Brewing up a tipped wages nightmare

Brewery owners: Let's talk why class-action lawyers are just as interested in your payroll practices as your flagship IPA.

A new lawsuit against a Georgia craft brewery is making the rounds, and it's the same old recipe—alleged FLSA violations in how tipped employees are paid. Don't brew the same legal trouble for yourself. 

Here's what every taproom, brewpub, and brewery owner needs to know to stay out of court in wage and hour lawsuits:

Teen employment is about education, not filling low-wage labor gaps

I'm a firm believer in the value of teenagers holding part-time jobs.

My first was as a mobile DJ, spinning records at Bar/Bat Mitzvahs, weddings, and sweet 16 parties. I also bussed tables in a nursing home dining room and unloaded giant rolls of fabric from trucks at a warehouse. Each job taught me about hard work, punctuality, taking direction, and dealing with people. They also taught me the value of money and the importance of earning my own spending cash.

That kind of experience is invaluable. It builds character, work ethic, and confidence. It's why both of my kids work, even though most of their friends do not. Just because I can provide walking-around money doesn't mean I should. If my daughter wants to drive a car, she'd better have the money to put gas in it and help cover the insurance. That's part of my responsibility as a parent—getting them ready for adulthood.

But what we're seeing now in some states (including Ohio) is something very different.

Missing time sheets doom employee's overtime claim

One of the most challenging tasks is proving a negative. Yet, this is precisely the problem employers face when defending wage-and-hour cases in which employees allege off-the-clock work. The employer argues that time records define the boundaries of the paid workday, while the employee contends they should be compensated for work performed outside of those clock-ins and clock-outs.

For example, consider Osborne v. JAB Management Services, a case recently decided by the 7th Circuit. Tara Osborne worked remotely as a technical support specialist for JAB, providing on-call support to its customers. As a salaried remote worker, she had the flexibility to design her own schedule. While she did not track any time worked over 40 hours per week, Osborne claimed she worked an average of 10 hours per day and 15 hours of overtime per week, including weekends.

The 7th Circuit affirmed the trial court's dismissal of Osborne's lawsuit for unpaid overtime. 

Taking from your employees' tip pool? It's illegal

It’s Dry January, and brewery owners are feeling the pinch. You might be tempted to supplement your income by dipping into your employees’ tip pool. That would be a huge mistake. It isn’t just bad form to take your employees’ hard-earned tips. It’s also illegal.

Under the FLSA, owners, managers, and supervisors are strictly forbidden from taking any part of pooled tips. There are no excuses.

SCOTUS eases burden of proof for employers in FLSA exemptions cases

Big news for employers: The Supreme Court just made it easier to defend against Fair Labor Standards Act exemption claims by employees.

In E.M.D. Sales v. Carrera, the Court unanimously ruled that employers only need to meet the preponderance of the evidence standard—not the heightened clear-and-convincing standard—when proving that an employee is exempt from the FLSA's overtime requirements.

Buckeye of broken promises: OSU's trust fumble

Ohio State University announced that it will rescind raises for 306 salaried employees, effective Jan. 1. Earlier this year, the university granted these raises to comply with a new federal overtime rule that increased the salary threshold for exempt employees. After a federal judge overturned the rule, OSU decided to take back the pay increases, claiming the raises were no longer legally required.

Legally? Fine. Ethically and from an HR perspective? A disaster.

Life without a Department of Labor isn't as efficient as some will tell you

What happens if the Department of Labor vanishes? It's not some dystopian fantasy—it's an actual possibility under Elon Musk and Vivek Ramaswamy's "Department of Government Efficiency." They could eliminate the DOL entirely. The pitch? Let states handle it. The reality? It's a disaster waiting to happen.

A tip on employee tips

Here's a tip for management — keep your hands off of your employees' tips.

A recent case filing by class of employees against a cannabis company accusing management of pilfering their tips. The Department of Labor and the Fair Labor Standards Act, however, are crystal clear: tips belong to the workers who earn them, period.

Service charges: A hidden trap for employees (and customers)

You just wrapped up a great meal at your favorite restaurant. The server drops off the check, and there's a surprise—your $100 tab is now $120, thanks to a $20 "service charge" added at the bottom. But here's the kicker: under the Fair Labor Standards Act (FLSA), that service charge isn't considered wages for your server. The restaurant can legally keep it all without sharing a dime.

The 80/20/30 Rule is official a zero

The Department of Labor's "80/20/30 Rule" for tipped employees is dead.

