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  • Interesting Article Regarding New Regulations Regarding Homecare

    The New York Times ran a blog article regarding an interview with Select Home Care regarding ways some employers are considering to survive recently enacted and currently pending changes regarding in-home care.  The implementation of AB241 requiring overtime for caregivers in California and soon-to-be-imposed federal regulations requiring overtime for caregivers throughout the nation has employers scrambling to consider how they can keep in-home care affordable and profitable.

    The article suggests three alternatives employers are considering:

    1. Raise rates to cover the increased costs, which will mean fewer people will be able to afford in-home care.  Raising the costs will not increase the profit margins, but will result in fewer clients which means companies will have to do more with less.  Companies could hire more workers so the employees each work fewer hours, but that will reduce the employee’s income and require more managers to oversee the work.  This doesn’t result in more money for the workers but could help keep the cost to the client down.
    2. Switch employees to independent contractors.  The article makes it seem like this is a viable option, but I have serious doubts this will be an effective solution.  Particularly in California where there are hefty fines for willfully misclassifying an employee as an independent contractor, and given the broad definition of “employer,” under AB241, I don’t recommend this course of action in most cases.
    3. Change the business model to a referral agency.  Referral agencies do not employ the workers, but can still help families locate and hire quality workers.  This could lower the costs for the families because they are not having to pay the profit margins for the caregivers, but it comes with its own sets of risks.  Most likely, the family will become the employer, which means the family needs to understand and comply with the myriad of laws impacting employers and employees.  This can be a daunting concern.

    The article quotes a few other industry professionals, and most seem to agree that the first option (raising prices to cover the costs) is the safest route.  I agree.  Hiring more caregivers, each working fewer hours, will help keep the costs down, but can impact the continuity of care.  This is particularly important for clients with Alzheimer’s or dementia.  Instead of having one worker working a 24-hour shift, you’ll end up with two to four workers working shorter shifts.  Financially this is the best option.  I don’t know if this will be the best option for providing quality care to the elderly and disabled.

    Governor Brown (CA-D) has taken the position that the best way to deal with the increasing costs is to limit the number of hours the employees work.  That is why his budget proposal does not allow caregivers under the state’s In-Home Support Services program to work more than 40 hours per week.  Of course, Governor Brown hasn’t indicated how the clients will care for themselves during the remaining 128 hours of the week.

    There is one last assumption in the article that bears addressing.  All of the sources seem to imply that they can deduct up to 8 hours of sleep time for 24-hour shifts.  Because the California Supreme Court granted review of Mendiola v. CPS Security Solutions, Inc. in the fall of 2013, we cannot guarantee that an employer can deduct for sleep time.  While the federal regulations allow employers to deduct for sleep time, the issue has not been decided in California.  Employers in California that deduct for sleep time may run the risk of having to go back several years to pay for the uncompensated hours of work.

    The New York Times blog promises to do a follow-up with Select Home Care to check on their progress.  If you, or someone you know, uses or provides in-home care, you should speak with a knowledgeable employment attorney to understand the rights and obligations imposed by the law.

    The Law Office of Phillip J. Griego
    95 South Market Street, Suite 520
    San Jose, CA 95113
    Tel. 408-293-6341
     
    Original article by Robert E. Nuddleman, former associate of The Law Office of Phillip J. Griego.
     
    Feel free to suggest topics for the blog. We are happy to consider topics pertaining to general points of Labor and Employment Law, but we cannot answer questions about specific situations or provide legal advice. If you desire legal advice, you should contact an attorney.
     
    Your use of this blog does not create an attorney-client relationship between you and the Law Office of Phillip J. Griego. The use of the Internet or this blog for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be posted in this blog and the Law Office of Phillip J. Griego cannot guarantee the confidentiality of anything posted to this blog.Phillip J. Griego represents employees and businesses throughout Silicon Valley and the greater San Francisco Bay Area including Palo Alto, Menlo Park, Mountain View, Los Altos, San Jose, the South Bay Area, Campbell, Los Gatos, Cupertino, Morgan Hill, Gilroy, Sunnyvale, Santa Cruz, Saratoga, and Alameda, San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.

