News, Articles & Updates

LABOR DEPARTMENT ANNOUNCES PLANS TO RESCIND TIP-POOLING RESTRICTIONS

On Friday, July 21, 2017, the U.S. Department of Labor announced plans to rescind the controversial tip-pooling restrictions imposed on employers in 2011.  The announcement has potential to significantly impact hospitality employers throughout California.

Background

Under the Fair Labor Standards Act, hospitality employers may pay wait staff a lower wage so long as they receive enough tips to bring their hourly rate to the $7.25 federal minimum wage.  While banned in California, this option, known as a “tip credit,” allows employers to pay wages as low as $2.13 per hour so long as the employee receives at least $5.12 in tips.  If the employee does not earn at least $7.25 after factoring tips, the employer must pay the difference; if there are more than enough tips, the employee keeps the excess.

2011 Tip-Pooling Restrictions

The current tip-pooling restrictions were enacted by the Obama administration in 2011.  The rules established that tips are the property of employees and cannot be distributed to other workers or by the employer, even if the employer does not take a tip credit and pays tipped employees the full minimum wage.  Several circuit courts  have struck down these restrictions, holding that they do not apply to employers who pay employees at least the $7.25 minimum wage.  Employers in these circuit jurisdictions have thus been permitted to retain employee tips and distribute them to back-of-house employees who do not otherwise receive tips.  Such tip-pooling arrangements are designed to make pay more equitable throughout a restaurant.

The Ninth Circuit, holding jurisdiction over California, has disagreed; hospitality employers throughout the state have thus remained subject to the tip-pooling restrictions and have had no control over employee tips.  In effect, back-of-house staff have been excluded from tip pooling arrangements.

Effect of the July 21, 2017 Announcement

The announcement by the U.S. Department of Labor on July 21, 2017 to rescind the tip-pooling restrictions thus is significant to California employers and others throughout the Ninth Circuit.  If the Department proceeds as planned, California hospitality employers may exercise control over employee tips and arrange tip pooling that benefits back-of-house staff.

Hospitality employers should understand that the announcement does not have any legal effect; the restrictions remain in place until further action is taken by the U.S. Department of Labor.  Nonetheless, given the split amongst circuit courts, employers should expect the Department to act quickly.

Mitzel Group attorneys will monitor developments in this regard and update employers of any further changes.  Please contact us with any questions.

U.S. CITIZENSHIP AND IMMIGRATION SERVICES ISSUES NEW FORM I-9

On Monday, July 17, 2017, U.S. Citizenship and Immigration Services (USCIS) issued a new Form I-9 and accompanying instructions.  The new form replaces the Form I-9 issued on November 14, 2016 and becomes mandatory for all employers on September 18, 2017. 

Employers should note that the fillable portions of the new form have not changed. Rather, the new form differs from the last version in regards to page 3, List C, setting forth documents that establish employment authorization.  The new form has added “Consular Report of Birth Abroad (Form FS-240)” as an additional acceptable document under List C.  All List C documents were thereafter renumbered except for the Social Security Card.

The form instructions have also changed the name of the Office of Special Counsel for Immigration-Related Unfair Employment Practices (“OSC”) to the “Immigrant and Employee Rights Section (IER).”  This agency investigates and prosecutes unfair documentary practices and retaliation that may occur during the I-9 completion process.  The agency renamed itself to avoid confusion with another federal government agency.

Employers should complete Form I-9 following the same rules and timelines as before.  For answers to additional questions, or to schedule an I-9 training with one of our immigration experts, please contact the Mitzel Group.

SAN FRANCISCO PASSES ORDINANCE BANNING SALARY HISTORY INQUIRIES

On July 21, 2017, San Francisco Mayor Ed Lee signed an ordinance banning employers from asking job applicants about their salary histories.  The new ordinance is scheduled to take effect on July 1, 2018.

The “Pay in Parity Ordinance” applies to all employers registered to do business in the city. It applies to applicants applying for jobs that will be performed in San Francisco and whose application, in whole or in part, will be solicited, received, processed or considered in the city.  “Applicants” include any individual who applies for temporary, seasonal, part-time work or for work through a temporary agency.

The ordinance prohibits employers from

  • Directly or indirectly inquiring about an applicant’s salary history
  • Considering or relying on an applicant’s salary history when making hiring decisions and salary offers
  • Refusing to hire or retaliating against an applicant for not disclosing his/her salary
  • Releasing the salary of any current or former employee to a prospective employer without the employee’s written authorization.

The ordinance does not prohibit an applicant from “voluntarily and without prompting” disclosing salary history. In such instances, an employer may consider salary information when making employment decisions (while also keeping in mind that, under California’s Equal Pay Act, salary history cannot be used as sole justification for pay differentials amongst genders or races for substantially similar work).

The ordinance is intended to narrow the wage gap between men and women by eliminating consideration of prior salaries that may reflect historical inequities.  In addition to prohibiting salary history questions, the ordinance also requires employers to post a notice advising employees of their rights.  Failure to abide by the ordinance will subject the employer to fines and other penalties.

The ordinance is part of a growing trend across the country and mirrors a current state proposal under consideration by the California legislature. Attorneys at the Mitzel Group will monitor any amendments to the ordinance and statewide trends.  We encourage you to contact us with any questions.

U.S. DEPARTMENT OF LABOR EXPECTED TO INCREASE INVESTIGATIONS RELATED TO H-1B AND H-2A VISA PROGRAMS

Following a recent announcement from the U.S. Department of Labor, investigations and audits of foreign worker programs such as H-1B and H-2A visas are likely to increase. The announcement states that the Department “will focus on preventing visa program abuse and take every available legal action against those who abuse these programs.”

Expected enforcement measures include:

  • Increased scrutiny by the Department’s Wage and Hour Division
  • Changes to the Labor Condition Application targeted at identifying fraud and abuse
  • Review of investigatory forms to better identify systematic violations and potential fraud
  • Increased coordination between the Employment and Training Division, the Wage and Hour Division, and the Office of the Solicitor to avoid duplication of efforts and maximize the efficiency of the Department’s activities regarding the visa programs.

To protect themselves in the event of an audit or investigation, employers should continue to keep well-organized and thorough records of all foreign worker applications and employment.  Mitzel Group attorneys are available to answer any questions employers have regarding foreign worker visas.