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Food and Drink Industry Labor Laws
Posted November 2015 by S. Ward Heinrichs
Food and Drink Industry Labor Laws
Brinker Restaurant Corporation v. Superior Court, (2012) 53 Cal.4th 1004: Brinker was a case in which restaurant hourly employees filed a class action against their employer for violations of the California meal period regulations and other wage and hour violations. The Supreme Court said that employers have a duty to “provide” meal periods for its qualifying employees. However, employers need not “ensure” that employees get meal periods, as the plaintiffs argued. Rather, they only need to provide the opportunity to receive a meal period.
Sometimes, the work load is so heavy that employees cannot find the time to take a meal period. When that situation arises, the employer can be exposed to liability. If it happens to enough employees, the employer may face a class action. If an employer learns that employees feel as though their workload prevents them from taking a meal period, the employer should adjust the scheduling or workload to allow its employees the opportunity to take a meal period if they want to. Once they have a legitimate opportunity to take a meal period, the employer’s risk of a class action lawsuit should diminish markedly.
Employers must “authorized and permit all employees to take rest periods.” The Brinker court helped to clarify what an employer must actually “authorize”. An employee is entitled to a 10 minute uninterrupted rest period if the employee’s shift is at least 3.5 hours. An employee is entitled to a second rest period if his or her shift is at least 6 hours and is entitled to a third rest period if the shift is at least 10 hours long. Employees can elect not to take their rest periods, but allowing them to not take them can create the appearance of violations.
Employers should track the rest periods with a sign-in/sign-out sheet. However, tracking rest periods can have a downside. If the rest period tracking data shows employees who skip or skimp on rest periods, then it can be used by a plaintiff’s attorney to show violations of the rest period requirements.
TIP POOLS AND TAXATION
Generally, California law forbids the employer from taking or sharing in tips (Labor Code §351), and employers must track all tips that they collect for employees (Labor Code §353). Employer mandated tip pooling is legal, but the house cannot share in the pooling arrangement. The tip pool must be fair and reasonable. Only those who are in the chain of service can be in the pool. For instance, an employer cannot require servers to include cooks and dishwashers in the pool.
Tips are taxable income. The IRS now requires all tips to be declared. Technically, all persons who receive tips, or a share of the tips, must report it as income. However, a common practice is for the employer to allocate the entire tip to the server who waits on the table. In that case, even when the server shares the tip, the server is the only person who pays tax on the entire tip. The employers records do not show any other employees in the service chain as persons who receive tips, even though they actually do in tip pooling arrangements. Presumably, they escape tax liability because the employer’s records do not show them collecting any tips. The server then unfairly pays tax on income that the server did not actually take home.
PAID SICK LEAVE:
Starting on July 1, 2015 (less than three months ago), most employers in California must provide at least 3 days of paid sick leave for its employees who have worked at least 30 days within the year. Restaurant employees will, in most cases, qualify for paid sick leave under the new California law.
The sick leave accrues at the rate of 1 hour for every 30 hours worked. The employer may provide only 24 hours (3 days) of sick leave per year if the employer offers its employees three sick days at the beginning of the employment year. Otherwise, the employer must allow its employees to accumulate up to 6 days of sick leave per year, but may still limit each employee to the use of only 3 days per year. In that case, any unused balance may be carried over to the next year. Employees can begin to use accrued sick leave after 90 days of employment.
CLASS ACTION WAIVERS:
One way an employer can potentially avoid class action liability is to have a valid class action waiver in an arbitration agreement. (Concepcion v. AT&T Mobility, (2011) 563 U.S. 321.) The United States Supreme Court ruled that the Federal Arbitration Act (FAA) preempted state law. In other words, if the parties freely entered into an arbitration agreement under the FAA, then state laws that might otherwise invalidate the arbitration agreement could not defeat it. Typically, arbitration agreements require the consumer or employee to waive the right to take their cases to court. Further, they typically require the consumer or employee to waive their right to bring a class action in the arbitration proceedings.
The Courts are still wrestling with arbitration agreements and class action waivers in the employment context. Generally, class action waivers appear to prevent employees from filing class action lawsuits, but that is not true in all cases.
S. Ward Heinrichs, Esq.
Employment Law Office of Ward Heinrichs
4565 Ruffner Street, Suite 207
San Diego, CA 92111
(858) 408-7543 (fax)
Employment Law Office of WARD HEINRICHS
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