  • What’s the Deal with Alternative Workweeks?

    Some employees want to work longer hours each day in exchange for working fewer days per week.  These “alternative workweeks” are permissible, provided the employer follows prescribed methods of adopting and implementing the policies.  The most common alternative workweek situation allows employees to work four ten-hour days without receiving overtime.  Without the alternative workweek policy, the employee would be entitled to two hours of overtime every day. With a proper alternative workweek agreement, the employee can work the schedule without the employer incurring overtime pay.

    Many alternative workweek agreements are invalid because employers fail to follow the appropriate procedures for adopting the policy or they fail to notify the Labor Commissioner about the policy.  To be enforceable, an alternative workweek agreement must comply with the following:

    (1)           The employer must present a written schedule available for the employees (this can be one option or several options from which the employees can choose).

    (2)           Employees can submit alternatives to the employers options with the employer’s approval;

    (3)           The written schedule must specify the number of days and amount of hours offered (the actual days do not have to be specified);

    (4)           There must be at least two (2) consecutive days off during the week;

    (5)           If the employees elect an alternative workweek, they can switch between the various alternative workweeks offered by the employer;

    (6)           Each workday must consist of at least four (4) hours but not more than ten (10) hours;

    (7)           The employer must inform the employees what effect the alternative schedules will have on wages and benefits;

    (8)           If more than 5% of the workforce does not speak English, the notice of available schedules must also be in the language of that portion of the workforce;

    (9)           The employees must meet at least 14 days before they vote on the alternative workweek and the employees must be given advance written notice of the meeting;

    (10)        If all employees cannot attend a single meeting, the employer must hold multiple meetings;

    (11)        The employer must mail a copy of the disclosure to any employees who could not attend the meeting;

    (12)        The ballot must be all affected employees;

    (13)        The “affected employees” can be limited by division, department, job classification, shift, separate location or recognized subdivision of a work unit;

    (14)        The vote must carry by a 2/3 approval;

    (15)        The ballots must be confidential (i.e., no names or employee ID)

    (16)        The election must occur during work hours at the worksite;

    (17)        The vote cannot be used to retroactively allow an alternative workweek;

    (18)        The results of the election must be filed with the Labor Commissioner within 30 days of the election (do not send the ballots).  The results can be mailed to:

    Division of Labor Statistics & Research,

    Attn: Alternative Workweek Election Results

    P.O. Box 420603

    San Francisco, CA 94142

    (19)        The Labor Commissioner must receive the following:

    • Company name, phone, address and contact person;
    • Date of the election
    • Election results summary
    • Description of alternative workweeks from the election
    • Statement that the election was by secret ballot, written, and passed by a 2/3 vote

    (20)        The employer cannot require employees to work the new work hours for at least 30 days after the announcement of the final election results – The regulations do not appear to prohibit allowing an employee to work the alternative workweek if they voluntarily choose to do so.

    When deciding whether to adopt or offer an alternative workweek, the employer should consider:

    • What schedule(s) did you have in mind for the alternative workweek?  (i.e., hours, days, etc.)
    • Do you want to offer more than one option?  (i.e., four 9-hour days and one 4-hour day, plus four 10-hour days)
    • Will employees be able to choose not to work an alternative workweek?
    • Do you want to allow employees to submit alternatives to your options?
    • Will each employee get at least 2 days off?
    • What effect will the alternative workweek have on wages & benefits? (consider how vacation accrues, eligibility for health benefits)
    • What percentage of your workforce does not speak English? (if more than 5%, Notice of available schedules must be provided in their language)
    • Will all employees be able to attend a single meeting to discuss the proposed schedule? If not, how can all employees have a chance to meet?
    • Which employees will be “affected”?
    • How are you going to ensure the ballots are confidential? (use drop box and form)

    If an employer adopts an alternative workweek wherein the employee is scheduled to work ten hours per day and the employee actually works more than ten hours, the employer must pay one and one-half times the employee’s regular rate of pay for all hours in excess of the alternative workweek schedule.  Additionally, if an employee works more days than scheduled under the alternative workweek agreement, the employer must compensate the employee at the overtime rate even if the employee works less than forty hours during the week. Employees are still entitled to double time for hours in excess of twelve hours per day.

