Thursday, May 18, 2023

A few wage and hour thoughts for beer festival season

As the weather warms up around the country and spring quickly transitions to summer, festival season will begin … including my personal favorite, the beer festival.

Beer festivals, however, raise a few specific wage and hour traps for participating breweries. Here's the 411.

1.) Volunteers.

Craft breweries take note — you cannot have volunteer labor working your tent, table, or other display at a beer festival. 

Under the Fair Labor Standards Act, any employee working for a for-profit business must be paid at least the statutory minimum wage … either in cash wages, or in states permitting employers to take a credit against the minimum wage from tips earned, a combination of cash wages plus tips. The salary paid to exempt employees should cover their time working a festival. But your non-exempt employees must earn at least the minimum wage for all hours worked. Volunteer, unpaid labor is per se unlawful. It will either buy you a visit from a Department of Labor Wage and Hour investigator or a class/collective action plaintiff-side employment lawyer. You don't want either of these visits, especially when your FLSA violation is indefensible.

2.) Free Beer.

You cannot skirt your FLSA minimum wage obligations by paying festival employees in beer. Indeed, in some states, like Ohio for example, free beer is illegal. Even if the provision of free beer is permitted in your jurisdiction, its value does not count as wages and does not replace your obligation to pay at least the statutory minimum wage. Finally, do you want employees drinking their wages in beer? What example will it set for your brewery if those manning your exhibit are crocked? 

3.) Tip Pools.

The FLSA permits employers to pool employee's tips for redistribution based on a pre-determined formula. Take note, however, that under the FLSA an employer may not require an employee to give their tips to the employer, a supervisor, or a manager under any circumstances, including tips from a tip pool. Your tip pool becomes invalid the moment a supervisor, manager, or owner participates in it.

There's much for craft breweries to gain by participating in beer festivals, including connecting with new customers and expanding the reach of your brand. There's also a lot of risk if you don't take your wage and hour obligations seriously when exhibiting your beer.