Articles Posted in Wage and Hour

For those who work in the service industry, the importance of tips cannot be overstated. Many service employees work primarily for tips, meaning that their employer only provides them with a minimal level of base hourly compensation. Thus, for many service employees, their lives literally depend on the amount of tips they bring in.

On its face, the concept of tipping seems to only benefit the employee receiving the tip. However, over the years, employers have also found ways to benefit from society’s expectation that an employee will be tipped for the services they provide. For example, under Texas law, an employer is able to pay a tip-eligible employee less than those employees who do not receive tips by taking a “tip credit.”

A tip credit is an adjustment that employers can make to a tipped employee’s wage, assuming that the employee will make up the difference in tips. For example, the minimum wage in Texas is $7.25/hour. However, an employer only needs to pay a tip-eligible employee $2.13/hour. The remaining $5.12/hour is considered a tip credit. If, however, the employee does not bring in at least an additional $5.12/hour, the employer will be required to pay the difference. Thus, tipping allows for an employer to pay its tipped employees less than they pay non-tipped employees.

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The federal minimum wage for hourly employees is $7.25 per hour. Unlike other states that allow for a higher minimum wage, the Texas minimum wage is $7.25. Advocates of a higher minimum wage have cited the unrealistic expectation that people are able to live on $7.25 per hour. Furthermore, they have argued that a higher minimum wage will foster the economic growth of the United States and close the gap between low- and middle-income families.On the other side, those in favor of keeping the minimum wage lower argue that employers cannot keep up with the higher wages and will have to lay off more employees, increasing the unemployment rate. However, despite the opposition to increasing the minimum wage, the fact remains that individuals in these positions often face many obstacles surviving on so little income. In some cases, employers will try to get around complying with the minimum wage requirement, which leads employees to face even more issues.

There are very few instances when an employer does not need to comply with federal minimum-wage standards. Some exceptions are if the employee is a farm worker, student learner, independent contractor, or tipped employee. If an employee is not sure if they fall into one of these categories, or they believe their employer is not complying with federal statutes, they should contact a Dallas wage and hour attorney.

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Studies have found that employers underpaying workers is a huge problem in America. Texas is not immune from this problem. From 2014 to July 2017, $29.5 million in back pay was awarded to workers under the Texas Payday Law. However, this figure may not represent what’s truly owed. It doesn’t include back pay owed to workers who don’t realize they’ve been shorted, or who are undocumented and are afraid to involve the government for fear of deportation or other retaliation.

From January 2014 – July 2017, there were 42,788 complaints filed under Texas law. Eight hundred employers were assessed bad-faith penalties of $1.17 million for knowing underpayment of workers. Under Texas law, individual penalties cannot be more than the lesser of $1,000 or unpaid wages.

Sometimes Texas employers require or encourage workers to do work “off the clock.” This is work that isn’t compensated and isn’t tallied as part of your weekly hours when calculating overtime. Off-the-clock work may be illegal. Assuming you are a nonexempt employee, the time you spend doing things for your employer is supposed to be compensated. However, in some cases, employees do not realize this. They may volunteer to do work off the clock so that they seem appropriately enthusiastic about their careers, or simply because they enjoy working.

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Waiters and bartenders are among the least compensated people in the nation. Their median hourly wage is $9.61 each hour. Under the Obama Administration’s 2011 regulations, their tips are their property. These regulations prevent an employer from using the tips for any reasons other than as a credit against its usual obligation to pay its employees minimum wage or in order to create a valid tip pool. Valid tip pools are sharing arrangements among employees who customarily get tips, like wait staff, but they don’t include employees who don’t customarily get tips, such as dishwashers or janitors.

Moreover, under section 3(m) of the Fair Labor Standards Act, an employer is permitted to take a tip credit toward its minimum wage obligation for tipped employees that’s equal to the difference between the required cash wage and the federal minimum wage. In certain situations, an employer is able to claim additional overtime tip credit against its overtime duties.

The United States Department of Labor has estimated that around the country, there are about 1.08 million wait staff and 219,000 bartenders who receive tips in 280,000 establishments.

Sometimes Texas workers believe that they must be as helpful as possible to an employer, even if it means working off the clock. For example, sometimes workers come in early to help an employer set up for that day’s work, but they don’t punch in for that period. Or, sometimes, an employee participates in work during lunch hours that isn’t counted toward their work hours for that week. Under the Fair Labor Standards Act (FLSA), work that is not counted toward overtime or goes uncompensated is illegal.

The FLSA requires that nonexempt employees be paid overtime if they work more than 40 hours per week for all work done. Most employees are considered nonexempt and are covered by the FLSA for the purposes of overtime, as well as the minimum wage. Exempt employees are those who are considered professional, administrative, or executive, or are within certain industries such as commission-based sales.

