My desire and excitement for practicing law centers around client service. Serving others has always been a fundamental part of my moral fiber, whether it be through acting as a sounding board for friends or volunteering in the greater Atlanta community. From the day I completed my first legal internship in high school, I knew I had to be a part of a profession dedicated to simplifying the complex legal landscape for clients. I haven’t looked back!
Most of all, I enjoy bringing my labor and employment experience to hotels and restaurants personally. Stokes Wagner’s proactive, preventative approach to potential legal issues provides for plenty of opportunities for day-to-day counseling and interactions with clients. When it comes to litigation, I enjoy the challenges of vigorously defending my clients against any type of allegation. There is never a dull moment in the world of labor and employment law, and it’s my honor to be there for every moment.
When I’m not at the office, you can usually find me taking in a musical at one of Atlanta’s amazing regional theaters, training for a 10K run or half marathon, dreaming of my next international vacation, or spending precious time with friends and family.
October 4, 2018 • Rachel Zisek
Category: Legal Updates
In the wake of the recent Las Vegas shooting and the rise of the #MeToo movement, concerns about safety in the hospitality space are at an all-time high. The American Hotel & Lodging Association (“AHLA”) recently re-emphasized its dedication to these issues through its announcement of the 5-Star Promise in September 2018. Most notably, major hotel brands including Hilton, Hyatt, IHG, Marriott, and Wyndham, have publicly shown their support for the Promise and its goals.
In committing to the 5-Star Promise, these major players in the hospitality space have pledged to provide hotel employees with employee safety devices and enhance existing policies, trainings, and resources that are dedicated to preventing and responding to sexual harassment and assault. The key provisions of the Promise include:
- Industry-wide training and materials on safety and security;
- Mandatory anti-sexual harassment policies in multiple languages;
- On-going training and education on identifying and reporting sexual harassment;
- Employee safety devices for U.S. hotel employees; and
- Vital partnerships with national organizations that target sexual violence, sexual assault, and trafficking and promote workplace safety.
The AHLA has created a taskforce specifically dedicated to creating a way to implement the 5-Star Promise in hotels around the country. Given the industry’s dedication to this new initiative, hospitality employers will likely be encouraged to incorporate the Promise into its operations. To learn more about the 5-Star Promise and how to make these changes on your property, visit the AHLA’s website and contact the Stokes Wagner.
For a printable PDF version of this article, click here.
August 31, 2018 • Ashley S. Nunneker, Rachel Zisek
Category: Legal Updates
Hospitality guests have historically used gratuity to acknowledge their service staff’s excellent work. Employees have come to expect and rely on gratuities, as they now often form the majority of their incomes. Restaurants also sometimes charge guests mandatory fees instead of, or in addition to, gratuity. Yet employers often mislabel, mishandle and commingle gratuities and service charges, which can have serious legal implications. Understanding the differences between a gratuity and a service charge is critical. Below, we demystify these payments and explain how to limit your exposure through best practices.
Gratuities are Voluntary. Simply put, a gratuity is a voluntary amount paid by a guest in recognition of services performed. The amount of a gratuity is left to a customer’s discretion and is optional. Because a gratuity is voluntary, the term “automatic gratuity” is a misnomer. Although the terms “tip” and “gratuity” have been used interchangeably, we prefer “gratuity,” as it is industry standard.
Properly classifying a payment as a gratuity is essential, as certain states (including Arizona, California, Florida, Georgia, Massachusetts, New York, and Washington) do not subject gratuities to sales tax. It is also important to correctly identify which employees are eligible to receive gratuities, as litigation surrounding who can participate in a “tip pool” has become increasingly prevalent.
We have identified the following key traits of a gratuity or tip:
- Customer determines the amount;
- Not subject to sales or income tax;
- Not included in calculation of employees’ overtime rate of pay;
- Employer responsible for withholding taxes only from those gratuities it administers through payroll (i.e. credit card tips and tip share); and
- Not considered “sales” and not reported on the employer’s gross revenues.
Best practices to limit exposure: - Present the bill to the guest with the gratuity area left blank, so the guest may voluntarily write in the amount. Take this opportunity to also inform guests that gratuities are optional. - You may provide “suggested gratuity” calculations, provided that the guest ultimately decides the amount. - Be sure to use terms consistently on all payroll records to dispel any uncertainty surrounding the payment. For example, if you administer credit card gratuities or tip share through payroll, use the term “gratuity” on employees’ paystubs if that is the term used on guest bills.
Service Charges are Mandatory. A service charge is a compulsory amount imposed by the venue, usually included as a percentage of the total bill. Unlike gratuities, guests are not given discretion to determine the amount or recipient. To further complicate matters, certain venues refer to service charges as “auto-gratuities” on bills. Remember, if the guest lacks discretion in the amount and recipient of the payment, it cannot be treated as a gratuity. Common examples of service charges in the hospitality industry include large-party charges at restaurants, bottle service charges at restaurants and night clubs, room service charges, and luggage assistance charges at hotels.
