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Friday, September 26, 2014

Tip Credits Can be Complicated

By: Tommy Eden

Leonzo Alvarado, a car wash attendant for Five Towns Car Wash, Inc. ("Five Towns") in New York claimed that Five Towns improperly benefited from the Fair Labor Standards Act tip credit because he claimed three supervisors improperly shared in the tip pool. Alvarado also claimed the Five Towns violated the FLSA by failing to inform him that a tip credit would be applied to his wages. Employers may pay tipped employees as little as $2.13 an hour if the employee makes enough in tips to reach the $7.25 minimum wage, but employers must provide advance notice to employees.

The Federal District Judge was unable to find clear evidence that that the car wash failed to provide Alvarado with proper tip credits notice or that the 3 others persons included in the Tip pools were supervisors, and found that such were fact questions were jury issues. The case is Alvarado v. Five Towns Car Wash.

Common Sense Counsel: This is a great case to review DOL Tip Credit regulations.
Tipped employees are those who customarily and regularly receive more than $30 per month in tips. Tips are the property of the employee. The employer is prohibited from using an employee’s tips for any reason other than as a credit against its minimum wage obligation to the employee (“tip credit”) or in furtherance of a valid tip pool.

The requirement that an employee must retain all tips does not preclude a valid tip pooling or sharing arrangement among employees who customarily and regularly receive tips, such as waiters, waitresses, bellhops, counter personnel (who serve customers), bussers, and service bartenders. A valid tip pool may not include employees who do not customarily and regularly received tips, such as dishwashers, cooks, chefs, and janitors.

Tip FLSA Credit Requirements. The employer must provide the following information to a tipped employee before the employer may use the tip credit:
1) the amount of cash wage the employer is paying a tipped employee, which must be at least $2.13 per hour;
2) the additional amount claimed by the employer as a tip credit, which cannot exceed $5.12 (the difference between the minimum required cash wage of $2.13 and the current minimum wage of $7.25);
3) that the tip credit claimed by the employer cannot exceed the amount of tips actually received by the tipped employee;
4) that all tips received by the tipped employee are to be retained by the employee except for a valid tip pooling arrangement limited to employees who customarily and regularly receive tips; and
5) that the tip credit will not apply to any tipped employee unless the employee has been informed of these tip credit provisions.

Dual Jobs are those when an employee is employed by one employer in both a tipped and a non-tipped occupation, such as an employee employed both as a maintenance person and a waitperson, the tip credit is available only for the hours spent by the employee in the tipped occupation. Knowing the regulations is your best tip to say out of court.

Tommy Eden is a partner working out of the Constangy, Brooks & Smith, LLP offices in Opelika, AL and West Point, GA and a member of the ABA Section of Labor and Employment Law and serves on the Board of Directors for the East Alabama SHRM Chapter. He can be contacted at or 334-246-2901. Blog at and follow on twitter tommyeden3

Wednesday, September 17, 2014

Transgender Auto Tech Found Sleeping

By: Tommy Eden

Jennifer Chavez was employed as an automobile technician at Credit Nation Auto Sales who sells and repairs automobiles in Austell, Georgia. At the time of her hire, Jennifer was known as Louie Chavez and presented as a male, according to court documents.

In the summer of 2009, according to court documents, Jennifer decided to go through a gender transition because she "did not want to die having lived a lie."  Jennifer decided to inform Credit Nation of her intention to transition from a male to a female and later testified in deposition that the managers and staff were both extraordinarily kind regarding her decision to transition. The manager made sure that all employees understood the no harassment policy and that anyone who committed an infraction would be terminated.

Jennifer claimed in her lawsuit that the supportive environment at Credit Nation ended two weeks after she announced the intended transition and was told to "tone things down" after her visits to the other technicians' stalls, talking about surgeries, including breast augmentation.

Later the Credit Nation President met with Jennifer about coming to work or leaving work wearing dresses, skirts and heels in the service department work area because the attire violated Credit Nation's workplace rules. Technicians at Credit Nation are required to wear work pants, a uniform shirt, and rubber soled shoes that allow technicians to walk on greasy and slippery surfaces.

In December 2009, Credit Nation approved Jennifer’s request for two weeks of paid leave, even though she had accrued only a week of vacation time at that point, to accommodate her sex reassignment surgery. Jennifer raised a number of unisex restroom issues for which Credit Nation sought advice of legal counsel. Jennifer was also issued two disciplinary warnings.

On January 8, 2010, according to court documents, Jennifer arrived at work and clocked in at 7:39 a.m. and decided to sit in the back of one of the cars she was working on to try and get a little bit warm. She then went to sleep in the back of the car and a photograph of her sleeping was sent to the manager.  On January 11, 2010, Jennifer was terminated for sleeping while on the clock on company time in violations of the Employee Handbook. Another employee, who did not have previous write-ups in his file, had been terminated for sleeping on the clock.

Jennifer was allowed to file an EEOC Charge for transgender sex discrimination under Title VII and later filed a Title VII lawsuit in the Federal District Court for the Northern District of Georgia. Credit Nation filed a motion for summary judgment which was granted in its favor last week. Although the Judge held that under existing 11th Circuit Court case precedent Jennifer could file a transgender based case, he also held that her termination was for sleeping on the job and not transgender issues. The comparator evidence was critical to the Judge’s ruling. The case is Jennifer Chavez v. Credit Nation Auto Sales.

Common Sense Counsel: In these difficult cases bullet proofing your discharge decision is absolutely critical. Updating your handbook language to cover gender identification and sexual orientation language should be one of your first priorities, with updated training, deciding now on restroom solutions and finding a source for guidance when confusion reigns in your workplace.

