Chipotle views the immigrant workforce as a vital part of its success. The restaurant chain expects to hire 100,000 more workers in the upcoming three years. Other plans to expand and create more outlets are in the works. Among other reforms, Moran supports the proposal to grant legal status to workers from across the border.

For more information about restaurant employee compliance issues, contact Rick Casmass at Valiant.

The article explains, just 16 commercial airports in the United States use private security companies, which are vetted and supervised by the T.S.A. according to rules Congress outlined when it established the agency. But in recent years, the security agency has rejected requests by additional airports to join the private screening program — a decision some members of Congress and airport officials would like to change.

Supporters of the privatization say that it would save the agency money and that private security companies are more efficient and effective than government-run operations.

“I know they perform better — I’ve seen the results when you do a fair test,” said John L. Mica, a Florida Republican who is chairman of the House Transportation Committee. In that role, Mr. Mica is privy to classified reports evaluating the T.S.A.

A study conducted last year by the House Transportation Committee offered a detailed comparison of security at San Francisco International Airport, which uses a private contractor for screening, and Los Angeles International Airport, which uses T.S.A. employees. It found that private security personnel were more efficient, screening 65 percent more passengers for each employee than their government counterparts, and estimated that the government could save $1 billion over five years by using private screeners at the nation’s 35 largest airports.

T. J. Orr, aviation director for Charlotte Douglas International Airport, who has testified before Congress about the airport’s difficulties working with the T.S.A., said, “I think just about every airport director in the country would agree with me — we would rather be in charge of security. “That’s because we could do it better, we could do it cheaper and we could be more effective — that is, more secure. But not many people want to stand up and say, ‘We’re going down the wrong road.’ ”

For more information about private security, contact Jeff DiDomenico at Valiant.

Today there are a number of companies, including Groupon and Living Social, which offer “daily deal” promotions whereby a variety of products and services are sold at a significant discount. Under these arrangements, consumers are able to buy vouchers or coupons that can later be redeemed for goods and/or services. But if these vouchers or coupons are not redeemed prior to the expiration of a pre-determined dormancy period, the merchant selling the voucher or coupon may be exposed to liabilities far in excess of the amount they received from the sale of the unused vouchers under so-called “escheat” laws.

For example, a consumer might pay $50 for a voucher to purchase $100 worth of food at a restaurant. The $50 charge for the prepaid voucher would generally be split between the restaurant and the deal site selling the voucher, with each receiving $25.

To the extent this voucher is not used prior to the expiration of the dormancy period, the restaurant may be required to pay to the state the entire $50 face value of the voucher or, $100 if such state deems the voucher a $100 gift certificate. Given that the vendor only received $25, the restaurant would have to come up with the difference for every unredeemed voucher. Needless to say, the potential exposure for unsuspecting merchants can be substantial as online deal sites continue to grow. 

Often, state unclaimed property examinations target large businesses or specific industries, such as hospitality, retail, healthcare, insurance, and financial services. The growth of these daily deals could, however, drastically change that landscape.

As with many evolving areas, there are many unresolved unclaimed property issues that merchants must consider if they intend on selling through “daily deal” sites, including whether prepaid vouchers should be treated as gift certificates for unclaimed property purposes, if a separate legal entity structure should be created to sell the vouchers or coupons, the value to be escheated if the property becomes “dormant,” and who is ultimately deemed to be the holder of the property for purposes of the unclaimed property liability. 

As state unclaimed property laws continue to evolve in the face of rapid technological innovations and expanding state budget deficits, businesses must be aware of these and other potential issues that may arise and thereby create significant unintended legal and financial obligations. Given the complexity and ever-changing landscape regarding unclaimed property matters, we often recommend that our clients work with either an unclaimed property firm or law firm to assist in addressing these and other potential issues that should be considered.

