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Wage and Hour Lawsuits Up More Than 430 Percent in 20 Years

It starts with something as small as the clink-clanking of coins in a tip jar.

But those dollars and cents can add up quickly, and if they aren’t distributed fairly, it can result in someone filing a wage and hour lawsuit.That’s exactly what’s happening amid a dispute with a national coffee chain, now embroiled in a case before the New York Court of Appeals. The case could ultimately have broad consequences for workers in hospitality, as well as for those working at the coffee chain’s stores throughout the country.

Federal Judicial Center data reveals that wage-and-hour litigation has actually shot up more than 430 percent in the last two decades. Reasons for this are varied. On one hand, workers are more aware and sensitive to wage-and-hour issues and what their rights are under the law. Social media may be at least partially credited. But also, workers may be more and more frequently turning to the courts to ensure fair pay because the Department of Labor has failed to make the resources available to ensure employers are complying with the law.

The latter theory goes that employers became lax in their application of the law because enforcement is nowhere near stringent.

When the economy got bad, companies were able to squeeze employees more than ever, with little fear that any would fight back because they were desperate to simply have a job. But workers are taking a stance now that the economy is improving.

Claims generally fall into one of three categories:

  • Hourly workers who aren’t paid for all of the hours they have worked;
  • Salaried employees who claim they are owed overtime;
  • Tipped minimum wage workers who claim their tips don’t add up to the minimum wage.

The New York coffee chain case pits baristas, who are paid hourly, against shift supervisors, who are also paid hourly and assistant managers who are salaried workers. As it stands now, baristas and shift supervisors must share the tip, but assistant managers may not.

The case is being heard by a federal appeals court, but it involves a question of New York labor law. Specifically, the issue is what comprises the definition of employer “agent” as it relates to prohibitions of tip-sharing. Additionally, the court needs to answer whether state law permits employers to exclude an otherwise tip-eligible employee from sharing the pot.

We do now that shift managers, who are below assistant managers in rank, are paid hourly, which has been part of the reason they have been allowed to share in that tip, while assistant managers can’t.

The court’s decision will provide clarification that is expected to affect more than 40,000 businesses throughout the state of New York, including about 250,000 hospitality industry workers just in New York City.

Lawyers representing the baristas say the shift managers should also be excluded from sharing those tips, since they have authority over the baristas, and may coordinate wages and breaks.

Representatives of the chain, meanwhile, say that the shift supervisors, along with the baristas, provide customer service, while the assistant managers have “real authority” to schedule, hire and fire.

As it now stands, it’s up to the employer to interpret what state statute says about whether an employee is eligible.

The Law Offices of Ira S. Newman provides wage and hour representation in New York City, Long Island, Great Neck and surrounding areas. Call 516-487-7375 or send us an e-mail.

Additional Resources:
Starbucks Tip Jars The Subject Of Case In New York’s Highest Court, May 28, 2013, By Michael Virtanen, The Associated Press

More Blog Entries:
NYC Tight-Lipped On Employment Lawsuit Settlements, Nov. 20, 2013, New York City Wage And Hour Lawyer Blog