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  • Prevailing Employer in Meal/Rest Break Suit Entitled to Attorneys’ Fees

    11/17/2010 Update: The California Supreme Court granted review of Kirby v. Immoos Fire Protection.  We will have to wait for the Supreme Court’s decision to determine if I was correct.

    In 2000, the California legislature added some teeth to California’s meal and rest break laws.  Prior to 2000 employers were required to give employees meal and rest breaks, but there was no penalty if the employer refused to allow employees to take their legally mandated breaks.  In 2000 the legislature enacted California Labor Code Section 226.7 which requires employers to pay an additional hour’s pay for each day in which a meal and/or rest break is not provided.

    The California Supreme Court later decided that the additional hour’s pay is a “wage” and not a “penalty.”  See Murphy v. Kenneth Cole.  Since that time we have since a proliferation of suits alleging a violation of Labor Code Section 226.7.  If court filings are to be believed there is hardly an employee in California that is allowed to take the required meal and rest breaks.  I rarely see an overtime case filed that does not include a missed meal and/or rest break claim.

    When the court first decided Murphy I recall thinking about how it would affect the attorneys’ fees provisions in the Labor Code.  Under Labor Code Section 1194 the prevailing employee is entitled to recover his/her attorneys’ fees in an action for unpaid minimum wage or overtime.  The employer can never recover its attorneys’ fees in an unpaid minimum wage or overtime case.  Labor Code Section 218.5, however, allows the “prevailing party” to recover attorneys’ fees in any action for nonpayment of wages other than minimum wages or overtime.

    Based on Murphy and the language of Labor Code Sections 218.5 and 1194, I theorized that an employer that successfully defeats a claims for unpaid meal and/or rest breaks would be entitled to recover its attorneys’ fees. In the common unpaid overtime case where the employee “throws in” a claim for missed meals/rest breaks I believe the employee is at risk of having to pay a portion of the employer’s attorneys’ fees even if the employee prevails on the unpaid overtime claim unless the employee also prevails on the missed meal/rest break claim.

    Well, the Third Appellate District agrees.  In Kirby v. Immoos Fire Protection (10 C.D.O.S. 9451), the court came to the same conclusion I did: because a claim for missed meal/rest breaks is a claim for “wages” other than minimum wage and overtime, an employee who does not prevail on those claims is liable for the employer’s attorneys’ fees incurred in defending against those claims.

    Attorneys representing employees in unpaid overtime and minimum wage cases need to carefully consider whether to include the unpaid meal/rest break claim.  Considering the fact that employers are not required to force employees to take rest breaks (whether this is true with regard to meal breaks remains to be seen) or to track the rest breaks (which is not the true with regard to meal breaks) means prevailing on a rest break case may be difficult.  Good attorneys will carefully interview their clients, and hopefully other percipient witnesses, before deciding to add the rest/meal breaks claim as a matter of course.

    Employers should not treat this as a license to violate the law.  To the contrary.  Although you may be able to offset a judgment against you by the amount awarded to you in attorneys’ fees, actually collecting an award of attorneys’ fees is usually problematic at best.  The best policy is to know the law, follow the law, and ensure you have accurate records reflecting what occurred.  But you already knew that!

    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.