For more information on the potential unclaimed property implications of prepaid discount vouchers, please email Gary Levy, CPA, partner and director of J.H. Cohn’s Hospitality Industry Practice, or call 646-254-7403; Corey L. Rosenthal, JD, a J.H. Cohn director and member of the Firm’s State and Local Tax Practice, or call 646-625-5729; Patrick J. Duffany, CPA, JD, partner and director of the Firm’s State and Local Tax Practice, or call 860-368-3607; or your J.H. Cohn engagement partner at 877-704-3500.

The article goes on, “Citing a report from the ASIS Foundation in 2005, proprietary security represents 56.5% of the industry, compared with contract or outside service, which account for 34.7%, and ‘other,’ which accounts for 9.0%.”

And it concludes, “If true, that still leaves much growth ahead, even considering contract sectors expansion in the past six years. How this growth will occur is a different matter: fewer security officers, but smarter security is a trend. The officers trained in CPR, public relations skills, technology interface, and creative helping are worth more per hour.”

For more information about the security guard and government contractor industries, contact Jeff DiDomenico at Valiant.

La Campina owner Ricardo Sanchez has agreed to comply with the FLSA going forward and will implement new business procedures to accurately record and compensate employees for all hours worked, in accordance with the law.

The FLSA requires that covered, nonexempt employees be paid at least the federal minimum wage of $7.25 per hour for all hours worked, plus time and one-half their regular rates of pay, including commissions, bonuses and incentive pay, for hours worked beyond 40 per week. Employers are required to keep accurate records of all hours worked by covered employees. The FLSA permits an employer to take a tip credit toward its minimum wage obligation for tipped employees that is equal to the difference between the required cash wage, which must be at least $2.13 per hour ($5.00 in New York), and the federal minimum wage. Employers may create a tip-pooling or sharing arrangement among employees who customarily and regularly receive tips, but a valid tip pool may not include employees who do not customarily and regularly receive tips, such as dishwashers, cooks, chefs and janitors.

2. Make Effective Harassment-Prevention Training for Employees A Top Priority. In 2011, discrimination charges filed with the U.S. Equal Employment Opportunity Commission (EEOC) — the federal agency that enforces the federal laws prohibiting certain kinds of workplace discrimination — hit a new record high. According to the EEOC’s annual Performance and Accountability Report, released Nov. 15, 2011, the EEOC received 99,947 charges of employment discrimination in fiscal year 2011, the highest number of EEOC charges filed in a single year since the EEOC’s founding 46 years ago. The agency also obtained $364.6 million in back pay and penalties for workplace discrimination complainants.

One way to minimize discrimination claims is to implement annual training on preventing workplace discrimination and harassment for managers/employees. Training reinforces your organization’s written anti-discrimination/harassment policies and complaint procedures. In fact, having an effective harassment-prevention policy and complaint procedure may provide a legal defense to an employer later charged with a hostile work environment harassment claim. Make training a top priority for your organization in 2012.

3. Review Your Organization’s Employee Policies and Handbook to ensure they are narrowly tailored to accomplish your organization’s goals and to ensure they reflect recent legal developments.

4. Keep Workplace Law Postings Current. Effective April 30, 2012, private-sector employers covered by the NLRA’s jurisdiction must inform their workers in a written 11 x 17- inch notice of workers’ right to organize (i.e., join a union), pursuant to a final rule recently established by the NLRB. The effective date of this employee rights notice-posting rule has now been postponed twice, following litigation against the NLRB regarding the legality of the NLRB’s edict. The required notice, which must be posted in the same place as all conspicuous and other worker postings at your worksite, is available at http://www.nlrb.gov/poster. With respect to other federal, state and local laws that must, by law, be posted at your workplace in a visible location, be sure to maintain current postings.

5. Ensure Your Organization Is Properly Classifying Independent Contractors and Exempt/Nonexempt Employees. In 2010 alone, the New York State Department of Labor (NYSDOL) returned $26.6 million in unpaid wages to New York workers. That same year, New York’s joint task force on employee misclassification identified 18,500 instances of employee misclassification, discovered more than $314 million in unreported wages, assessed over $10.5 million in unemployment taxes, over $2 million in unpaid wages and over $800,000 in workers’ compensation fines and penalties. In 2011, the NYSDOL obtained a $5.1 million settlement with the sandwich chain Lenny’s in New York City for minimum wage and overtime pay violations.
Do not assume that the worker classified as an “independent contractor” is indeed an independent contractor simply because you have a written agreement saying so; that individual may be your employee.