    You can search the Labor Commissioner’s database for employer names to find out if the employer has registered a valid alternative workweek election.

    Phillip J. Griego & Associates
    95 South Market Street, Suite 520
    San Jose, CA 95113
    Tel. 408-293-6341
    East Bay 925-364-4655

    Original article by Robert E. Nuddleman, a former associate of Phillip J. Griego & Associates

    Feel free to suggest topics for the blog. We are happy to consider topics pertaining to general points of Labor and Employment Law, but we cannot answer questions about specific situations or provide legal advice. If you desire legal advice, you should contact an attorney.

    Your use of this blog does not create an attorney-client relationship between you and Phillip J. Griego & Associates. The use of the Internet or this blog for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be posted in this blog and Phillip J. Griego & Associates cannot guarantee the confidentiality of anything posted to this blog.

    The attorneys of Phillip J. Griego & Associates represent employees and businesses throughout Silicon Valley and the greater San Francisco Bay Area including Palo Alto, Menlo Park, Mountain View, Los Altos, San Jose, the South Bay Area, Campbell, Los Gatos, Cupertino, Morgan Hill, Gilroy, Sunnyvale, Santa Cruz, Saratoga, and Alameda, San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.

  • FAQ’s Regarding California’s Caregiver Overtime Laws

    With the new overtime requirements under the newly enacted Domestic Workers Bill of Rights (AB241), I’ve received a lot of questions about how the law will impact caregivers and the families they serve.  Many employers and employees do not understand their rights and obligations.  Hopefully, the following answers to some of the common questions I’ve been receiving will help clarify the law.

    Keep in mind, this is a newly enacted statute with some ambiguities.  Future cases or amendments could affect my interpretation of the statute.

    Q: My employer told me that they are reducing my pay rate so they can afford to pay overtime.  Can my employer do that?

    A: Usually, yes.  Most employees are employed “at-will.”  This means the employer or the employee can terminate the employment relationship at any time, with or without notice, and for any reason or no reason (except an illegal reason).  When an employer lowers an employee’s pay rate, the employer is effectively terminating the old employment relationship and offering new employment under the new lower rate of pay.   Your continued employment constitutes acceptance of the terms of the unilateral contract.  As long as the employer notifies you of the new terms of employment (e.g., the new rate of pay), the employer can change the terms.  An employer may not retroactively alter the terms of employment.

    Employers are supposed to provide employees a new Notice to Employee under Labor Code section 2810.5 whenever the employer changes the employee’s pay rate (or any other item included in the 2810.5 Notice to Employee).

    Q: Can an employer deduct the cost of room and board from an employee’s pay?

    A: Yes, if the employer provides meals and lodging to an employee, even if the meals and lodging are provided at the client’s site, an employer can deduct specific amounts for the meals and lodging as a credit against the employer’s minimum wage obligations.  The employer must have a written agreement, and can only deduct up to certain amounts specified in the wage order.  Generally speaking, the amounts an employer can deduct are fairly low and are usually well below fair market value (For example, an employer can only deduct $2.90 for breakfast, $3.97 for lunch, $5.34 for dinner, and $37.63 per week for an unshared room), and the employee must actually receive the meals or lodging if the employer is going to use that as a credit against the employer’s minimum wage obligation.

    Q: Can I pay a caregiver a “daily” or “weekly” rate?

    A: You can, but you shouldn’t.  A daily or weekly rate is a salary.  The law says that a salary only compensates an employee for the “regular nonovertime hours” worked.   For a domestic work employee that qualifies as a personal attendant, this means the first 9 hours in a day or the first 45 hours a week.  If you pay a worker a daily or weekly salary, you are not paying the employee for any overtime hours.  All caregivers should be paid by the hour and should be paid for all hours worked.

    Q: Can my employer deduct for sleep time?

