If you are a small business owner, there are some potential traps laid by New York’s Labor Law (NYLL) and the federal Fair Labor Standards Act (FLSA) that even the most well-intentioned amongst you could fall prey to.
The New York State Labor Law and the Federal Fair Labor Standards Act are powerful tools for employees’ and their lawyers to seek damages for wages that might be due. Small businesses like restaurants, dry cleaners, grocery stores, construction contractors in specific trades, and others are often unaware of the nuances of the law.
For example, while you may know that there are differing minimum wage laws for small employers and large employers, you may not know where the cut-off is. The law states that If you employ 11 or more persons, you are considered a large employer, as absurd as that may sound. If you are a restaurant and you have a wait person who works more than 40 hours in a week, you’ve got to pay overtime, but not at the rate you might think: you can take the tipped employee deduction from minimum wage of $15 per hour, but overtime is not paid at time and one -half of that rate ($8.50) per hour, but time and one half from the full minimum wage of $15, making the OT rate $22.50, not $14.25. Complicated, I know.
Maybe you didn’t realize that if an employee works 10 or more hours in any one day, that employee must be paid “spread of hours rate”, meaning he/she gets an extra hour at the regular rate. In other words, if the employee is paid minimum wage, he is due an extra hour at regular rate as a sort of bonus, plus any overtime he/she might have earned.
As an employer, you need to be aware of certain often complex tenets of The Fair Labor Standards Act.
How the FLSA affects restaurant owners
On another note, if you’re a restaurant, and there’s an issue with tips, you have a big problem. An employee’s lawyer will try to “bust” your tip pool, meaning invalidate it completely. This opens you up to scrutiny of the entire procedure used to distribute tips making possible a class action lawsuit that all your tipped employees can join. If you have included non-tipped employees into the tip pool, the pool is invalidated and you lose the tipped employee deduction, meaning everyone gets retroactive pay at the regular minimum wage rate plus liquidated damages and you pay their attorney’s fees.
Surprised? There’s a lot more to know about the Fair Labor Standards Act. If you as a small business owner finds yourself facing any of these situations, call me. I’ve got extensive experience and can help you.
Contact Joe Carbonaro today if you are being affected by the FLSA or New York Labor Law.