Domino’s Pizza Sued for Wage and Hour Violation

As reported yesterday in the Cherry Hill Courier-Post, pizza company Domino’s is being sued in a proposed class-action lawsuit by delivery persons in South Jersey who claim they are not being paid the required minimum wage.  The plaintiffs contend that Domino’s does not properly reimburse the drivers for the full cost of using their personal vehicles to deliver Domino’s products to consumers.  The federal business mileage reimbursement rate has averaged about 55 cents per mile over the last few years.  By contrast, the lawsuit claims, the Domino’s drivers have only received about 90 cents per delivery, which equates to about 18 cents per mile for a typical pizza delivery trip.  This has resulted in a wage reduction of approximately $3.60 per hour, making the typical hourly wage for a Domino’s driver to be less than $5 — far less than the federal or New Jersey state minimum wages.  The lawsuit also asserts that drivers are compelled to purchase their own Domino’s jackets for $25, which further reduces their hourly wage.

Domino’s pay practices have drawn fire in other states as well.  New York has brought several cases against the pizza chain, garnering settlements of almost $450,000 on behalf of workers who were allegedly underpaid.  One year later, 29 different New York Domino’s locations paid $970,000 in settlements for the exact same claim, according to website Grubstreet.

It goes without saying that a global company such as Domino’s, with literally billions of dollars of sales per year, has the means to ensure that its employees are paid properly and in accordance with the law.  Whether Domino’s has the will to do so remains to be seen.  The negative publicity generated by cases such as this one and others may be the push Domino’s needs to decide to treat its employees better.  There is clearly more than enough “dough” to go around.

N.J. Workers Owed Millions in Unclaimed Back Pay

According to the U.S. Department of Labor (as reported in North Jersey.com), there is over $7,000,000 in back pay sitting unclaimed in their Philadelphia.  This money is being held on behalf of approximately 10,000 New Jersey workers.  The unclaimed money was collected over the past three years from employers who were investigated or prosecuted for wage and hour violations.  If you believe you are owed back pay from a U.S. DOL investigation or complaint, you can check the agency’s “Wages Owed Workers” site and type in your employer’s name and location, followed by your own last name and first initial.  Since the website’s launch in June, approximately $800,000 has been claimed.  But act fast.  If you don’t claim your money within three years, it will go the U.S. Treasury.

Fast Food Workers Rally for Higher Pay

According to Bloomberg Business, fast food workers across the nation are rallying for higher pay and the right to unionize without retaliation.  Rallies organized by the Fight for $15 campaign were held in 236 U.S. cities last week.  The campaign seeks McDonald’s Corp. and other fast food chains to raise their minimum wages to $15 and to permit employees to unionize.  Campaign organizers said that the rallies drew tens of thousands of workers and were the largest action to date for its movement, which began in November 2012.  Prior to these rallies, McDonald’s stated that it would raise wages and offer paid vacations for its full-time employees at its U.S. company-owned stores, which amount to approximately 1,400 stores out of 14,000.  Recently, Wal-Mart, Target, and other retailers have begun boosting pay for its minimum wage workers as well.

The Fight for $15 campaign, and the businesses that are paying attention to it, are ahead of the federal government on this issue.  Legislative attempts to increase the minimum wage nationwide do not have the support of the House of Representatives or a majority of the Senate.  In our view, it is good economic policy for lower wage workers to have more disposable income to spend.  A rising tide of wages for lower income workers will lift everyone’s boats.

Papa John’s Found Liable for Wage and Hour Violations

A New York court has ruled that a Papa John’s pizza franchise owner has to pay approximately $2,000,000 for underpaying hundreds of its delivery workers.  The court found that New Majority Holdings and its owner, Ronald Johnson, violated wage and hour law by rounding workers’ hours down to the nearest whole hour (thereby not paying them for fractions of an hour), paying them the lower “tipped” minimum wage although they had many non-tipped job duties, not paying them overtime pay, and not reimbursing them for buying and maintaining their bicycles.

