Cheddar's Casual Cafe Plagued by Minimum Wage Lawsuits

Recently, Cheddar's Casual Cafe has been plagued by minimum wage lawsuits brought by current and former servers for violations of the Fair Labor Standards Act. In consolidated lawsuits filed by former employee/servers of Cheddar’s Casual Café in Tampa Florida federal court, it was alleged that the national chain violated the Florida Minimum Wage Act (“FMWA”) and the Fair Labor Standards Act (“FLSA”) by: (1) failing to pay them for all hours that they worked; (2) improperly utilizing the tip credit; (3) failing to pay them overtime; and (4) improperly engaging in tip pooling. The former employees also alleged that that Cheddar’s Casual Café improperly took a tip credit from their wages for time spent performing related, non-tipped work. The former servers listed various examples of the related, non-tipped work that they were required to do, which they referred to as “side work.” The former employees also alleged that Cheddar’s Casual Café regularly and consistently required them to perform “side work” including restocking supplies, stocking ice, sweeping floors, stocking food/condiments on the expo line, brewing tea and coffee, running food to tables for other servers, wiping down/washing trays, stocking lemonade mix, unclogging drains, cleaning soft perform side work before, during, and after their shifts and that the side work exceeded 20% of the time spent working.

In addition to the side work, the workers alleged that Cheddar’s Casual Café required them to perform tasks belonging to an entirely different category of employment that was unrelated to and not incidental to tipped service. The former employees referred to this type of work as “dual occupation” work, which includes maintenance, cooking, and cleaning. As a result, the former employees contend that Cheddar’s Casual Café owes the full minimum wage (without regard to a tip credit) for the time that they spent performing the dual occupation work.

Following an earlier investigation by the U.S. Department of Labor’s Wage and Hour Division, Cheddar’s Casual Cafe Inc. paid $99,168 in back wages and $62,417 in liquidated damages to 268 current and former employees of Cheddar’s restaurants in Oklahoma City, Okla., and Lubbock, Texas, under the terms of a consent judgment. The chain will pay an additional $166,620 in civil money penalties for child labor violations, as well as for willfully and repeatedly violating the Fair Labor Standards Act’s minimum wage and record-keeping provisions.

An investigation led by the Wage and Hour Division’s Dallas District Office found that managers recorded fewer hours in the payroll system than employees actually worked, tipped employees did not take home the required federal minimum wage, and managers did not compensate employees for attendance at mandatory meetings and training.  Cynthia Watson, the Wage and Hour Division's regional administrator in the Southwest, stated: “The Labor Department will hold employers accountable when they do not properly pay their workers and put young employees in danger by allowing them to perform hazardous jobs.”
The consent judgment was filed with the U.S. District Court for the Northern District of Texas, Dallas Division. In addition to requiring back wages and damages, the judgment will enjoin the company from future FLSA violations.

Employees who are covered by the FLSA must receive at least the federal minimum wage of $7.25 for all hours worked. In Florida, the current minimum wage is $7.93. Tipped employees must be paid a cash wage of at least $2.13 per hour, and the cash rate when combined with their tips must total at least $7.25 per hour. Additionally, employers must maintain accurate time and payroll records for all workers.

Do you have a claim for unpaid wages against Cheddar's Causal Cafe?

Rulings go against employers using 'fluctuating' workweeks to cut overtime costs

Here's the rule: If someone works more than 40 hours, their salary covers the first 40 hours and overtime is to be factored at that salaried rate.

But employers often try to reduce their costs by using what is called a "fluctuating work week," in which workers receive their salary over the entire week -- no matter how many hours long that week is -- and then overtime is calculated on one hour of that longer week.

Two recent federal cases, however, have helped tilt the playing field in favor of Pennsylvania workers and the traditional overtime calculation.

Here's how the math shakes out: If a worker gets a weekly salary of $400, under Pennsylvania law that means the wage is $10 an hour for a 40 hour week. So the worker who earns $400 a week, and works 10 hours of overtime, should be paid an extra $150 (time and a half) for the extra 10 hours, for a total of $550 that week.

Under the same scenario, with a fluctuating work week, that base salary would be tabulated $8 at an hour -- $400, divided by 50 hours worked. Overtime would then be calculated at a time-and-a-half rate, or 150 percent of the $8 hourly rate, meaning overtime wages are $12 an hour, not $15. The result is that an employee on a "fluctuating work week" would be paid $440 total -- $320 in "regular" wages, and $120 in overtime, but just $40 "extra" that week.

Drivers for Frito-Lay, those people who move the bags of Doritos into the stores and arrange the shelves, were being paid by the fluctuating workweek standard, and sued claiming that Frito-Lay violated the Pennsylvania Minimum Wage Act of 1968.

