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Archive for December, 2012

Dec 07 2012

NEW WAGE NOTICE OBLIGATIONS TO EMPLOYEES

Published by under Taxes,Uncategorized,Wages

noticeEmployers with New York employees must ensure that they provide them with an annual wage notice form by February 1, 2013, as required by the New York Wage Theft Prevention Act (the Act). This Act, which became effective in April 2011, significantly increases employers’ wage notice obligations to New York employees.

The Act requires private sector employers to provide each New York employee, upon hire and every year, with a detailed notice form setting forth that employee’s pay rate and the employer’s pay practices. Notice to current employees must be provided between January 1 and February 1 of each year, beginning January 1, 2012. Notice must also be given to employees within seven days following a reduction in their wages (or, if an employee works in the hospitality industry, following any wage change). Notice must be given to both non-exempt and exempt employees, and must contain the following information:
• the employee’s rate of pay and, if non-exempt, overtime rate of pay;
• the basis of the employee’s rate of pay (e.g., salary, commission or hourly);
• the employee’s regular pay day (employees are also advised to state the frequency of pay periods-e.g., weekly, bi-weekly or other);
• the employer’s name and any “doing business as” names;
• the employer’s telephone number and the address of its main office or principal place of business (and, if different, mailing address); and
• any allowances the employer intends to claim as part of the minimum wage (e.g., tip, meal or lodging allowances).

This means that, no later than February 1, 2013, all private sector employers must give ALL of their New York employees a written notice containing the above information.
Employers may provide this notice by hard copy or electronically, provided that employees are able to print out a copy of the notice. Employers must also obtain a signed acknowledgement from employees, acknowledging that they have received the notice. Although an employee’s email response confirming receipt of the notice is sufficient for acknowledgement purposes, an automated “read receipt” would not be sufficient. All notices must be retained by employers for six years.

The New York Department of Labor (the DOL) requires that employers provide the notice in an employee’s primary language for workers whose primary language is English, Spanish, Chinese, Korean, Creole, Polish or Russian. The DOL has notice templates available on its website for each of these languages. However, employers are not required to use the DOL-created templates. They can develop their own notice forms, provided that they contain all of the legally-required information described above.
Employers should be aware that the notice must be a separate form. As such, new hires should receive a separate, stand-alone notice form in addition to (or attached to) any offer letter or employment agreement they may receive. Moreover, if an employee works on a commission basis, the commission agreement should be attached to the notice form.  An employer who fails to provide required notices to its employees may be subject to significant penalties. Individual employees may recover up to $2,500 in a lawsuit, and the DOL may assess a penalty of $50 per week, per worker.

Employers are also advised that, in addition to the new stringent notice requirements, the recently enacted Act also contains provisions regulating recordkeeping, payroll records and paystubs.

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Dec 02 2012

TIP SHARING … OR TIP STEALING?

A recent onslaught of lawsuits involving illegal tip sharing amongst restaurant employees is rocking the restaurant industry. These lawsuits are not new to the industry but they have recently increased in numbers as a result of a few recent, and very substantial, plaintiff/employee successes.

On April 4, 2008, the largest class action suit ever brought by New York restaurant employees, employees sued Starbucks for violating a state law that prohibits management from receiving part of workers’ tips. At Starbucks, “shift supervisors” share the pooled tips with baristas, prompting a suit from a former barista, on behalf of at least 2,000 Starbucks baristas in NY who are allegedly owed over $5 million. The lawsuit was commenced almost immediately after a California ruling, where a state judge found Starbucks liable for $105 million, finding Starbucks illegally enabled shift supervisors to take a share of the tips.

GENERAL RULE: Restaurants in New York State are allowed to pay employees who receive tips as little as $5.00 — less than the federal minimum wage of $5.85 per hour and the New York State minimum wage of $7.15. However, To use this “tip credit”, amongst other things, employers are not permitted to share tips among “agents” of the employer.

This general rule seems straightforward, but it’s not. The law fails to define who constitutes an “agent” of an employer. An owner, officer of the corporation, or a general manager clearly fit this bill and cannot share in tips. But, what about a maitre‘d? a shift supervisor? or an assistant manager? The answer is . . .it depends on their job tasks and responsibilities – not their job title. The Department of Labor (DOL) has stated that an agent, “does not include a mere supervisory employee who does not have the authority to hire or fire.” And just because a maitre‘d has “supervisory” responsibilities over the rest of the dining room personnel does not necessarily mean that the maitre‘d cannot share in employee tips. The DOL will look at each situation on an individual basis, and pay particular attention to whether the maitre‘d (or another employee) “acts in the place of the owner”, by performing such functions as hiring and firing employees, or other managerial responsibilities such as disciplining and setting wages or work schedules.

In its defense, Starbucks argued in California court and again in New York that it’s shift supervisors are not managers (although they are in charge when managers are away and can evaluate baristas in performance reviews), because (i) the customers cannot differentiate between the shift supervisors and the baristas, (ii) the shift supervisors often do the same work as baristas including serving the customers, and (iii) the shift supervisors pay is only 22 cents more per hour. However, the California Court ruled that the tasks and responsibilities given to these “shift supervisors” did indeed make them “agents” of the employer and hence, they were prohibited from sharing in the tips.

Thus, the prohibition of sharing tips with an “agent” of an employer must be very carefully adhered to as the penalties can be severe. As in the Starbuck’s cases and many others, the definition of what constitutes an “agent” is presently being defined and redefined by the courts. If you are an employer and employ a Maitre’d, Assistant Manager, captain, or shift supervisor, play it safe, compensate them fairly – or even magnificently – but keep their hands out of the tip jar.

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