    UPDATE:

    The California Supreme Court granted review of Mendiola v. CPS Security Solutions, Inc. in the fall of 2013.  Until the Supreme Court issues its decision, employers may not be able to rely on the sleep time rules stated below.  If you have questions about your work situation, contact an attorney familiar with California’s overtime requirements.

    A: Under Mendiola v. CPS Security Solutions, Inc, an employer can deduct for sleep time as long as:

    1. The employee regularly receives at least 5 hours of uninterrupted sleep;
    2. The employee is provided a comfortable place to sleep;
    3. The employer and employee agree (preferably in writing) that the sleep time is not compensable; and
    4. The employee works a 24-hour shift.

    If any of those factors are missing, the employer cannot deduct for sleep time.  Additionally, the employer can only deduct the actual number of rest time hours, up to a maximum of 8 hours per 24-hour shift.  So, if the employee only receives 6 hours of uninterrupted sleep, the employer can only deduct those 6 hours.  If the employee receives 10 hours of uninterrupted sleep, the employer can only deduct a maximum of 8 hours.

    As noted in the update above, Mendiola v. CPS Security Solutions, Inc. is currently under review and therefore an employer may not be able to avail itself of the sleep time rules.

    See my article for more detailed information.

    Q: If I work in San Jose, but the care agency that employs me is located outside of San Jose, am I still entitled to the San Jose minimum wage?

    A: Yes.  Certain cities, such as San Jose and San Francisco, have adopted their own minimum wage ordinances.  Any employees performing work within the geographical boundaries of the specified cities must receive the minimum wage set by the ordinances.  In San Jose, the minimum wage is $10.15 per hour.  In San Francisco, the minimum wage is $10.74 per hour.

    Q: My employer wants me to become an independent contractor.  Is that legal?

    A: Likely not.  There are a number of factors that determine whether a worker is an employee or an independent contractor, and the tests can differ from agency to agency.  Under the Domestic Workers Bill of Rights, an employer includes anyone that exercises control over the employee’s hours, wages or working conditions.  It is hard to imagine a scenario where the caregiver has 100% control over his or her hours, wages and working conditions.  If you are working one day as an employee, and the next day as an independent contractor without any other changes, chances are you are really an employee.

    Q: I run the domestic worker placement agency.  Do I have to comply with the new overtime laws?

    A: Not if meet the definition of a domestic work employment agency under Civil Code section 1812.5095.  See my article to see if you meet all of the requirements.

    Q: Which hours are counted toward the weekly overtime?  I work 12 hours a day, 5 days a week.  By the 4th day I’ve worked 45 hours.  Does that mean that the 5th day is all overtime?

    A: The Domestic Workers Bill of Rights uses the same, or substantially similar, language as other overtime statutes in defining which hours require overtime payments.  Cases interpreting those statutes make it clear you only count the regular hours worked towards the weekly overtime.  In other words, you only count the first 9 hours worked toward the weekly 45-hour maximum.  You don’t count the daily overtime hours toward the weekly maximum because the employer already paid overtime for the hours in excess of 9 per day.

    The following examples may help.

    Correct!

    M T W T F Total
    Total 12 12 12 12 12 60
    Reg Hrs 9 9 9 9 9 45
    OT Hrs 3 3 3 3 3 15

    Wrong!

    M T W T F Total
    Total 12 12 12 12 12 60
    Reg Hrs 9 9 9 9 0 36
    OT Hrs 3 3 3 3 12 24

    Hopefully, these answers help. Each situation is unique.  The questions and answers provided above are for general information purposes only. If you have questions or concerns about your particular situation, contact an employment attorney familiar with wage and hour issues in the eldercare industry.

    The Law Office of Phillip J. Griego
    95 South Market Street, Suite 520
    San Jose, CA 95113
    Tel. 408-293-6341
     
    Original article by Robert E. Nuddleman, former associate of The Law Office of Phillip J. Griego.
     
    Feel free to suggest topics for the blog. We are happy to consider topics pertaining to general points of Labor and Employment Law, but we cannot answer questions about specific situations or provide legal advice. If you desire legal advice, you should contact an attorney.
     
