Courts Rule on Tipped Income, Overtime, Compensable Time

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By Michael Trimarchi

Federal courts recently ruled on several wage and hour cases, including those related to wage and hour policies, meal and rest breaks, and the motor-carrier exemption under the Fair Labor Standards Act.

Tipped workers. Employees who delivered pizzas filed a class action, claiming that their employer did not pay workers the minimum wage required by federal and state law. The lawsuit, filed in federal district court, claimed that the employer, Papa John's International Inc. and its Ohio franchisees improperly applied a tip credit to some of the drivers’ pay, failed to reimburse them adequately for delivery expenses, and took unlawful deductions from their pay.

The result was that Papa John's and the franchisees that operate most of its Ohio locations were violating the FLSA and state law by paying drivers less than the legally required minimum wage for all hours worked, the lawsuit said.

The drivers typically are paid the tipped minimum wage, which is $2.13 an hour under federal law, or they are paid the federal minimum wage, which is $7.25 an hour, said Andrew Biller, an attorney at Markovits Stock & DeMarco LLC in Columbus, Ohio, which filed the lawsuit.

Papa John's and its franchisees assumed that drivers who were paid the tipped minimum wage would earn at least $7.25 an hour after tips were added, Biller told Bloomberg BNA on June 16. However, Papa John's did not fully reimburse drivers for expenses and charged them for uniforms and insurance, dropping compensation to less than the minimum wage even if they were paid $7.25 an hour, Biller said.

Papa John's was sued as a joint employer, along with It's Only Pizza Inc. and four other franchisees that operate the company's Cincinnati-area locations, Biller said ( Thomas v. Papa John's Int'l, Inc., S.D. Ohio, No. 17-411, complaint filed 6/16/17 ).

To contact the reporter on this story: Kevin McGowan in Washington at kmcgowan@bna.com

Meal and rest breaks. About 7,000 bankers agreed to a $6 million settlement with Bank of America Corp. over premium pay for missed meal breaks, a federal district court said.

The employees, known as personal bankers, worked at branches in California. The employees said the employer failed to provide premium pay for one hour of meal time when they were unable to start the break period by the end of the fifth hour of a shift, as required by state law.

The bank lacked a mechanism to “automatically investigate meal periods that began after the end of the fifth hour of work to determine if an additional hour of premium pay should be paid,” the court said ( Belevich v. Bank of Am. Nat'l Assoc., C.D. Cal., No. 15-09171, proposed settlement filed 6/14/17 ).

Motor-carrier exemption. Shuttle bus drivers at an Indianapolis airport may advance federal overtime claims in a case involving the motor-carrier exemption and interstate commerce, a federal district court said.

The workers drove fixed routes in Indiana, court documents said. Although most of their passengers had out-of-state billing addresses and were dropped off at the airport, it was not enough to prove that the passengers, mostly college students, bought shuttle passes to embark on out-of-state air travel, the court said in ruling for the employees.

Employees covered under the FLSA motor-carrier exemption are drivers, helpers, loaders, and mechanics of vehicles lighter than 10,000 pounds and whose tasks affect the safety of vehicles operating in interstate or foreign commerce.

“The out-of-state billing address is the address of the individual who paid for the ticket, but not necessarily the address of the passenger,” the court said. “It is not beyond the realm of possibility that the billing address represents the address of the passengers' parents” because the shuttle bus company maintains the bulk of its business is transporting college students, it said ( Haverkamp v. Star of Am. LLC, 2017 BL 206065, S.D. Ind., No. 4:16-cv-00004, 6/16/17 ).

Compensable time. Employees at a foundry may advance a collective action, claiming that they were owed pay for time spent changing clothes and showering after shifts ended to remove harsh chemicals from their skin, a federal appeals court said.

The workers showed that wash-up time was necessary because an expert testified that the procedures could reduce health risks, court documents said. Additionally, the employer did not show that there were workers whose health was unaffected by the decontamination time.

The appeals court overruled a lower court that said the employer did not violate the FLSA for not paying workers for the wash-up time. The court said the lower court ignored evidence “as to the health effects of chemical exposure” at the plant and the effect that showering and changing clothes would have on the employees ( DeKeyser v. Thyseenkrupp Waupaca Inc., 2017 BL 214027, 7th Cir., 16-2159, 6/22/17 ).

Overtime. A class action by managers at U.S. Bank branches in California, who claimed that they were owed overtime pay under state law, was denied by a federal district court. The managers, who were classified as exempt from overtime pay under the FLSA, agreed that they spent varying amounts of time performing nonmanagerial duties, so the resolution of their claims required the court to analyze how much time each manager spent on such duties. In practice, the court said, it was inefficient to try class claims together ( Barker v. U.S. Bancorp, 2017 BL 206743, S.D. Cal., 3:15-cv-1641, 6/16/17 ).

To contact the reporter on this story: Michael Trimarchi in Washington at mtrimarchi@bna.com. To contact the editor responsible for this story: Michael Baer at mbaer@bna.com.

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