Tommy Eden is a partner working out of the Constangy, Brooks & Smith, LLP offices in Opelika, AL and West Point, GA and a member of the ABA Section of Labor and Employment Law and serves on the Board of Directors for the East Alabama SHRM Chapter. He can be contacted at or 334-246-2901. Blog at and follow on twitter tommyeden3

Monday, September 8, 2014

Nothing to Cheer About

By: Tommy Eden

Members of the Raiderettes Cheerleader squad will receive $1.25 million to their settle class-action claims the Oakland Raiders football franchise for failing to compensate them for all hours worked and reimburse them for expenses. The Raiders will pay the 90 cheerleader plaintiffs from $2,460 to $20,634, according to the brief in support of the joint motion for preliminary approval of the settlement filed Sept. 4 in Alameda County Superior Court. Under the mediated settlement, class counsel will receive $400,000 in attorneys' fees and $23,000 in costs. This is the first suit settlement against a football team for failing to pay cheerleaders for their hours worked.

The Raiderettes lawsuit led to other wage and hour lawsuits against other National Football League franchises including the New York Jets, Buffalo Bills, Cincinnati Bengals and Tampa Bay Buccaneers.

The Raiderettes alleged in their lawsuit that the Raiders failed to pay cheerleaders for all hours worked, reimburse them for business expenses, and provide meal and rest breaks and made unlawful deductions in violation of California law. They also claimed in their lawsuit that they were required to pay $150 or more to have their hair done by a team-selected stylist; pay for replacements uniforms and lost or damaged pom-poms; purchase false eyelashes, tights, and white bras; and pay for team specified makeup once the provided cosmetics ran out.

Common Sense Counsel: This wage and hour claim by the Raidettes, and large class settlement, is clearly a blitz the Raiders were totally unprepared to stop. So what are the top three Fair Labor Standard Act (FLSA) violations against employees and how do you avoid the sack.

1) Misclassification of Exempt Employees. Basically it is either classify and pay correctly now or pay the Department of Labor (DOL) later. Exemptions are based on job duties, salary level and salary payments. Salaried exempt employees must be paid no less than $455 per week on a guaranteed salary basis.

2) Not Counting Every Hour Worked. It is imperative to ensure that every hour the employee performs tasks for you is counted and paid correctly. Hours worked need to include not only hours actually performing job duties, but also any other suffered or permitted to work by the employer or for the employers benefit. Work not requested but suffered or permitted is work time.

3) Not Calculating Overtime Pay the FLSA Way. The FLSA has its own way of defining overtime and the “regular rate” which also includes shift differential and non-discretionary bonuses. Improper “rounding” of time can result in a costly DOL settlement.

So before you start your next work day make sure your game plan can pick up these three FLSA Blitz packages.

Tommy Eden is a partner working out of the Constangy, Brooks & Smith, LLP offices in Opelika, AL and West Point, GA and a member of the ABA Section of Labor and Employment Law and serves on the Board of Directors for the East Alabama SHRM Chapter. He can be contacted at or 334-246-2901. Blog at and follow on twitter tommyeden3

Thursday, September 4, 2014

Workplace Drug Testing Laws Complex

By: Tommy Eden

Shawn Olson, a Minnesota resident was offered a job in West Virginia by a Wisconsin company and requested to complete a pre-hire drug screen.  Push, Inc. had initially requested the test be performed in Wisconsin, but Olson was allowed to take the test in Minnesota for his convenience. He then reported for work in West Virginia and when  the test results came back as “too diluted,” which the employer interpreted as a failed test, Olson was fired.  Under the Minnesota Drug and Alcohol Testing in the Workplace Act an employer may not terminate or refuse to hire an employee based on an initial screening result unless the employer verifies the result through a confirmatory test. Neither Wisconsin nor West Virginia has a similar confirmation requirement.

An upset Olson filed suit in Minnesota State Court and Push removed the suit to federal court based upon diversity, then filed a motion to dismiss contenting that Minnesota laws were not controlling. The issue before the Federal District Court Judge was whether the Minnesota drug testing law controlled a Wisconsin company that was providing employment in West Virginia, despite the fact the employee lived in Minnesota when he took a drug test in Minnesota.  Olson claimed that under Minnesota law, the employer was “doing business” in Minnesota and therefore subject to the Minnesota drug testing rules.

On August 18 the federal district judge ruled that Minnesota had a presumption against the imposition of extra-territorial application of Minnesota law on other states and that it was unreasonable to construe the phase “doing business in” as applying to an out of state employer providing out of state employment. The Court also held that such a broad approach as urged by Olson would likely be unconstitutional because it could violate the Commerce Clause of the United States  constitution by creating numerous conflicts among state laws and dismissed the case.

Common Sense Counsel: Determining which state drug testing laws, or federal regulations, apply underscores  that workplace drug testing can be extremely complex and legally regulated. Following these five guidelines will help you navigate the murky drug testing waters: 1) when sued get into Federal Court if you can. The above well reasoned opinion and quick dismissal in favor or Push, Inc. is a good example; 2) make sure you have a working knowledge of the drug testing laws of the states you have employees on the ground  working; 3) have your state specific drug testing policy legally vetted on an annual basis for compliance and best practices as reefer madness is changing drug testing laws nationwide;  4) plan in advance how you will handle the tough issues of pre-duty prescription medication disclosure, last change agreements,  EAP referrals, UC & WC positive drug test disqualifications and bullet proofing your positive test discharge decision; and 5) decide who you will call for professional MRO drug testing advice and counsel in those moments when you have to make a hard decision with lasting consequences.

Tommy Eden is a partner working out of the Constangy, Brooks & Smith, LLP offices in Opelika, AL and West Point, GA and a member of the ABA Section of Labor and Employment Law and serves on the Board of Directors for the East Alabama SHRM Chapter. He can be contacted at or 334-246-2901. Blog at and follow on twitter @tommyeden3