Do not assume that your organization’s salaried employees are exempt from overtime pay laws merely because they are paid on a salary basis rather than on an hourly basis; that may not be the case. Instead, carefully review with your legal counsel whether your organization has properly classified workers as exempt or non-exempt from overtime pay laws and/or whether independent contractors are, in fact, employees.

The U.S. Department of Labor (DOL), the IRS, and the NYSDOL all have been zealous in their pursuit of misclassifications of employees as independent contractors, and are conducting audits like never before in their quest for additional revenue. The federal and state Departments of Labor also are investigating whether workers are properly classified as exempt or non-exempt from overtime pay laws. New York employers may be subject to hefty damages, penalties and fines for failure to pay unemployment insurance taxes, failure to maintain workers’ compensation and disability insurance coverage for their employees, and failure to pay overtime pay to employees who should have been properly classified as non-exempt, rather than exempt, employees.
Be proactive now in reviewing your worker classifications rather than reactive when the DOL comes to audit your pay practices.

6. Ensure Legal Compliance with Other Wage/Hour Issues. New York employers must be careful not to take improper deductions from wages like deductions for employee loss or damage of company equipment, recovery of inadvertent overpayment of wages, vacation and other advances, loans or other obligations to them. Employers must also ensure proper payment of wages to nonexempt employees for all hours worked, includes those hours worked remotely by email, Blackberry, Smartphone, or other mobile device.

If your organization destroyed the exempt status of an employee by making impermissible, inadvertent deductions from an employee’s salary, you should consider maintaining a written “safe harbor” policy to help reduce potential liability. In order to invoke a “safe harbor” policy, an employer must have a written policy prohibiting improper deductions and must have “clearly communicated” that policy to its employees; it must have established a complaint mechanism for employees who believe their wages have been improperly deducted; it must reimburse employees for any improper deductions; and it must make a good-faith commitment to comply in the future.

7. Make Sure Job Requirements Are Necessary and Job-Related. In a recent “informal discussion letter,” the EEOC said an employer’s job requirement of a high school diploma may violate the Americans with Disabilities Act (ADA) if it screens out an otherwise qualified candidate who did not graduate from high school because of a learning disability that meets the definition of a disability under the ADA. The EEOC further stated that a high school diploma requirement– long a standard criterion for screening potential employees– must be “job-related for the position in question and consistent with business necessity.” The EEOC has recently been targeting and suing employers for alleged disability discrimination. Be sure any job requirements are truly necessary and job-related to minimize the potential for scrutiny by the EEOC.

8. Be Prepared for Increased OSHA Audits and Inspections and Implement A Workplace Violence Prevention Plan. OSHA–the federal agency charged with enforcement of workplace health and safety laws– has hired more inspectors and anticipates conducting more inspections this year so be prepared in the event of an audit. New York employers have already been targeted by OSHA this year. On January 6, 2012, OSHA announced its proposal of a $90,040 fine against a New York manufacturer for repeat and serious safety hazards, including inadequate employee training.

- Smaller Businesses Targeted. Additionally, OSHA’s Site Specific Targeting (SST) Program for 2012 will be focusing its inspections on non-construction businesses with 20 or more employees that report high injury rates instead of businesses with at least 40 employees as in the past, which means that more small businesses than ever before will be targeted by OSHA.

- OSHA Issues Directive on Workplace Violence. On September 8, 2011, for the first time, OSHA issued a Compliance Directive entitled “Enforcement Procedures for Investigating or Inspecting Incidents of Workplace Violence.” The directive establishes uniform procedures for OSHA field staff to respond to workplace violence incidents and complaints and conduct inspections in industries considered especially susceptible to workplace violence, such as healthcare, social service settings, and late-night retail establishments.

