By Dale J. Venturini, President/CEO Rhode Island Hospitality Association
It seems that every week that goes by, I receive more and more calls from our membership about wage and hour laws. This is a complex subject that really takes an expert resource to resolve. It’s also an expensive subject that literally can cost restaurant owners tens of thousands of dollars in fines. In Rhode Island, we host several panels each year on this subject that include experts from the U.S. Department of Labor, the Department of Labor and Training and legal counsel who specialize in this type of law.
Many of you reading this column right now are in violation of wage and hour laws and you don’t even know it. And, trust me…if you are in the wrong, you will be fined and possibly sued. As I prepared to write this column, I read an article in the Boston Globe that a Massachusetts-based law firm this week filed a class-action suit against one of the nation’s largest restaurant groups alleging that its’ Burlington, MA, based restaurant violated state wage laws with regard to tip sharing.
And, one of the largest operators in the business, employing more than 165,000 workers throughout New England and beyond, is currently the target of a suit alleging that the group has not fairly compensated employees for overtime and for duties as performed. This class-action suit involves current and former employees from 2009 – present. If they decide not to fight this battle and settle the suit, they will be on the hook for millions and millions of dollars.
While some of the biggest names in the industry have found themselves targeted, you don’t need to be a huge consortium or famous chef to find yourself in this kind of predicament; small, standalone operators are also susceptible to suits and fines. Recently, we helped a local restaurateur here in Rhode Island who found himself hit with more than $30,000 in fines because there was confusion on compensating his employees to the letter of the law.
According to calculations by the Federal Judicial Center, U.S. employers have seen a 10% jump in wage-and-hour lawsuits year-over year. Plaintiffs brought more than 7,700 suits between April 1, 2012 and March 31, 2013. Most of the suits involve disputes over monies owed to an employee in the form of salary or overtime pay. And, according to Restaurant Business magazine, the number of lawsuits alleging wage and hour violations has increased more than 400% over the past decade.
Why is this? Well, first the laws are complex and have changed. And, employers need to be familiar with both their local law and the Federal law – the Fair Labor Standards Act (FLSA) because the law that they must follow is that which most benefits the employee. For example, in many states, local wage laws mandate higher minimum wages than that of federal law. In this instance, employers must adhere to their local law.
Remember, ignorance is not going to get your restaurant a pass in this matter. I cannot stress enough that every restaurant operator needs to get up to speed on their local state wage and hours laws as well as the Federal law. We are living in a litigious society that is driven in part by the weakened economy. We have to ensure that we are all following the letter of the law to protect ourselves and our businesses.