    Your use of this blog does not create an attorney-client relationship between you and the Law Office of Phillip J. Griego. The use of the Internet or this blog for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be posted in this blog and the Law Office of Phillip J. Griego cannot guarantee the confidentiality of anything posted to this blog. Phillip J. Griego represents employees and businesses throughout Silicon Valley and the greater San Francisco Bay Area including Palo Alto, Menlo Park, Mountain View, Los Altos, San Jose, the South Bay Area, Campbell, Los Gatos, Cupertino, Morgan Hill, Gilroy, Sunnyvale, Santa Cruz, Saratoga, and Alameda, San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.

  • Robert Nuddleman Discusses California’s Administrative Exemption

    I am excited to be sharing the stage today with Richard Schramm of Employment Rights Attorneys and Ray Hixson of Hixson Nagatani, LLP as we discuss the administrative exemption under California’s overtime laws.  This is the first in a serious of discussions regarding wage and hour laws in California for the Santa Clara County Bar Association’s Labor & Employment Law Section.

    The purpose of the Wage & Hour Roundtable is to have an open discussion with practitioners to help each other understand complex wage and hour issues.  In this Roundtable, we will discuss California’s administrative exemption.  Attendees will receive practical information from experienced wage and hour attorneys and tools to help attorneys understand the administrative exemption.

    The administrative exemption under California wage and hour law is one of the most frequently misunderstood and misapplied exemptions.  Which duties are exempt?  To what extent can employers rely on federal regulations?  What if an employee is performing exempt duties at the same time they are performing non-exempt duties?  What role does the employer’s job description play in the analysis? Of special importance in Silicon Valley, when may an employer rely upon the administrative exemption in lieu of the software professional exemption (with its higher salary requirement) for software-related jobs? Recent court decisions try to clarify the issues, but oftentimes create confusing and sometimes conflicting results.

    The Roundtable is FREE!  Bring your lunch, your questions and your experiences as we delve into this oft misunderstood issue.

    You can register for the event at the SCCBA’s website.

    The Law Office of Phillip J. Griego
    95 South Market Street, Suite 520
    San Jose, CA 95113
    Tel. 408-293-6341
     
    Original article by Robert E. Nuddleman, former associate of The Law Office of Phillip J. Griego.
     
    Feel free to suggest topics for the blog. We are happy to consider topics pertaining to general points of Labor and Employment Law, but we cannot answer questions about specific situations or provide legal advice. If you desire legal advice, you should contact an attorney.
     
    Your use of this blog does not create an attorney-client relationship between you and the Law Office of Phillip J. Griego. The use of the Internet or this blog for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be posted in this blog and the Law Office of Phillip J. Griego cannot guarantee the confidentiality of anything posted to this blog.Phillip J. Griego represents employees and businesses throughout Silicon Valley and the greater San Francisco Bay Area including Palo Alto, Menlo Park, Mountain View, Los Altos, San Jose, the South Bay Area, Campbell, Los Gatos, Cupertino, Morgan Hill, Gilroy, Sunnyvale, Santa Cruz, Saratoga, and Alameda, San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.

    n Hill, Gilroy, Sunnyvale, Santa Cruz, Saratoga, and Alameda, San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.

  • Recent Article in ACBA L&E Section Newsletter: Department of Labor Proposes Change the Companion Exemption

    If you missed some of my prior posts talking about proposed modifications to the FLSA regulations regarding “companions,” I wrote an article for the Alameda County Bar Association’s Labor & Employment Law Section Newsletter.  The issue came out in May, but somehow it passed under my radar until I was searching for new information on the topic and came across the article.

    You can download a copy of the article at the ACBA L&E Section website.

    If you, or someone you know, works in the home care industry, I highly recommend reviewing the article.

    The Law Office of Phillip J. Griego
    95 South Market Street, Suite 520
    San Jose, CA 95113
    Tel. 408-293-6341
     
    Original article by Robert E. Nuddleman, former associate of The Law Office of Phillip J. Griego.
     
    Feel free to suggest topics for the blog. We are happy to consider topics pertaining to general points of Labor and Employment Law, but we cannot answer questions about specific situations or provide legal advice. If you desire legal advice, you should contact an attorney.
     