It seems to me that fast food workers have a hard enough time making a living without their employers taking further advantage of them by violating wage and hour laws.  Kudos to New York Attorney General Eric Schneiderman and his team for prosecuting this case and highlighting the plight of fast food workers in New York City.

NJ SUPREME COURT RULES ON PROPER TEST FOR DETERMINING EMPLOYEE OR INDEPENDENT CONTRACTOR STATUS

In a recent case, Hargrove v. Sleepy’s LLC No. A-70-12 (072742)(N.J. Jan. 14, 2015), the Supreme Court of New Jersey held that the proper test to apply when determining an individual’s status for purposes of the New Jersey Wage Payment Law is the “ABC test”.

The case involved three plaintiffs, delivery truck drivers, suing Sleepy’s individually and on behalf of a putative class.  Sleepy’s had contracted with individuals and delivery companies to provide delivery services to its customers.  The plaintiffs claimed that Sleepy’s had misclassified them as independent contractors rather than employees and, in doing so, denied them the benefits and protections that they otherwise would have been entitled to under New Jersey’s wage and hour laws.

The lower federal court applied the federal common law test that focuses primarily on the employer’s ability to control the contractor’s work performance, and awarded summary judgment to Sleepy’s.  The plaintiffs appealed and the Third Circuit asked the NJ Supreme Court to consider the specific question of which test should be applied to determine independent contractor status.  At least four different tests had been used in New Jersey to determine employee vs. independent contractor status for purposes of unemployment, whistleblowing, discrimination and tort claims so the Court in this case was asked to decide which test to use for purposes of the wage and hour laws.

The Supreme Court determined that the “ABC test” governs, a test that is more worker-friendly.  Employers will now have the burden of showing that an individual providing services:

  1. is free from the company’s control in performing services;
  2. performs work outside the usual course of the company’s business or outside the company’s place of business, and
  3. is engaged in an independently established business.

The Court further specified that the failure to satisfy any one of the three criteria means that the worker should be classified as an employee, not an independent contractor for purposes of the wage and hour laws. The Court noted that New Jersey’s wage and hour laws are remedial statutes that should be liberally construed.

Workers and companies alike should consult with employment counsel to determine the proper employment classification under this ABC test.

Minimum Wage Increased in NJ

As of January 1, 2015, the minimum wage in New Jersey is $8.38 per hour, up from $8.25 per hour.  The increase is the result of an amendment to the New Jersey State Constitution which requires New Jersey’s minimum wage to be adjusted annually to reflect increases in the consumer price index.  This increase will help many New Jersey families make ends meet.

WAGE & HOUR – Compensable time for security screenings?

The recent U.S. Supreme Court decision in Integrity Staffing Solutions v. Busk is a blow to hourly employees nationwide.

The employees at issue in Integrity Staffing were employed to retrieve products and package them for delivery to Amazon customers.  These employees claimed that they were entitled to be paid for the time spent undergoing security screenings before leaving the warehouse each day.  They estimated that these screenings took about 25 minutes each day, or about 2 + hours per week.

The Court analyzed this case under the Portal-to-Portal Act, which exempts employers from paying employees for activities that are preliminary and postliminary to the “principal activity or activities.”  It found that the screenings were not the employees’ “principal activities” because Integrity Staffing had not hired them to undergo security screenings.  Moreover, it found that the screenings were not “integral and indispensable” to the employees’ work as warehouse workers because they could perform their jobs, retrieving packages, without the screenings.  The Court rejected the test used by the Ninth Circuit – whether an employer “required” a particular activity – in determining whether such activity was compensable under the federal wage and hour laws. The Court stated that that standard would be too broad and would run contrary to the intent of the Portal-to-Portal Act.

This decision is clearly a significant victory for employers, who now have clear guidance that in the vast majority of cases, the time an employee spends undergoing security screening is not compensable under federal law.  But employers should still proceed carefully – particularly if their screenings result in employees waiting significant amounts of time.  The Court alluded to the fact that requiring employees to wait a significant amount of time for security screening could trigger union demands to be paid for such time.

