Articles Posted in Compensation

A class action lawsuit, brought by staff at the elite Harvard Club of Boston, has been settled by the club for $4 million. waitermotionblur.jpg

Our Boston employment lawyers understand the dispute arose from years of a practice that involved billing patrons a “club charge,” which was promoted as a charge paid in lieu of gratuity. However, that money was not subsequently redistributed among the staffers, who claimed this was in violation of Massachusetts tip laws.

The fact is, Massachusetts has some of the most stringent laws with regard to service worker compensation. There are federal guidelines that dictate this issue as well, but under state law, specifically General Law Chapter 149, Section 152A, a violation is punishable by a $25,000 fine, and/or 1 year of imprisonment.

The law is very clear on this issue. It defines a “service charge” as a fee that is charged by an employer to a patron in lieu of gratuity to the staff. Even if it is not expressly called that, the only requirement is that it is a fee that any consumer might reasonably expect to be given to the staff as a tip.

The law goes on to say that no employer is allowed to demand that a service charge be deducted from tips, and further that any tips collected by the employer must be paid directly to the staff either at the end of the business day, or, at the absolute latest, at the end of the employee’s pay period.

Violators of this statute are not only subject to the penalties described above, they also have to repay to employees all of the back tips, plus 12 percent interest. Workers have up to three years to bring action against an employer for alleged violation of any part of this law.

It’s important for both employees and employers to educate themselves on the Massachusetts tip law.

In this case, the complaint was originally filed last November, while the workers and the club administrators were in the midst of contract negotiations. The wait staff and dining hall workers were represented by a local labor union. The club, which is a private company not affiliated with Harvard University, is only open to graduates of Harvard and of other select universities and colleges.

The clincher in this case was an advertisement that was sent by club administrators, trying to reel in old patrons and new clients. The booklet advertised a surcharge paid at the end of meals, as a substitute for gratuity. This was despite the fact that employees were not being paid tip money.

It’s been speculated that this has been happening for decades, and that it likely would have continued, had one of the union members not pressed the issue in court.

The whole case did not reflect well on the club administrators. One Harvard student was quoted by the local newspaper as saying that he regretted the club’s association with the university, and that the elite are enjoying fancy meals at the expense of service workers.

To be fair, the workers were still being paid for their service. However, given all the facts, the club may have been on the wrong side of the law on this one.

Administrators deny that, saying in a letter to patrons that settling the lawsuit for $4 million was a strategic decision from a risk management standpoint. The club wanted to avoid a protracted legal battle and the divisiveness that inevitably ensues.

If you have questions about the application of the Massachusetts tip law, we can help.
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A weaker economy has undoubtedly led to more work, and sometimes for the same – or even less – pay. weldingglass.jpg

Boston employment lawyers understand overtime complaints have become increasingly more common – and not just in the U.S.

The survey, conducted by Harris Interactive on behalf of Kronos Inc., found that about two-thirds of non-salaried employees in France, the U.K., Australia, Canada, Mexico, China, India and Brazil indicated their employers violate overtime rules – at least part of the time.

In the U.S., a little less than half said the same thing.

So while we may be better off than some other places, overtime violations are no rarity. They are rarely sanctioned, except through civil litigation, despite the fact that both federal and Massachusetts state laws forbid an employer from not properly compensating most hourly employees with overtime.

Workers in China, Britain and India had the highest number of complaints.

Of course, overtime in and of itself is not a problem – and is often welcome by many employees because they need the extra pay. In fact, in the U.S., nearly 50 percent said they were content with the amount of overtime they worked, and another 40 percent said they actually wished they had more.

The problem is when overtime laws are broken.

The U.S. Fair Labor Standards Act (or FLSA) requires that companies pay time-and-a-half for any time employees put in over the full-time 40 hours work week. There are a few exemptions (for example, police, firefighters and hospital workers typically don’t work a 40-hour week, so the rules are a bit different).

The regular base rate of pay has to meet minimum wage requirements (which is $8 per hour in Massachusetts as of Jan. 1, 2012, except for tipped employees, for whom it is $2.63 an hour).

So here, if an employee makes $8 regularly, the worker would have to be paid $12 an hour for any time that he or she works over that 40-hour threshold.

When workers do get overtime, they may be reluctant to speak up about not receiving the full time-and-a-half pay because they don’t want to jeopardize their opportunity for extra hours. In some cases, hourly workers may be subtly asked to work over without any pay at all.

Across the U.S., there has reportedly been a record increase in the number of employee claims of wage and hour violations. These include miscalculation of overtime pay and off-the-clock work. According to the U.S. Department of Labor, there have been roughly 7,000 complaints filed so far this year under FLSA. That’s an increase of about 2,000 from 10 years ago.

Last year, the federal agency’s wage and hour division reportedly collected some $225 million in back wages from employers on behalf of some 275,000 workers.

More employees may be standing up to overtime violations in Boston due to the discussion generated by high-profile cases, such as several class action suits filed by Walmart workers. Earlier this year, the retail giant agreed to pay some $5 million in back wages to some 4,500 employees who were not properly classified, and therefore denied the overtime to which they were entitled. Four years ago, another case involving the company, alleging improper meal and rest breaks, resulted in a $352 million verdict.
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Bloomberg Businessweek is reporting House Speaker John Boehner is among Republicans defending the Defense of Marriage Act to a federal judge in a suit claiming the act violates the fundamental rights of the lesbian plaintiff.

In June, New York became the sixth state to legalize same sex marriages, along with Massachusetts, New Hampshire, Vermont, Connecticut and Iowa. Boston employment attorneys have seen how the gay marriage issue may complicate employment issues when dealing with both state and federal regulations. In some cases, employees are moving to hold employers liable for discrimination based on sexual orientation when it comes to benefits and other legal and financial issues. In other cases, employees are seeking to defend themselves, using federal law and the Defense of Marriage Act, which currently does not recognize same-sex marriages as legal unions. 1191968_solitary_walk.jpg

Signed into law by President Clinton in 1996, the law defines marriage as being between one man and one woman. The law also bars the federal government from recognizing same-sex marriages and permits states to pass laws that decline to recognize them as well.

Last year, a federal employee sued, seeking to extend health benefits to her wife. Boehner was among Republicans who submitted a defense of DOMA to the U.S. District Court in San Francisco.

“There is nothing intrusive in the least about DOMA,” the congressmen said. “It is simply a definitional statute that defines, for federal law purposes, marriage and spouse.”

The woman’s attorney said her client would be paid differently as a man, which is inherently unfair.

A hearing is scheduled Dec. 16. the case is Golinski v. United States Office of Personnel Management, 10-cv-00257, U.S. District Court, Northern District of California (San Francisco).

When Massachusetts’ same-sex marriage law was passed in May 2004 — Massachusetts became the first state in the U.S. to issue marriage licenses to same-sex couples. However, couples are currently not eligible to receive federal recognition.

M.G.L.c. 151B, §4 states that “(i)t is unlawful for an employer to discriminate against an employee based on his/her sexual orientation.”

Meanwhile, Goodridge v. Mass Department of Health, the Massachusetts gay marriage decision, found that “a person who enters into an intimate, exclusive union with another of the same sex is arbitrarily deprived of membership in one of our community’s most rewarding and cherished institutions. That exclusion is incompatible with the constitutional principles of respect for individual autonomy and equality under law.”

Keeping up with today’s legal landscape as it relates to Massachusetts employment and business law requires a law firm focused on the issues facing today’s businesses. Discrimination and sexual harassment claims are complex and serious cases. The DOMA and Massachusetts gay-marriage rights further complicate the issues.
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