Many companies use tips from customers to meet the company's obligations of paying minimum wage under the Fair Labor Standards Act ("FLSA"). But is there a way that an employer could keep those tips? Or distribute those tips differently?
Over the last five (5) years, there has been a drastic increase in the number of lawsuits filed alleging violation of the Fair Labor Standards Act (FLSA) in an attempt to procure back wages and liquidated damages for affected employees. A vast number of these lawsuits have turned into large class action litigations. Any employer who has been involved in this type of scenario is well aware that the "actual bottom line cost" of these cases is not just the alleged back wages and liquidated damages due to the affected employees, but by statute, will include substantial payments to Plaintiff's counsel for "reasonable attorneys' fees incurred by the successful Plaintiff in pursing their claim."
Recently, there have been three (3) separate and distinct lawsuits filed in New York dealing with unpaid interns and a company's obligation to "pay them for their work" (Eric Glatt, et al. v. Fox Searchlight Pictures, Inc., et al.; Lauren Ballinger, et al. v. Conde Nast; Xuedan Wang, et al. v. Hearst Corp.). In all of these cases, interns are claiming that they are entitled to compensation from their employer because the employer "suffered and/or permitted the intern to work," and perform duties that were performed by "other regular employees" (i.e. doing office work; delivering documents to customers; reconciling purchase orders and invoices; etc.). In essence, the "interns" did not work in a "learning environment" but were merely "manual labor."
As we enter and proceed through Calendar Year 2012, it may be time for some business resolutions for the success of your organization.