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Employee Credit Checks – A Hot Topic
July 24, 2010Credit checks have gained traction as a screening device to deny jobs to applicants with bad credit. Prospective employers must ask permission to do a credit check under the federal Fair Credit Reporting Act, but refusal to grant the request can cause a job offer to evaporate. As such, credit checks may create a barrier even for fiscally responsible applicants who have suffered financial setbacks due to job loss, medical costs and housing problems. However, in most states, it is legal to do credit checks, and employers have shown increased interest in using them as an applicant screening tool.
Three States Bar Routine Credit Checks
Hawaii, Washington and, most recently, Oregon, have made routine credit checks by employers illegal. In New York, a bill was introduced in the state legislature in 2009, but it is not on the current legislative agenda. However, even in the states with protective legislation, credit checks may be used for employees with certain specific fiduciary or financial responsibilities.
Credit Checks Create Risks for Employers
Among employers there is sharp disagreement over whether credit checks will weed out potential problem employees, and whether it is worth the risk of uncovering private employee information to do so. A legally conducted credit check can reveal information unrelated to the prospective employee’s credit status which may leave the employer open to claims of illegal discrimination if the applicant is turned down after a credit check. Employers are well-advised to limit the use of credit checks to obtaining information substantially related to an employee’s duties or they may suffer unintended consequences.
Undocumented Immigrants and Workplace Rights
May 18, 2010In light of Arizona’s new illegal-alien law and the nation-wide controversy surrounding it, it is important to be aware of the legal rights and remedies that are available to undocumented workers under the Fair Labor Standards Act (“FLSA”) and other labor laws. Undocumented workers are more likely to be exploited because they live under the risk of deportation. The courts, however, have been very protective of the rights of undocumented workers to obtain the minimum wage and overtime they have earned regardless of the fact that they are in the United States illegally.
Undocumented Immigrants Have the Right to Be Paid Minimum Wage and Overtime
The FLSA requires that employers pay their employees a minimum wage ($7.25 per hour) and overtime pay for all the hours that they work. Undocumented workers are considered “employees” within the meaning of the FLSA and have the same rights under the law as workers who are in the country legally. A worker’s immigration status does not affect his right to be paid for the work he performs. Moreover, undocumented workers are not required to disclose their immigration status in order to assert their rights under the federal labor laws.
It is Illegal for an Employer to Retaliate Against an Undocumented Worker
In addition, it is important to recognize that it is illegal for any employer to retaliate against an undocumented worker who brings a claim under labor and/or discrimination laws. In a recent New York federal court case, Centeno-Bernuy v. Perry, the employer tried to report his employees to the Immigration and Naturalization Service as members of a terrorist cell in retaliation for their filing of a FLSA lawsuit against him, assuming they would be deported and the case would be dropped. Instead, the employer’s actions were found to be unlawful retaliation and the court prohibited him from contacting any government official or agency regarding the plaintiffs. Notably, retaliation victims under the wage and hour laws may be entitled to punitive damages.
There are estimates of almost 7,000,000 undocumented workers in the United States. Many of these workers are not paid the wages they are entitled to because unscrupulous employers think they will not sue. Think again.
Waiters File Lawsuit Against The Waldorf For Unpaid Tips
March 2, 2010Berke-Weiss & Pechman LLP filed a lawsuit against The Waldorf-Astoria hotel on February 26, 2010 alleging the hotel retained service charges which should have been paid to its banquet waiters. The case is Orlando Colon v. Hilton Worldwide, Inc., 10 Civ. 1575 (SDNY).
It Is Illegal For a Restaurant or Hotel to Keep Gratuities or Tips Meant For Its Waiters
The lawsuit seeks to recover misappropriated service charges and special banquet gratuities for banquet waiters which The Waldorf led customers to believe were gratuities or tips to be paid in their entirety to their service staff, but were actually kept by the house. This practice was held by the New York Court of Appeals to be unlawful in the case of Samiento v. World Yacht Inc. In that case, the Court of Appeals concluded that a mandatory service charge may be a “charge purported to be a gratuity” within the meaning of the New York Labor Law.