Exotic Dancers in NY, Misclassified as Independent Contractors, Win Wage Claim

A federal court in NY has recently granted partial summary judgment to the plaintiffs in a class action lawsuit involving more than 2000 exotic dancers.  The dancers alleged that their employers misclassified them as independent contractors in order to avoid paying them the minimum wage.  These dancers were not paid any salary for working at the employer’s strip club; instead, they earned “performance fees” and tips from customers.  However, the court found that the club exercised a considerable amount of control over the dancers, who did not require any special skills or experience to perform their job duties.  Under this “economic realities” test, the dancers were employees, not independent contractors.  Based on that finding, the club’s failure to pay them the required minimum wage violated state and federal law.

The employer argued that it should get an offset on the amounts owed, based on the monies that the dancers collected personally from the patrons.  However, the court ruled that no offset was available, in part, because directing customers to pay employees their minimum wage would interfere with the goals of the wage and hour laws and fail to ensure that proper payroll deductions were made.

The court found that at least $10.8 million in back wages were owed.  The court has scheduled a trial to determine if the dancers are owed another $8 million, plus liquidated damages.

The takeaway from this case is that businesses who employ “artists” (broadly defined) cannot simply call them independent contractors but treat them as employees.  There are a number of tests to determine whether an individual is an independent contractor or an employee, and these tests are complicated.  If you run a business that employs independent contractors, or if you are currently being classified as an independent contractor by your employer, you may want to consult an employment attorney who can advise you as to your rights and obligations.

Big Win for NJ Unemployment Insurance Claimants

The New Jersey Department of Labor has settled a lawsuit that claimed applicants for unemployment benefits have been wrongfully denied counsel and other due process rights. As part of the Consent Order that lays out the terms of the settlement, the Department agrees to address its procedures for telephone hearings and other proceedings.

Each claim for unemployment has three possible stages where notifications are sent out: (1) a notification of the initial fact-finding interview; (2) notice of a hearing before an appeal tribunal, which is sent out if the claimant challenges the initial eligibility finding; and (3) notice of hearing before the Board of Review, which is the next and final step in the internal process before the matter goes to an appellate court.

The class action lawsuit claimed that notices sent at the first and third stages of the above process lack any notification that the claimant has a right to counsel. The lawsuit pleadings claimed that, even worse, claims examiners routinely instructed claimants that they do not have the right to counsel, and affirmatively prevented them for doing so. This is quite troubling, given that attorneys ensure that the rights of claimants are protected and instruct their clients on what they can legally accomplish.

As part of the settlement, the Department agreed, among other measures, to update its’ written notifications and direct claims examiners to advise claimants of their rights, particularly the right to be represented by an attorney or non-lawyer. The Department also agreed to circulate an administrative directive to the examiners, who will be required to read a statement outlining what role attorneys may play in the hearing, including the ability to make objections, provide documentary evidence or offer a closing statement. Moreover, where the ex-employee and the employer are both attending the hearing, the examiner must advise of the attorney’s right to ask questions of the other side, according to the directive.

It’s about time that the Department cleans up its unemployment benefits procedure. As a practitioner who regularly represents claimants before the Department, I have personally witnessed the widespread violations of people’s rights, at a time when they are unemployed and the most vulnerable. Hopefully, these hard fought for changes will vastly improve the system.

More NJ Municipalities Join Paid Sick Leave Bandwagon

Add Trenton and Montclair to the growing list of New Jersey municipalities who have passed legislation to offer paid sick leave to employees.  Last night, voters in these two cities chose to adopt local earned sick time laws.  As reported in The Jersey Tomato Press, an additional 20,000 New Jerseyans will now be able to earn paid sick time when illness strikes them or their families.  The victory at the polls was the result of a coordinated effort led by New Jersey Working Families, New Jersey Citizen Action, the New Jersey Time to Care Coalition, New Jersey Communities United, BlueWave NJ, SEIU 32BJ, and CWA District 1.  It certainly appears that momentum is building for the passage of a statewide paid sick leave bill, which passed out of committee last month.  We support paid sick leave legislation, as being beneficial for both workers and their employers, who can expect reduced employee turn-over, higher morale, and healthier and safer workplaces.