    Your use of this blog does not create an attorney-client relationship between you and the Law Office of Phillip J. Griego. The use of the Internet or this blog for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be posted in this blog and the Law Office of Phillip J. Griego cannot guarantee the confidentiality of anything posted to this blog.Phillip J. Griego represents employees and businesses throughout Silicon Valley and the greater San Francisco Bay Area including Palo Alto, Menlo Park, Mountain View, Los Altos, San Jose, the South Bay Area, Campbell, Los Gatos, Cupertino, Morgan Hill, Gilroy, Sunnyvale, Santa Cruz, Saratoga, and Alameda, San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.

  • Look Out Brinker and Brinkley, Here Comes Sharon

    As employers and employee advocates eagerly await the California Supreme Court’s decision in Brinkley and Brinker regarding the lengths to which employers must ensure employees are afforded the opportunity to take meal breaks, some companies have decided to go so far as to discipline employees who voluntarily work “off the clock.”  I have to admit that when a manager asks me, “what do I do if an employee insists on working through lunch,” I have offhandedly commented that the only choice may be to discipline the employee for refusing to follow the employer’s reasonable directions.  Well, it turns out that may not be the best advice.

    A recent Chicago Tribune article reports a victory for Sharon Smiley after she was fired for working during her lunch hour.  In Illinois, like California, employees are entitled to a lunch break in the middle of the day.  After 10 years of employment, Sharon Smiley decided to work through a lunch break to finish some work. Her manager became upset because Sharon was apparently in violation of company policies so he sent her to HR.  HR had a short discussion with her and then fired her for misconduct (violating company policies) and insubordination (refusing to follow the employer’s instructions).  Sharon was devastated.

    To add insult to injury, the company opposed her unemployment insurance claim.  She went to several different attorneys, all of which told her she had no chance of winning.  Undaunted, and really with no other choice, Sharon represented herself.  She appealed the initial unemployment insurance benefits denial, and the superior court judge overturned the decision.  Last week an appellate court upheld the lower court’s decision allowing Sharon to obtain unemployment insurance benefits.

    To my knowledge there are no plans to file a wrongful discharge claim.

    The article is particularly interesting here in California as the Supreme Court decides whether employers must force employees to take lunch breaks or merely ensure employees have a realistic opportunity to take the required breaks.  I guess I’ll have to add a few more caveats to my advice.

    You can read the original Chicago Tribune article here.

    The Law Office of Phillip J. Griego
    95 South Market Street, Suite 520
    San Jose, CA 95113
    Tel. 408-293-6341
     
    Original article by Robert E. Nuddleman, former associate of The Law Office of Phillip J. Griego.
     
    Feel free to suggest topics for the blog. We are happy to consider topics pertaining to general points of Labor and Employment Law, but we cannot answer questions about specific situations or provide legal advice. If you desire legal advice, you should contact an attorney.
     
    Your use of this blog does not create an attorney-client relationship between you and the Law Office of Phillip J. Griego. The use of the Internet or this blog for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be posted in this blog and the Law Office of Phillip J. Griego cannot guarantee the confidentiality of anything posted to this blog.Phillip J. Griego represents employees and businesses throughout Silicon Valley and the greater San Francisco Bay Area including Palo Alto, Menlo Park, Mountain View, Los Altos, San Jose, the South Bay Area, Campbell, Los Gatos, Cupertino, Morgan Hill, Gilroy, Sunnyvale, Santa Cruz, Saratoga, and Alameda, San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.

  • Tip-Pooling v. Tip-Allocation: Can Managers Receive Tips?

    If you asked me this question a year ago I probably would have told you, “not unless the tip is left for the manager and the manager alone.”  After a flurry of cases in 2009, however, my answer may be a little different.

    Labor Code Section 351 states, in pertinent part,:

    No employer or agent shall collect, take, or receive any
    gratuity or a part thereof that is paid, given to, or left for an
    employee by a patron, or deduct any amount from wages due an employee
    on account of a gratuity, or require an employee to credit the
    amount, or any part thereof, of a gratuity against and as a part of
    the wages due the employee from the employer. Every gratuity is
    hereby declared to be the sole property of the employee or employees
    to whom it was paid, given, or left for.