The case was heard by U.S. District Judge Joy Flower Conti, who ruled in 2011 that the workers were covered by Pennsylvania Minimum Wage Law that prohibits the fluctuating workweek for workers who aren't paid by the job or the day.

And Judge Conti's decision was cited in an August 2012 decision by U.S. District Judge Cathy Bisson in a case against Kraft Foods Global Inc., in which Kraft admitted to paying employees only half-time for extra hours work with that half being the determined by the base pay divided by the total number of hours worked that week.

Joe Fieschko, the attorney who represented the Frito-Lay workers, said the fluctuating workweek model is popular among employers who want to save money.

"The thing about this fluctuating workweek is the longer you work, the less you are paid," he said.

Under the fluctuating workweek model, if an employee is paid $400 for the week, then for a 40 hour week his compensation would be $10 an hour. But, once that employee works more, the base hourly rate goes down.

At 50 hours that base rate drops to $8. And if the employee worked double an average week -- 80 hours -- the compensation would conceivably drop to base rate of $5 an hour (which would be below the minimum wage of $7.25 an hour) for all of the hours. The overtime pay would be $7.50 an hour (an extra $2.50 tacked on to the second 40 hours) for a total of $500 for the week.

The fluctuating workweek is allowed under the U.S. Fair Labor Standards Act, which used to cover the drivers when they were under the Federal Motor Carrier Act. That law still covers long-haul truckers and drivers of large trucks, but it no longer applies to short-route drivers of smaller delivery trucks.

While federal law allows employers to use the fluctuating workweek model, Judge Bisson was clear that Pennsylvania law does not.

"Had the Pennsylvania regulatory body wished to authorize one-half-time payment under [the law], it certainly knew how to do so," she wrote.

It's not just trucking companies that have tried to use fluctuating workweeks to reduce overtime costs.

Mr. Fieschko also has successfully represented insurance adjusters, warehouse workers and park rangers who worked at Fort Necessity and at the Friendship Hill National Historic Site's Albert Gallatin house.

This isn't a new technique -- employers have been trying to make workers put in more hours, for less money, for decades. Mr. Fieschko said a lot of the case law goes back to 1938, 1939 and 1940, as courts ruled against the employers of that day who were testing the original version of the Fair Labor Standards Act.

By Ann Belser, Pittsburgh Post-Gazette

For more information about Overtime, visit Orlando Overtime Pay.

Florida Minimum Wage Act Provides for Personal Liability

The Florida Minimum Wage Act (FMWA) allows a private cause of action against an employer for state-regulated minimum wage and functions analogously to the federal Fair Labor Standards Act ("FLSA"). This Act is cofiied in Section 448.110 of the Florida Statutes and currently sets Florida’s minimum wage at $7.67 per hour . The federal minimum wage is currently $7.25 per hour. As defined by the FLSA, an employer includes "any person acting directly or indirectly in the interest of an employer in relation to an employee . . . ." 29 U.S.C. § 203(d). An officer of a corporation is deemed an "employer" within the meaning of the FLSA and is personally liable under the FMWA if the officer was either “involved in the day-to-day operation" or had “some direct responsibility for the supervision of the employee." Patel v. Wargo, 803 F.2d 632, 638 (11th Cir. 1986).

For more information about minimum wage and overtime, visit us at: Orlando Overtime Pay.

Co-owner of Business may also be an "Employee" for purposes of FLSA

Plaintiff was a co-owner of Madera Honda Suzuki. After investing $100,000 with her husband she then became a co-owner. Plaintiff was responsible for paying bills and she had authority to pay certain expenses, such as rent and dealership insurance, without consulting the other officers. Plaintiff was authorized to issue payroll checks to herself and others if the company had sufficient funds, and it appears Plaintiff issued a check to herself at least once during her tenure as CFO. Plaintiff interviewed prospective employees and she had a say in everybody the company hired. She also handled employee disciplinary matters 95% of the time and was not required to consult with her co-owner before terminating an employee. Defendants moved for summary judgment contending that plaintiff was a co-owner, not an employee of Madera Honda Suzuki. The Court went on to examine other evidence that plaintiff was not merely a director, officer and shareholder, but was also hired to work as the company’s office manager. She was initially paid hourly wages for working as the office manager, at a rate determined by her co-owner. After reviewing these facts, the Court conceded that its research revealed no authority — stating categorically that a co-owner and shareholder of a closely held corporation, who works for the corporation in another capacity, cannot also be the corporation’s employee for the purpose of the FLSA. Indeed, the Court stated, case law seems to suggest otherwise. The Court then cited Goldberg v. Whitaker House Co-op, Inc. , 366 U.S. 28, 32, 81 S.Ct. 933, 6 L.Ed.2d 100 (1961) (“There is nothing inherently inconsistent between the coexistence of a proprietary and an employment relationship. If members of a trade union bought stock in their corporate employer, they would not cease to be employees within the conception of [the FLSA]. For the corporation would ’suffer or permit’ them towork whether or not they owned one share of stock or none or many”). The Court concluded that the possibility an individual could simultaneously be both an owner/employer and an employee exists. Support for this proposition, one court has observed, may be found in the FLSA itself. As noted, “employee” refers to “any individual employed by an employer. 29 U.S.C. § 203(e)(1).” ’Employ’ includes to suffer or permit to work. 29 U.S.C. § 203(g). “[I]t appears from this language that if an owner or manager performs work, as here,”that person fits within the definition of employee.”

