Academic journal article Labor Law Journal

Class Action Trends Report, Fall 2017

Academic journal article Labor Law Journal

Class Action Trends Report, Fall 2017

Article excerpt

A Word From the Authors

As a modern fictional character has said: "a trap is only a trap if you don't know about it." The same can most certainly be said about minimum wage laws and ordinances across the United States. The concept appears rather simple and straightforward: an employer must pay an employee $X per hour to comply with the applicable minimum wage law or ordinance. However, compliance is never as simple as it may seem. Employers, in fact, maintain operations at multiple locations, pay employees by means other than an hourly rate, and utilize credits (e.g., the tip credit and meal credit) that may raise complications. Put simply, an employer's practice may be perfectly legal in one jurisdiction but may not be lawful in another. The best way to avoid these traps is to be aware of them and develop a unique compliance strategy for each jurisdiction in which your business operates.

As the federal hourly minimum wage remains unchanged at $7.25, Massachusetts and Washington have $11.00 per hour minimum wages and New York City's minimum wage will increase to $15.00 per hour at the end of 2018. Employers with operations in multiple jurisdictions-or even those that simply perform work in jurisdictions with differing minimum wage rates-face compliance challenges on a weekly basis. For example, a company based outside of a state with a higher minimum wage may have employees who perform the majority of their work inside that state with the higher minimum wage. Additionally, if your establishment utilizes tip credits and meal credits, is your company's tip notification sufficient to pass muster in all of the jurisdictions with operations?

In addition to the above minimum wage compliance issues, company timekeeping, break, and meal break practices also may place your business at risk of a minimum wage class or collective action. Auto-deduction and compensable travel time policies continue to be the subject of countless collective actions against employers. Likewise, donning and doffing claims (i.e., seeking pay for compensable time spent putting on and taking off protective gear) remain a palpable risk. Knowledge of your company's policies and procedures in the specific jurisdictions in which the business operates is essential to avoiding these minimum wage traps.

Lastly, to the extent your business relies upon the services of independent contractors, state agencies may vigorously pursue misclassification investigations and actions. A business faces the conundrum of intentionally not tracking contractor hours because those contractors are not employees and the risk posed by not tracking such hours. Absent some sort of records or time tracking, the contractor's testimony or records of service hours may be credited by an agency or court. Furthermore, it is often difficult to determine whether the compensation paid to a contractor (flat-fees, piece-rates, and so on) covers the minimum wage when documentation regarding those service hours are absent. Accordingly, businesses utilizing independent contractors need to conduct risk assessments and develop strategies to counter the risks.

We encourage you to learn about the possible minimum wage "traps" that exist for your business. Knowledge and proactive compliance can spring these traps before your business becomes embroiled in a lawsuit or Department of Labor action.

Minimum Wage Traps

Teen Scene is expanding in leaps and bounds-the youth fashion retailer is entering new markets and seeing robust sales growth at existing store locations. With a presence in malls across America and increasing online sales, the clothing chain is hiring new employees at a steady clip-primarily "look' consultants" for its brick-and-mortar stores, but also warehouse workers at the companys numerous distribution centers, online customer care associates, and team members at Teen Scene's corporate offices. But there are growing pains.

Look consultants are mad about Teen Scene's new baggagecheck policy, implemented to reduce shrinkage at the retail stores. …

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