    Courts have long interpreted this to mean that tips left for employees may not be shared with management employees.  Managers and supervisors are agents of the employer.  Requiring employees to share their tips with the employer’s agents violates Labor Code 351.

    Courts have interpreted this to prohibit tip-pooling arrangements where managers or supervisors receive a part of the tip.  See, e.g. Jameson v. Five Feet Restaurant, Inc. 107 Cal.App.4th 138 (2003) [prohibiting a tip-pooling policy that required servers to share 10% of their tips with floor managers].  Courts have allowed  tip-pooling arrangements so long as managers and supervisors do not receive tips left for the employees.  See, e.g., Leighton v. Old Heidelberg, Ltd 219 Cal.App.3d 1062 (1990) [approving tip-pooling policy that required waitress to share 15% of her tips with bussers that worked the same tables]; Budrow v. Dave & Buster’s of California, Inc., 171 Cal.App.4th 875 (2009) [approving tip-pooling policy that required servers to share tips with bartenders]; Etheridge v. Reins International California, Inc. 172 Cal.App.4th 908 (2009) [approving tip-pooling policy that required servers to share tips with kitchen staff, bartenders, and dishwashers].

    A recent appellate court case carved out an exception to the seemingly straight-forward rule against sharing tips with management employees.  In Chua v. Starbucks, 174 Cal.App.4th 688 (2009) the court upheld Starbuck’s “tip-allocation” policy where customers put tips into a tip jar that was intended to compensate all employees working the shifts, including shift supervisors.  There were several key features to Starbuck’s policy that differentiated the “tip-allocation” policy from other seemingly similar “tip-pooling” policies.

    Unlike a typical restaurant, the tip was not left on the table and was not part of the general bill or otherwise left for a specific individual.  Starbuck’s had a tip bucket on the counter making it obvious that the tip would not be for any one specific employee.  Rather, the tips were intended for a team of employees.  Had the tip been left for a specific individual then the court likely would not have allowed the shift supervisors to share in the tip.

    Starbuck’s tip-allocation policy only provided tips to people within the “chain of service.”  In Starbuck’s case, the weekly tips were added up and divided amongst the employees that worked during that week.  Employees received a pro-rata share of the tips based on the total hours worked by the employees.

    It is important to note that while shift supervisors were allowed to receive a portion of the tip-allocation, store managers and assistant store managers did not receive any portion of the tips.  Shift supervisors, while having some authority to hire, fire and discipline other employees, at least worked within the chain of service and were less likely to be considered the company’s “agents.”  I suspect this particular criteria will be the subject of further litigation in future cases.

    Tip-pooling and tip-allocation cases are on the rise.  If you require employees to share their tips with other employees you should seek the advice of competent professionals to advise you regarding how to ensure your company complies with the law.

    The Law Office of Phillip J. Griego
    95 South Market Street, Suite 520
    San Jose, CA 95113
    Tel. 408-293-6341
     
    Original article by Robert E. Nuddleman, former associate of The Law Office of Phillip J. Griego.
     

    Feel free to suggest topics for the blog. We are happy to consider topics pertaining to general points of Labor and Employment Law, but we cannot answer questions about specific situations or provide legal advice. If you desire legal advice, you should contact an attorney.

    Your use of this blog does not create an attorney-client relationship between you and the Law Office of Phillip J. Griego. The use of the Internet or this blog for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be posted in this blog and the Law Office of Phillip J. Griego cannot guarantee the confidentiality of anything posted to this blog.

    Phillip J. Griego represents employees and businesses throughout Silicon Valley and the greater San Francisco Bay Area including Palo Alto, Menlo Park, Mountain View, Los Altos, San Jose, the South Bay Area, Campbell, Los Gatos, Cupertino, Morgan Hill, Gilroy, Sunnyvale, Santa Cruz, Saratoga, and Alameda, San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.