Employers may face fines from OSHA for failure to maintain a safe workplace for their workers including inadequate safeguards to provide a “safe and healthful workplace,” separate and apart from legal liability employers may face for a worker’s compensation claim by an employee or a third-party negligence or assault claim arising out of a workplace violence incident (or a claim of negligent hiring or negligent retention of a dangerous employee in jurisdictions other than New York that permit such claims).

Do you have effective policies, processes, and protocols to help identify and prevent threatening behavior and workplace violence, and to address and resolve threats and violence that may have occurred? Who have you designated to handle prevention, investigation, incident management and resolution efforts?

- OSHA on the lookout for employee misclassification. As noted above, the DOL is increasing efforts to identify misclassification of employees as independent contractors, and this effort now includes training OSHA inspectors to recognize where misclassification is occurring and to refer such situations to the proper DOL division for enforcement. Ensure your organization has a written workplace violence prevention plan and is compliant with OSHA’s legal requirements before OSHA comes knocking at your door.

9. March 15, 2012 Compliance Deadline for Places of Public Accommodation under the ADA. March 15, 2012 is the deadline set by the U.S. Department of Justice (DOJ) for compliance with the new Americans with Disabilities Act (ADA) Title III Regulations that create a new level of accessibility standards. The new ADA regulations adopt the 2010 ADA Standards for Accessible Design, which, according to the DOJ, have been updated to be “more user-friendly for building code officials, builders, and architects, and have been harmonized with state and local accessibility codes.” The 2010 standards also include, for the first time, standards on making swimming pools, parks, golf courses, boating facilities, exercise clubs, and other recreation facilities accessible for individuals with disabilities.

On or after March 15, 2012, all newly constructed or altered facilities must comply with all of the requirements in the 2010 Standards for new construction, alterations, program accessibility, and barrier removal. If elements in existing facilities already comply with corresponding elements in the 1991 Standards (the Standards issued before the 2010 Standards) and are not being altered, then entities are not required to make changes to those elements to bring them into compliance with the 2010 Standards.

March 15, 2012 also is the compliance date for provisions governing hotel reservation policies. For example, on or after March 15, 2012, reservations staff (of a hotel or a third party) will be required to identify accessible features in guest rooms (e.g. guest room door widths and availability of roll-in showers) and other hotel amenities in sufficient detail so that an individual with a disability can make an independent assessment whether the hotel meets his or her accessibility needs.

For more information, see www.ada.gov.

Title III of the Americans with Disabilities Act (ADA) prohibits discrimination on the basis of disability by public accommodations. It requires places of “public accommodations” to accommodate disabled patrons, customers and members of the public to ensure that they can equally access and enjoy the goods and services offered by public accommodations just as non- disabled individuals do. To that end, the ADA requires places of public accommodation and commercial facilities to be designed, constructed, and altered in compliance with certain accessibility standards.

Places of public accommodation are facilities that are open to the public, including, but not limited to, restaurants, hotels, shopping malls, retail stores, theaters, convention centers, dry cleaners, Laundromats, pharmacies, doctors’ offices, hospitals, museums, libraries, parks, zoos, amusement parks, private schools, day care centers, recreation facilities, swimming pools, health spas and bowling alleys.

Conclusion
Be prepared. Don’t be caught unawares by employment litigation or government investigations/audits of your workplace practices. Dig into the necessary projects now to be fully employment-law-compliant in 2012. Employers should consult with their labor and employment counsel to head off any potential problems. Maintaining, reviewing and implementing a complete checklist of all of the areas in which you need to be compliant with employment laws is one way to ensure that you start off the New Year headed in the right direction.

The Fair Labor Standards Act (FLSA) states that the pooling of tips among employees who are “engaged in an occupation in which they customarily and regularly receive more than $30 a month in tips” is permissible.