That Rule broke down the work of tipped employees into 3 different categories of work:

1. Tip-producing — Work that "provides service to customers for which tipped employees receive tips."

2. Directly supporting — Work "performed in preparation of or to otherwise assist tip-producing customer service work." Think rolling silverware, filling saltshakers, or cutting garnishes.

3. Not part of the tipped occupation — Work that is neither tip-producing nor directly supporting, such as cleaning bathrooms.

The risks in treating inside salespeople as "exempt"

If you employ inside salespeople, you need to pay attention to Su v. Webb Co. 

This case examined whether Webb, a wholesale distributor of plumbing equipment and fixtures, misclassified its 350 inside sales reps under the FLSA as exempt administrative employees, and therefore owed them unpaid overtime.

What does Project 2025 mean for employers? Wage and hour edition

In part 2 of my series on what Project 2025 means for employers and employment law, let's examine its proposed impact on wage and hour laws.

You'll find part 1, covering workplace discrimination laws, here.

Project 2025 proposes the following 5 key changes to the FLSA:

As seen on Reddit: payment for training time

As seen on the legaladvice subreddit:

"My company just told us about a new policy where any meeting or training that is held over the lunch hour where food will be provided is unpaid. Some of these lunch meetings are optional trainings, but some are mandatory department meetings. Is it legal for the company to deny pay for time spent at these meetings just because lunch is provided?"

Answer: It is not legal, and the time employees spend during those lunch meetings must be paid.

DOL cautions employers on the use of AI

"When used responsibly, AI has the potential to help improve compliance with the law. Without proper human supervision, however, these technologies can pose potential risks to workers … and may result in violations of the law…." 

Those are the words of the Department of Labor in its just published Field Assistance Bulletin, Artificial Intelligence and Automated Systems in the Workplace under the Fair Labor Standards Act and Other Federal Labor Standards.

The DOL highlights many potential legal pitfalls for employers that rely on AI to manage how their employees are paid and to track their attendance and leaves of absence.

It’s long past time to Ctrl-Alt-Del the FLSA

The Fair Labor Standard Act is not a good law because employers have zero hope in complying with it.

I know this fact is true because I just read Bradford v. Team Pizza. In that case, the 6th Circuit rejected both the employer's and the plaintiffs' interpretation of the FLSA and punted the case back to the district court to interpret the statute instead.

President Biden’s proposed 2025 federal budget offers a lot for employers to chew on

If you want to learn about a government's priorities, trace the money. 

President Biden's proposed federal budget for FY 2025 contains significant funding that would impact the workplace.

I ❤️ being a lawyer

I ❤️ being a lawyer. It presents something new and different each day, with each day offering an opportunity to learn.

For example, yesterday I read the 6th Circuit’s decision in Jones v. Producers Service Corp., which asked this question: "Under § 207(f) of the FLSA, when do an employee's job duties 'necessitate' irregular hours?"

When dealing with the FLSA, “administrative” may not mean what you think it means

It's really unfortunate that when Congress, in 1938, enacted the Fair Labor Standards Act it chose the label "administrative" for the law's broadest white-collar overtime exemption. That one word has caused more misunderstanding, confusion, litigation, and legal fees than any other word in the FLSA.

"Administrative" does not mean any employee who performs office or other non-manual work. Instead, it means any employee who earns a minimum salary of $684 per week AND who performs office or other non-manual work for which the employee's primary duty: (i) is directly related to the management or general business operations of the employer or the employer's customers; and (ii) includes the exercise of discretion and independent judgment with respect to matters of significance.

These issues were just front and center in Blackstone v. Dearborn Life Ins. Co.

Baning salary discussion bans

🛑 Employers, for the love of all that is holy, STOP BANNING EMPLOYEES FROM DISCUSSING THEIR WAGES!!! 🛑

A supervisor of subsidiary of Duke University is accused of doing just that, and now the employer is in hot water with the National Labor Relations Board.

According to the just-filed NLRB complaint, the supervisor allegedly instructed workers during a meeting "not to discuss their salaries." When one of those employees later raised "concerns about employees' salaries and equity in pay," they were fired.

Hiring undocumented workers

"Illegal immigrant co-worker got fired for asking about her check." 

That's the headline on Reddit.

Here's the rest of the post: 

"I have a co-worker who doesn't speak English at all so I've always communicated with her through google translate. A week ago, she asked me if I had gotten paid yet and told me that she hasn't seen a penny of her check despite working 50 hours a week since late November. I talked to my manager about it and my manager told me that she would send the check to her later. My co-worker texted me a few days ago and told me that she was fired for being an illegal immigrant and that she won't be paid because of it."