Department of Labor Appears Set to Tip the Balance Back in Favor of Tip-Pooling

Department of Labor Appears Set to Tip the Balance Back in Favor of Tip-Pooling In December, the Trump Department of Labor issued a Notice of Proposed Rulemaking seeking to roll back yet another Obama-era regulation. This time, the target is the Department of Labor’s 2011 rule restricting mandatory tip pooling. As many employers in the hospitality and food service industries know, the Fair Labor Standards Act permits employers to establish tip pools among employees that “customarily and regularly” receive tips, like waiters, bartenders, and other service-oriented staff members.  Tip pools have generally been restricted to staff members who participate in front-of-house positions that more directly serve customers. The FLSA requires that the means of distribution must be fair and reasonable and that the pool cannot distribute tips to the employer or an agent of the employer. Like each workplace, tip pools vary widely in how they are set up and executed. It should then come as no surprise that lawsuits have sprung up to challenge the validity of tip pools or the laws or regulations permitting them—often with inconsistent results. One such result was the 2010 Ninth Circuit Court of Appeals case Cumbie v. Woody Woo, Inc., in which the court held that so long as an employer paid the front-of-house staff over the minimum…

NLRB Reverses Course on Browning-Ferris Standard for Defining “Joint Employers”

Last Thursday, the NLRB overruled the Obama-era NLRB’s decision in Browning-Ferris Industries, a 2015 ruling that loosened the standard for determining how much control over employees is required before a business entity can be held liable for infractions of federal labor law as a joint employer. Prior to Browning-Ferris, for two or more entities to constitute joint employers of a workforce, they had to share the ability to control only the essential terms and conditions of employment like hiring, firing, and directing employees. Further, this control must have been direct and immediate, and must have actually been exercised before an entity would be found a joint employer. Browning-Ferris changed that to a standard where “two or more entities are joint employers of a single work force if they are both employers within the meaning of the common law, and if they share or codetermine those matters governing the essential terms and conditions of employment.” How much of a departure this was from the previous standard only became clear as Browning-Ferris was applied and interpreted in successive Board decisions. Under these decisions, the Browning-Ferris standard would consider as a joint employer any entity with even indirect or unexercised-but-reserved authority to control or affect “essential terms and conditions of employment” reaching beyond the basics of hiring, firing,…

Fresh Off the Governor’s Desk: New Slate of Employment Laws for California Employers

Employers take note: a new slate of employment laws were signed into California law this month, with some taking effect as soon as January 1, 2018. Read on below to see how a few of these new developments may affect your business.   AB 450: Employers Prohibited from Consenting to ICE Searches   Signed by Governor Brown on October 5th, AB 450 prohibits California employers from voluntarily consenting to federal Immigration and Customs Enforcement (ICE) officers’ requests to search a workplace.  Like other searches conducted by government officials, workplace searches conducted to enforce federal immigration law require either a judicial warrant or consent to search.  AB 450 will remove the latter option, prohibiting employers from consenting to a search of any non-public premises or employee records and forcing immigration officials to pursue a judicial warrant in each case.   As part of a broader effort to make California a “Sanctuary State,” AB 450 is intended to frustrate the Trump administration’s more robust enforcement of federal immigration law.  However, in AB 450’s effort to protect undocumented workers and their employers from the hazards of immigration enforcement, the law puts employers in a tight spot between opposing state and federal interests.   A first-time violation will penalize an employer with a $2,000 to $5,000 civil penalty, which…

Overtime Controversy Over, For the Time Being

Last week, a federal judge declared unlawful the Obama-era Department of Labor rule that attempted to broadly redefine the class of workers eligible for overtime pay across the United States.  The rule was controversial from its inception, but that controversy has, for now, come to a close.   The final rule itself, “Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees” was promulgated May 23, 2016, for the purpose of updating and specifying which U.S. workers would and would not be exempt from the federal overtime pay requirements established by the Fair Labor Standards Act of 1938 (“FLSA”).   In addition to establishing overtime pay requirements, the FLSA exempts employers from paying overtime to “any employee employed in a bona fide executive, administrative, or professional capacity.”  Commonly referred to as the “EAP” exemption, this provision’s specifics were left by Congress to be defined and determined by the U.S. Department of Labor.   A 2004 regulation, promulgated by the Bush administration and still currently in effect, determines the class of exempt employees based on a three-part test. It classifies exempt employees as those (1) paid on a salary basis, (2) over a minimum salary level, (3) who perform executive, administrative, or professional capacity duties.  The 2004 rule sets the minimum salary…