Waiterpay goes on to explain that when all tips are received and retained by the employee, the pool only includes employees who “customarily and regularly receive tips,” and employees are notified that the employee is taking the tip credit, the requirements of the FLSA are satisfied and the employer is permitted to take a tip credit against minimum wage that would permit it to pay tipped employees an hourly rate lower than the standard minimum wage. (i.e. $5 per hour in New York).

In the decision of United States District Court Judge Jed Rakoff in Manhattan, he agreed with the restaurant that party captains are tipped employees within the meaning of the FLSA because they “work directly with the hosts and their guests during the events to ensure their satisfaction” and “have regular interactions with customers in connection with core restaurant functions.”

The court concluded that there were material issues of fact as to whether restaurant’s expediters and stockers are service employees. With respect to stockers, the workers adduced evidence indicating that while stockers restock glasses, silverware, and plates they do not interact with customers. Similarly, with respect to expediters, the court noted that the waiters submitted evidence that expediters do not provide any direct customer service but merely act as intermediaries between the kitchen and the runners.



California’s New Wage Disclosure Notice and the Wage Theft Prevention Act of 2011
With over 850 attorneys and 55 offices, Littler Mendelson is the largest U.S.-based law firm exclusively devoted to representing management in employment and labor law matters. As the only U.S. member of the Ius Laboris global alliance, Littler has extensive resources to address the needs of multi-national clients, from navigating international employment laws and labor relations issues to applying corporate policies worldwide. Established in 1942, the firm has litigated, mediated and negotiated some of the most influential employment law cases and labor contracts on record. For more information, visit littler.com.

According to an article on BLR.com, the bill passed through the Connecticut State Senate and House by close votes. Governor Malloy has promised that he will signed the bill into law.

Effective January 1, 2012, the new law applies to Connecticut service companies with 50 or more workers in the state during any one quarter of the previous year. The law requires covered employers to provide service workers one hour of sick time for every 40 hours worked, up to a maximum of 40 hours per calendar year. The term “service worker” is defined as an hourly, nonexempt employee as set forth by the federal Bureau of Labor Statistics Standard Occupational Classification system.

Eligible employees may use the sick leave for their own illness, injury or health condition, for the care or treatment of a spouse or child, or to address personal needs resulting from family violence or sexual assault. Up to 40 hours of unused accrued paid sick leave may be carried over from year to year. However, the employee can use only 40 hours of paid sick leave in any one year.

The article goes on to explain that certain categories of employers are exempt from the law, including manufacturers, specified nationally chartered tax-exempt organizations, and employees that receive at lest 5 days of paid leave per year in another form (e.g., PTO, vacation, etc.), provided that the employees can use those days for illness or other reasons covered under the new law.

Finally, the law includes an anti-retaliation provision that prohibits covered employers from retaliating (defined broadly) against an employee for requesting paid sick leave, using paid sick leave, or for submitting a complaint to the Labor Commissioner over a violation of the paid sick leave law.

For more information about workforce management issues like paid leave, contact Jeff DiDomenico at jeffd@valiant.com.

Servers at Le Bernardin, Zagat’s top-rated New York seafood restaurant for 2011, have sued the restaurant for tip, overtime, and spread of hours violations. The Complaint, filed in United States District Court in Manhattan by attorneys for a former captain and server at the restaurant, alleges that the waitstaff was required to pool their tips with managers who exercised significant managerial control over the waitstaff at Le Bernardin.

The servers were also required to share tips with other non-service/managerial individuals, including Le Bernardin’s wine director and another individual who worked in the kitchen and prepared coffee. The Complaint also alleges that Le Bernardin charged mandatory gratuities at private events but instead of distributing these gratuities in their entirety to the waitstaff, the restaurant retained a significant percentage of the gratuities and/or used it to pay the event coordinator.

In addition, attorneys for the waiters, claim that the waitstaff’s workdays often lasted longer than ten hours but that the restaurant did not pay New York’s “spread of hours” premium to its employees. The “spread of hours” premium under New York law is equal to one hour’s pay at the minimum wage for each such workday.