The Samiento case relied on Section 196 New York Labor Law, which requires that:
No employer or his agent or an officer or agent of any corporation, or any other person shall demand or accept, directly or indirectly, any part of the gratuities, received by an employee, or retain any part of a gratuity or of any charge purported to be a gratuity for an employee.
Country Clubs and Catering Halls Have Also Been Sued
The practice used by The Waldorf is not uncommon. Indeed, many catering halls, country clubs, and restaurants add a service charge or gratuity to the bill but do not pass on these gratuities or tips to their waitstaff. Given the pervasiveness of this unlawful practice, we believe that disputes over banquet service charges will be the next lawsuit du jour in the New York hospitality industry.
Restaurant Workers Sue for Same-Sex Harassment
January 18, 2010Berke-Weiss & Pechman LLP recently prosecuted a charge of male-on-male sexual harassment at the Equal Employment Opportunity Commission (“EEOC”) against Sparks Steak House. As a result of the charge, the EEOC filed a lawsuit against Sparks in the Southern District of New York, charging physical and verbal male-on-male sexual harassment and retaliation under Title VII of the Civil Rights Act of 1964. Several male employees alleged that a male Sparks manager groped them, attempted to touch them inappropriately, and made offensive sexual remarks. Although only 16% of sexual harassment charges made at the EEOC were filed by males in 2009, EEOC New York Director Spencer H. Lewis, Jr. stated in that agency’s press release, “The EEOC is determined to stop sexual harassment whether faced by men or women.”
The wave of sexual harassment claims in the restaurant industry has led to notable settlements and damage awards. Only one month before the EEOC filed suit against Sparks Steak House, the EEOC settled a similar male-on-male sexual harassment case for $345,000 with the Cheesecake Factory, a nationwide restaurant chain. The EEOC recently settled a sexual harassment lawsuit for $255,000 with Ruby Tuesday after five female employees alleged that a general manager made crude sexual propositions to women and frequently made sexually explicit and graphic comments to them. In addition, a federal jury recently returned a verdict for $105,000 in a sexual harassment lawsuit against IHOP Restaurant, where two female employees claimed that an assistant manager groped them and subjected them to sexual propositions.
The Sparks lawsuit is part of a significant uptick in sexual harassment cases in the restaurant industry. The EEOC’s lawsuit signals that restaurants face an increasing risk that they will be sued by their employees for sex harassment if they do not prevent or effectively address harassing conduct.
Courts Asked To Determine Whether Accountants Are Entitled to Overtime Pay Under FLSA
January 13, 2010With tax season underway, it is a good time to consider whether junior accountants or associate accountants are properly classified as exempt or nonexempt from overtime under the Fair Labor Standards Act (“FLSA”). According to the Department of Labor regulations, 29 C.F.R. 541.301(e)(5):
Certified public accountants generally meet the duties requirements for the learned professional exemption. In addition, many other accountants who are not certified public accountants but perform similar job duties may qualify as exempt learned professionals. However, accounting clerks, bookkeepers and other employees who normally perform a great deal of routine work generally will not qualify as exempt professionals.
Regardless of the title used, determination of whether an accountant is exempt from the FLSA is made by the courts by analyzing actual job duties. If the job does not require a CPA license and the accounting employees are not given independent discretion in decision-making, junior accountants or associate accountants could be entitled to overtime pay for hours they work over 40 in a given week. The key inquiry is whether work done is routine or that of a learned professional. The question is worth examining because misclassification of a non-CPA accountant as “exempt” from the FLSA can be costly, subjecting an employer to back pay liability for overtime, as well as liquidated damages, leading to a substantial monetary recovery by the employee.
Recently, accounting firms and financial services companies have been subject to lawsuits, some of which are class actions, brought by junior accountants and associate accountants claiming they were misclassified as nonexempt, and seeking to recover unpaid overtime. In one case, decided in December 2009, a federal judge in Connecticut declined to dismiss a wage and hour case brought by JP Morgan Chase accountants who worked in their hedge fund services business. The accountants claimed they were merely “internet age bookkeepers” whose positions did not require knowledge of accounting, thus making them eligible for paid overtime. The court determined that the nature of their primary duties was a question of fact to be determined at trial. A jury now will decide whether these accountants were or were not exempt.