Key characteristics of a service charge include:
- Venue determines the amount;
- Recorded in gross receipts and subject to income tax;
- Included in calculating overtime rates of pay if distributed to employees; and
- Subject to employer and withholding taxes if distributed to employees.
Best practices for handling service charges:
- Some states and localities require employers to distribute 100% of service charges to customer-facing staff (for example, California and New York). Other jurisdictions allow the venue to decide whether to retain all or a portion of a service charge or to distribute some or all to employees (Georgia and Florida, for example). We recommend distributing service charges to service staff, even if you are located in a jurisdiction that allows the venue to keep a portion.
- If you distribute a portion of a service charge to employees, ensure they are paid within the same pay period they are earned.
- If you do decide to provide guests an option to tip on top of a service charge, provide a blank line on the bill for the guest to write in an “optional gratuity” rather than “additional” gratuity. The word “additional” incorrectly suggests that the service charge is also a gratuity.
- State and local regulations vary on the requirements for communicating service charges to guests on menus and receipts. We recommend plain language and 12-point font to ensure compliance across state lines.
- Never merge a mandatory service charge with a gratuity on a bill into one amount. Each payment should be clearly and separately identified on the bill.
States also differ regarding other fixed charges like delivery fees. Some states consider a delivery charge to be a gratuity if a reasonable person would believe the charge would rightfully belong to an employee, while others firmly label these amounts as service charges.
Bottom line: consult with counsel to ensure that your service charge and gratuity practices are compliant with the laws where you conduct business.
For a PDF version of this article, click here.
August 14, 2018 • Rachel Zisek
Category: Legal Updates
Significant amendments to New York City’s Earned Safe and Sick Time Act (“ESTA”) went into effect on May 5, 2018. ESTA generally provides employees with the ability to use accrued paid time off for personal purposes. This paid time off (or, “paid sick leave”) can be used by employees to care for themselves or to care for family members.
The new amendments provide paid sick leave to employees for “safe leave”, leave where they or a covered family member are a victim of a family offense (crimes committed against members of the same family unit) or sexual offense, stalking, or human trafficking. To notify employees of these new amendments, employers were required to provide employees with the following notice starting on July 4, 2018.
Pursuant to the new amendments, safe leave can be used for the following reasons:
- Obtaining services from domestic violence shelters, rape crisis centers, or any other shelter or services programs;
- Participating in efforts to protect the safety of a covered employee or family member, including safety planning and temporary or permanent relocation;
- Meeting with a civil attorney or other social service provider to prepare for or attend any criminal or civil proceeding;
- Filing a complaint or domestic incident report with law enforcement;
- Meeting with a district attorney’s office;
- Enrolling children in a new school; or
- Taking other actions necessary to restoring the health and safety of the employee or family member or to protect the individuals who associate or work with the employee.
To request safe leave, employees must provide reasonable notice of any foreseeable absence from work. Employers can ask employees to provide written confirmation that the leave was used for one of the purposes listed above. However, employers are strictly prohibited from requesting documentation that specifies the details of the underlying matter prompting the leave request.
Under the ESTA amendments, reasonable documentation can include: (1) a police or court record; (2) a notarized letter from the employee stating the need for leave; or (3) documentation signed by a representative of a victim services organization, an attorney, a clergy member, or a professional service provider from whom the employee and/or covered family member sought assistance. The ESTA amendments also require that employers provide new employees with notice of their right to safe leave at the time of hire.
What Does This Mean For You?
New York City employers must ensure that their operations recognize an employee’s right to safe leave by updating their paid sick leave policies and providing appropriate notice throughout their workforce.
Historically, employers have not been on the hook for paying employees for time that was de minimis, or in other words, hard to capture in a time system and administratively difficult to record. However, that just changed with the decision in the California Supreme Court case, Troester v. Starbucks, Corp.
Douglas Troester, a shift supervisor for Starbucks, brought a lawsuit on behalf of all non-managerial California Starbucks employees asserting that they were not fully compensated for certain activities they completed after clocking out. The activities only took between 4 and 10 minutes and ranged from transmitting store inventory data to Starbucks’s corporate headquarters to activating the store alarm, exactly the type of work regularly deemed de minimis by California and federal courts.
California’s highest court determined that employees must be paid for all hours worked, regardless of the duration of certain tasks and explicitly rejected the de minimis doctrine with regard to the type of work performed by Starbucks employees after clocking out.
While the Court declined to create a blanket rule for all situations involving potential de minimis time, the Court pointed out that technological advancements have made recording certain off-the-clock tasks easier to record and therefore not an administrative burden. Although the de minimis argument is not completely sunk, it will be difficult for employers to make the argument where the tasks are routine and similar to those performed by Starbucks employees, including setting alarms, making bank drops, or other discreet tasks performed while not on the clock.
We recommend auditing all tasks performed by employees after clocking out to ensure compliance with this new California Supreme Court case. If you have any questions about how the de minimis doctrine applies to your business and workforce, we encourage you to contact a Stokes Wagner attorney.
For a printable PDF version of this article, click here.