide by these rules either. Even if the ADEA/OWBPA rules do not apply, employers are wise to give employees a reasonable period of time to consider a severance package to help protect against arguments that the waiver of claims should be unenforceable because of coercion or other reasons.

Savvy employer takeaways: Employers should know what is and what is not required to make their separation agreements and releases enforceable and should use reasonable means to give employees enough time to thoughtfully consider them.

Questions? Let me know.

Tip Strip? Exotic Dancers Prevail in Lawsuit Against Strip Club for Employment Misclassification

In Philadelphia, a federal court judge entered a nearly $4.6 million judgment in favor of a group of exotic dancers and against a strip club, the Penthouse Club. In the class action, the dancers argued they had been mischaracterized as independent contractors instead of as employees and, as a result, the dancers were deprived of minimum wages and tips they earned. The club argued it was not an employer and merely rented space to the exotic dancers, whom the club treated as independent contractors, but the jury rejected that argument and found the club was an employer. In this case, the club was deemed an employer because, among other things, it had the power to ban dancers (or fire them if they were employees) for violating club rules.  The club required dancers to pay “tip outs” to other club employees such as fees to management, the DJ, the “house moms,” the emcee, security workers, and valets.  As a result, the dancers argued their wages and tips, which they were entitled to keep as employees, were diverted.  This fact pattern is increasingly common because dancers from across the country assert similar claims, but it also extends to other businesses that use similar pay models, such as exercise studios.

Savvy employer takeaways: Proceed with the utmost caution when using the independent contractor designation for service providers, ensure tipped employees are paid in accordance with applicable federal and state laws, and impose limits on tip-pooling and other tip-sharing rules.

Questions? Let me know.

%d bloggers like this: