Jeffrey H. Ruzal, a Senior Counsel in the Employment, Labor & Workforce Management practice, in the firm’s New York office, was quoted throughout the Restaurant Opportunities Centers United (ROC United) recently released report titled “Tipped Over: Employer Liability in a Two-Tiered Wage State.” The report examines how rules necessary to regulate the subminimum wage system, including the so-called ‘80-20 Rule,’ create tremendous liabilities for both employers and employees in New York State. Mr. Ruzal also spoke at a related ROC United event on the topic.
Following is an excerpt from the report:
It [the ‘80-20 Rule’] is the source of a lot of litigation; it is very opaque because it is hard to necessarily account for what is considered non-tipped work. And quite frankly, most Front-of the-House employees, for some amount of time during their shift will perform non-service related duties, or duties that are arguably service related but will still be challenged. For example, does a bartender who spends part of his time cutting fruit, or stacking glasses, or doing barback related activities, is that considered service related? Many if not most restaurants will say, absolutely, it’s a critical part of the job and the service cannot be accomplished without performing those ancillary duties, but of course the plaintiffs’ bar and the Department of Labor would take a different view and say those are exactly the type of ancillary duties that if, in a given shift, go beyond 20 percent of the workers time or two hours, then the [subminimum wage] cannot be used.
It is even worse in New York than federal [law], because federal [law] says you can’t [pay the subminimum wage] for non-tipped work using the 20 percent rule for that time that that work is not actually being done, service oriented work, whereas in New York you actually [lose the ability to pay a subminimum wage] for the entire shift so it is much more punitive in that regard…‘80-20’ is a hot topic of litigation at the moment, and the reason for that is that it draws more settlements. It is a very difficult claim to defend against, because… it’s very amorphous, so it is hard to put forth documentary evidence or direct proof that the ‘80-20’ hasn’t been violated. You know, in a lot of cases, employers, knowing or understanding the litigation risk of going to trial and taking their chances, would rather try to settle early and hopefully strike some sort of a favorable or reasonable deal for themselves. And plaintiffs attorneys know this, and that is why they try to assert [this].