After reviewing several analogous cases involving employees who had a proprietary interest in their respective employers, the Court denied the Motion for Summary Judgment.

The Court expressed no opinion as to whether the plaintiff was an exempt employee under FLSA.

Hess v. Madera Honda, 2012 U.S. Dist. LEXIS 131584 (E.D. Cal. Sept. 14, 2012).

What is a “joint employer” and why is it important under FLSA

Under the Fair Labor Standards Act, an employee may stand in an employment relationship with more than one entity. As a result of this potential multi-employer relationship, workers frequently seek expanding targets of liability. This concept is known as a joint employer relationship.

In In Re: Enterprise Rent-A-Car Wage & Hour Employment Practices Litigation, 2012 U.S. App. LEXIS 13229 (3d. Cir. June 28, 2012), the Third Circuit Court of Appeals announced a new test for determining whether a joint employer relationship exists under the Fair Labor Standards Act. Courts first must consider: (1) the alleged employer’s authority to hire and fire the relevant employees; (2) the alleged employer’s authority to promulgate work rules and assignments and to set the workers’ conditions of employment, including compensation, benefits, and work schedules, including the rate and method of payment; (3) the alleged employer’s involvement in day-to-day employee supervision, including employee discipline; and (4) the alleged employer’s actual control of employee records such as payroll, insurance, or taxes. The court stated that this is not an exhaustive list of the relevant considerations, and thus it cannot be “blindly applied.” Courts next must consider any other indicia of “significant control” over the employee (by the potential joint employer), which it held may be persuasive to a finding of joint employment when incorporated with the other factors.

Supreme Court rules that drug reps not entitled to overtime pay

Two ex-GlaxoSmithKline employees sued their former employer for unpaid overtime. GSK and other pharmaceutical companies have historically treated drug representatives as outside salespeople exempt from overtime pay. That classification was challenged by the plaintiffs but the Supreme Court ruled in favor of pharmaceutical companies. The 5-4 decision will have a significant impact on existing lawsuits against the pharmaceutical industry. The decision from the Supreme Court originated in the Seventh Circuit Court of Appeals but it wasn't the first lawsuit about drug representative overtime pay to reach the Circuit courts. The Second Circuit Court of Appeals previously ruled that drug representatives are entitled to overtime pay. As a result of that decision, drug maker Novartis paid out a settlement to several former employees seeking overtime payment. However, the Seventh Circuit Court of Appeals' decision stated that drug representatives are exempt from overtime under the Fair Labor Standards Act. The Supreme Court upheld the Seventh Circuit's decision. In his majority opinion, Justice Samuel Alito dismissed the Department of Labor's arguments for overtime pay. He noted that the Department considered drug representatives exempt from overtime requirements until 2009, as reported by Dow Jones Newswires. Alito disagreed with the Department's decision to announce its new position in court briefs rather than the typical rulemaking process. The Court split along ideological lines, with Justices Ruth Bader Ginsburg, Stephen Breyer, Sonia Sotomayor, and Elena Kagan in dissent.

Are small companies covered by the Overtime Laws?

An employer falls under the enterprise coverage section of the Fair Labor Standards Act if it (1) has employees engaged in commerce or in the production of goods for commerce, or that has employees handling, selling, or otherwise working on goods or materials that have been moved in or produced for commerce by any person and (2) has at least $ 500,000 of annual gross volume of sales made or business done. 29 U.S.C. § 203(s)(1)(A).

Therefore, if the employee works for a company that grosses more than $500,000 on an annual basis and the employee handles goods or materials that were at any time in the past produced in or moved interstate, then that company is covered by the Fair Labor Standards Act even if it only has a few employees.

Polycarpe v. E & S Landscaping Serv.,  616 F.3d 1217 (11th Cir. 2010)