All work for an employer should be on the clock. If an employer requires or allows employees to do any work for it without compensating the employee and counting it toward weekly hours for the purposes of calculating overtime, it is “off the clock.” What counts as work? Whenever an employee engages in work that’s not requested but allowed, such as helping a colleague or coming in early to set up, this is work that is completed and should still be compensated.

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Many workers do not realize that they do not need to go off the clock for short lunch breaks or snacks. If you take yourself off the clock for breaks under 30 minutes, you may not be getting the wages to which you’re entitled.

There are many employment practices not regulated by the federal Fair Labor Standards Act (FLSA). For example, there’s no requirement under the FLSA that you get vacation pay, meal periods, holidays off, premium compensation for working weekends or holidays, pay raises, a reason to be discharged, or pay stubs. There are no collection procedures in place if you are promised wages or due commissions that are greater than what’s required. Moreover, there are no limitations about how many hours in a single day you can be scheduled to work if you are at least 16 years old. Generally, these issues are agreed upon between an employer and an employee.

However, rest periods or short lunch breaks are quite common in all workplaces. There is no requirement that a lunch or coffee break be given under federal law. However, if your employer chooses to offer you a short break, these breaks are considered compensable hours that are included when determining overtime and minimum wage, and they are regulated under the FLSA. Any rest period of short duration (such as one that is 20 minutes or less) is supposed to be paid as working time and included when calculating overtime.

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The Fair Labor Standards Act (FLSA) is the federal law that regulates minimum wage and overtime, including how these issues should be handled in connection with a summer internship. Employment is defined broadly such that anyone who is suffered or permitted to work is employed. The United States Department of Labor enforces the FLSA, and it uses a six-part test to decide whether you should be paid minimum wage for your summer internship.

An unpaid internship is only appropriate under the six-part test when:  (1) the intern doesn’t displace a paid employee, (2) the internship is for the intern’s benefit, (3) the internship is similar to training that would be provided in school, (4) the employer doesn’t benefit from the intern’s work and sometimes may be disrupted by what the intern is doing, (5) the intern isn’t promised a job once the internship is over, and (6) both the intern and the employer understand that the job is an unpaid position.

If you are closely supervised by existing staff and are not “seasonal help,” you probably didn’t displace a paid employee. However, if your employer would have hired more people to do the work you’re doing if you hadn’t joined as an intern, you are likely entitled to FLSA pay.

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The eight-hour workday was developed during the Industrial Revolution so that workers doing manual labor in a factory would not have to work as many hours. Prior to that, in the late 18th century, factory workers worked 10-16 hours days to keep factories running 24/7. A campaign was started to have people work no more than eight hours in a day so that they would have eight hours of work, eight hours of recreation, and eight hours of rest. The campaign was successful.

The goal was humane, but it doesn’t take into account our modern situation in which employees who work steadily for hours on end, sometimes for 10 to 12 hours in a day, are assumed to be more productive than employees who take breaks. According to the Bureau of Labor Statistics, the average American actually works 8.8 hours in a day. This is more time than the average worker spends doing anything else.

However, one study shows that workers who take brief breaks are more productive than those who keep working continuously for more hours, regardless of the number of hours they were working overall. Ideally, according to that study, there is an hour of uninterrupted work and then a break of about 15-20 minutes.

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The Texas Minimum Wage Act establishes minimum wage for nonexempt employees in Texas. It has adopted the federal minimum wage, and currently minimum wage is $7.25 an hour. This is too low for anybody to live on, and it is shocking when you consider how much exempt employees such as CEOs of corporations and professionals can make. Since the federal minimum wage hasn’t been changed since 2009, it has not kept pace with inflation, and what that $7.25 minimum wage represents is much less than what it previously meant.

The Texas Minimum Wage Act also provides for agricultural piece rate workers, exempts certain employers, allows employers to count trips and the value of meals and lodging toward their employees’ minimum wage, and specifies civil remedies for violations.

With specified restrictions, employers may use an employee’s tips and the value of meals and lodging toward the minimum wage that must be paid. The law also specifies that those who live at the job site for on-call time do not need to be paid in addition to their assigned working time. Certain other employees who have productivity impairments, have mental health or development problems, or are of a certain age may also be paid sub-minimum wage.

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Before minimum wage and overtime were instituted, the average American worker worked brutal hours. Workers were easily exploited by their wealthier employers, which forced them to work around the clock just to be able to survive, living paycheck to paycheck and not making much more than what it took to feed their families.

In 1938, President Franklin D. Roosevelt signed a number of bills, one of which was the Fair Labor Standards Act of 1938 (FLSA). The FLSA applied to industries that together held about one-fifth of the labor force, and, among other things, it set a minimum wage at 25 cents for those industries.

Importantly, it also introduced overtime regulations that guaranteed all nonexempt workers be paid time and a half for hours worked over 40 hours a week. These rules were intended to address the exploitation of workers and the lack of jobs.

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