Tip Credit & Tip Ownership Regulation Changes

The Wage and Hour Division of the Department of Labor published its Final Rule regarding the tip credit and ownership of tips. It published the Final Rule without a notice and comment period. As such, it takes effect immediately. The Final Rule amends previous regulations and requires employers to provide notice to employees in advance of taking the tip credit and additional notice requirements related to tip pool contributions. Moreover, particularly disconcerting is the DOL’s position with respect to tip ownership in cases where employers pay employees full minimum wage in cash and then take the tips and distribute them to other employees (such as back of the house employees). The DOL’s position is directly contrary to a Ninth Circuit court’s decision. The DOL has said that States in the Ninth Circuit can continue to act in accordance with the Ninth Circuit decision, however, that it will enforce its position in States outside of the Ninth Circuit, thereby creating two different interpretations and likely resulting in litigation.

Employers need to carefully review the Final Rule and develop compliance guidelines immediately. Do not hesitate to call me to discuss.

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Employee Handbooks – Is Yours Up To Date

Does your company have an employee handbook? Does the handbook accurately reflect the company’s business and needs? Does it comply with recent amendments to federal employment laws such as the Americans with Disabilities Act and Family and Medical Leave Act, address social media, and have an anti-harassment policy that covers sexual and non-sexual harassment? Are you certain that your progressive discipline policy does not modify the at-will employment relationship? Does your handbook and record keeping clearly provide that excessive absenteeism is a reason for terminating an employee? And are the policies consistently enforced? It is crucial that your handbook be a tool to avoid and defend against litigation. To this end, proper drafting and consistent enforcement are crucial.

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Restaurant Legislative Update- Swipe Fee Reform, 80% Business Meal Deduction and the 15 Year Tax Depreciation Schedule

The latest from Congress:

The 2010 Durbin Amendment made the reforms necessary to curb the excessive swipe fees charged when guests use a debit card.  Those reforms are at risk as the banks and debit card companies seek to kill or delay the reforms in S. 575 and H.R. 1081.  April 21 is the final rules publication date for the Federal Reserve.  We shall see.

Rep. Shelley Berkley (D-Nev.) introduced a bill to restore the tax deduction for business meals to 80 percent.  I believe she introduced the bill last year also.

Bipartisan bills S. 687 and H.R. 1265 would enable restaurateurs, landlords and commercial-property owners to write off the cost of improvements to property and the costs of new construction for restaurants over 15 years, not 39. The current 15-year schedule expires December 31, 2011.

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Department of Labor – “The Wage and Hour Investigators”

The Department of Labor has trained its “wage and hour investigators” and, in the words of Secretary of Labor Hilda Solis “We will not rest until the law is followed by every employer, and each worker is treated and compensated fairly.”  Employers should conduct an internal wage and hour audit to make sure they are compliant and that positions are properly classified under the DOL’s Regulations and the FLSA.  Pay particular attention to the “non-exempt” to “exempt” classifications for those tough to define threshold jobs.

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MLB is Back

After saying “no mas” last season and trading Cliff Lee and Victor Martinez, the Tribe starts anew today in their home opener against the White Sox.  There is some reason for optimisim with solid younger players like Masterson, Carlos Santana, Carlos Carrasco and, hopefully Alex White, coupled with the return of a healthy Grady Sizemore and Haffner.   Prediction – .500.  I hope…

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1099 Paperwork Mandate

 The new 1099 information-reporting mandate which was passed as part of the health care reform bill is one step closer to being repealed.  The House could take up the bill to repeal the mandate in March 2011.  The law requires businesses to use 1099 forms to report all cash/check payments of $600 or more to any party who supplies products and services.  The mandate is expected to raise more than $20 billion in tax revenue.

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DOL’s “Plan, Prevent, Protect” initiative

In April 2010, the Department of Labor announced its “Plan, Prevent, Protect” initiative.  The DOL is considering new recordkeeping rules to require employers to provide wage statements to employees, as well as requiring employers to notify workers whether they’re employees or independent contractors.  Moreover, the DOL and the ABA started an “attorney referral system” to help employees pursue minimum-wage and family/medical-leave complaints against their employers.  In a nutshell, the DOL wants employers to take more steps to prove compliance, and wants to give employees more information to help them monitor employer compliance.  Give me a call to learn how employers can safeguard themselves.

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Welcome to Klausman’s Corner

Hello and welcome to my corner! I’ve created this blog to post updates about new legislation (and how it affects you and your business), as well as timely legal tips.

Stay tuned!

This update has been prepared for informational purposes only and does not constitute legal advice. This information is not intended to create, and receipt of it does not create, an attorney-client relationship. Do not act upon this update without seeking advice from professional advisors.

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