A dollar saved, a tip credit destroyed

Sometimes a case turns on complex legal questions or convoluted fact patterns. Other times it turns on something far simpler—like a single dollar.

 
In Dugan v. Reservoir Restaurant Inc., a $1 deduction just cost a restaurant its entire tip credit. A federal court handed the plaintiffs (a class of servers) a summary judgment win because their employer deducted $1 per shift from their tips to cover items like silverware, pens, and similar supplies.

Here's the setup. The restaurant paid its servers the tipped minimum wage of $2.13 per hour, relying on the FLSA's tip credit to bridge the gap to the $7.25 federal minimum wage. But every shift, the restaurant also took $1 directly from the servers' tips to reimburse the business for operating supplies.

That's where things went sideways.

There are no “quick favors” in wage-and-hour law

"Can you just help with this for a minute?"

That's how off-the-clock cases start.

Not with an intent to steal wages, but with an innocent call for help.

In Arnold v. Marriott, a hotel employee alleges that during busy holiday seasons he and others were directed to help with conference and event setups while not clocked in — including during lunch. Supervisors allegedly observed pre-shift work and didn't ensure it was recorded. On one occasion, when he asked whether he'd be paid for responding to work texts during lunch, he was told yes — but claims he wasn't. He also alleges he raised concerns with management and nothing changed.

Understanding the 'duties test' of the FLSA's administrative exemption

Your employees probably aren't as important as they think they are.

That's not mean. It's just the Fair Labor Standards Act talking.

One of the more misunderstood parts of the FLSA's administrative exemption — the one that supposedly covers "office" workers — is which officer workers it actually covers. The test sounds deceptively simple: to be exempt, an employee must exercise discretion and independent judgment in matters of significance to the business. Most people with a desk, a computer, and a job title ending in "coordinator," "specialist," or "administrator" think they qualify.

Spoiler: they don't.

Salaried doesn't always equal exempt

Just because an employee is paid a salary does not mean they are exempt from overtime.

I came across this question on Reddit:

"I work at a small logistics company—about 10 of us total. I'm the person handling invoices, shipments, and customer calls. My title sounds fancy ('operations associate'), but I don't manage anyone. Lately, I've been doing 55–60 hour weeks because we're short-staffed, but when I asked about overtime, my boss said, 'you're salaried, so that doesn’t apply.' Am I actually exempt just because I'm salaried? Or is my company taking advantage of that label?"

One of the biggest myths in wage and hour law is that being paid a salary automatically makes you exempt from overtime

11 best practices to prevent off-the-clock wage claims

Target recently agreed to pay $4.6 million to settle a class action by warehouse employees claiming they weren't paid for all their work time.

The hourly employees said they had to:
➛ Badge into the building
➛ Walk long distances to their workstations to clock in, and
➛ Go through mandatory security screenings after clocking out.

Target didn't pay those hourly employees for any of that time. Those few minutes each workday added up to millions of dollars.

A reminder from the DOL that not all “front-of-house” jobs are created equal

The Department of Labor just released a new Wage & Hour opinion letter on one of those topics that always makes restaurant and hospitality employers nervous — tip pooling under the Fair Labor Standards Act.

The question is whether "front-of-house" oyster shuckers can be included in a tip pool with servers when the employer takes a tip credit toward minimum wage?

The DOL says yes — if those shuckers actually interact with customers.

When does the workday begin and end for a remote worker?

With the rise of remote work, wage and hour laws have forced employers to grapple with what should be a straightforward question: When does a remote employee's workday actually begin and end?

In Lott v. Recker Consulting, the Southern District of Ohio offered a clear answer.

Kiara Lott and 130 of her fellow Patient Care Associates worked from home as call-center reps. Their day started with the familiar remote routine: coffee, logging in, Duo security, VPN, ADP timekeeping, Microsoft Teams, and then opening the phone system and workflow tools to handle patient calls.

They sued under the FLSA, claiming they weren't paid for the minutes spent booting up, logging in, authenticating, and later shutting down. The employer countered that all of that was non-compensable "preliminary" or "postliminary" time.

The 6 hard truths of litigation

I pay my mortgage and my kids' school tuition thanks to how long lawsuits take and how expensive they are.

Still, we need to have a frank conversation about exactly that: how long lawsuits take, and how much they cost.

Xerox just ended a 13-year legal saga with a $9.1 million settlement to a class of 5,700 call center employees. The lawsuit challenged the company's Achievement-Based Compensation plan, which paid employees by task and offered bonuses to meet minimum wage thresholds—but didn't cover time spent logging in, waiting between calls, or doing other required non-task work.

Think about that. Years of disruption. Thousands of work hours lost to discovery, motions, depositions, hearings, and appeals. Millions in legal fees. All to land on a settlement that isn't remotely material to a $7 billion company.

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: