This week there were two important events that happened for the Wage
Standards Division (WSD). 1. A 9th Circuit decision sided with the United
States Dept. of Labor (USDOL) in their tip pooling appeal
(see Oregon Restaurant v Perez; Cesarz v Wynn Las Vegas,
February 23, 2016), and 2. The USDOL opened a comment period on a
proposed
rule for federal contractors that are now required to provide 7 days of
sick leave to employees.
9t
h Circuit restores tips to employees
The 9th Circuit issued their opinion in the appeal of two cases with similar
issues, the appeal by the USDOL in the Oregon Restaurant v Perez, Secretary of
Labor, and the Cesarz v Wynn Las Vegas. The appellee in the Oregon case
was the USDOL and the appellees in the Wynn Resort case were the employee casino dealers represented by
Joseph Cesarz for the class of employees similarly
situated.
The Oregon Restaurant and Lodging Association had sued the USDOL objecting
to a rule
(29 CFR5 31.52) stating that only employees who
are regularly tipped could participate in a tip pool. The U.S. District Court
of Oregon had sided with the Oregon Restaurant and Lodging Association, stating
that tips belonged to the employer. The 9th Circuit disagreed with the
District Court of Oregon, and restored the practice of requiring tip pools to
be legal only if shared with regularly tipped employees by declaring the USDOL's rule valid.
The casino dealers and servers at the Wynn Las Vegas had sued their employer
in U.S. District Court of Nevada to keep their tips and not share their tips with
other employees who were not regularly tipped, for example cooks and
supervisors. The District Court of Nevada sided with the employer
allowing the tips to be parceled out as the employer saw fit. The 9th
Circuit disagreed with the District Court of Nevada and reversed the lower
decision restoring the tips to the employee casino dealers and servers that
earned the gratuities.
Notice of proposed rule for paid leave.
President Obama may be in his lame duck period, but he is continuing to
advocate for employees in areas where he can still exercise control. Through
Executive Order 13706, issued September 15, 2015, President
Obama has required companies that contract or subcontract with the federal
government to provide at least 7 days of paid sick leave for the employee's
illness, or for the care of sick family member, or for addressing certain
concerns caused by domestic violence. An
overview of the proposed rule can be found on the USDOL
website.
The proposed rule comment period opened yesterday, February 25, 2016, and will
close March 28, 2016. The
proposed rule and the procedure to comment can be found on
the USDOL website.
Why should Hawaii care about these two events?
Regarding the 9th Circuit case on tip pooling, Hawaii has to care
because the federal rules are applied when there is no specific
Hawaii law provided. There are no specific
statutes or
rules
that direct who can participate in a tip pooling arrangement, only rules about
how a tip pooling arrangement can apply to a tip credit situation, (See Hawaii
Administrative Rule 12-20-11). For a period of time the WSD has had to
modify responses to claims by employees of shared tip pools and based on this
9th Circuit case we will be following the federal standard that only regularly
tipped employees may participate in a tipped pool arrangement.
The proposed rule will implement Executive Order 13706, and all federal
contractors, including those working on federal projects in Hawaii will have to
comply. Hawaii has required
Temporary Disability Insurance, Chapter 392, Hawaii Revised
Statutes. The TDI law is commonly referred to as Hawaii's sick leave
law because it provides partial wage replacement for employees who become ill
or are injured outside of the job and not covered under workers'
compensation. Federal contractors would be wise to comment on the proposed rule and how the TDI
contractors provide their employees in Hawaii will be accommodated under the Executive
Order. As the order requires 7 days of sick leave, and the TDI law has a
waiting period with only a partial wage replacement, will this suffice?
What's next?
The 9th Circuit decision in
Oregon Restaurant was decided by a 3 member
panel in a 2 to 1 decision with the dissenting judge writing that the majority
decision was against precedent and to overturn circuit precedent a full
en banc bench should hear the
case (
en banc means eleven 9th
Circuit judges, not just three). This suggests that maybe this case is
not quite over.
The federal rule's treatment of TDI for federal contractors with Hawaii employees
may be an insight into how proponents of paid leave issues that keep
reappearing in legislative measures will be resolved. At this writing
SB 2961 SD1 Relating to Family Leave, is still alive in
this 2016 session. While this measure does not invoke TDI for paid leave of
an employee's illness as some of the past measures have, it proposes a new
system to provide paid leave for the care of a sick family member as the
Executive Order requires. Federal contractors would be wise to consider
how their TDI will stack up against the Executive Order.
Will keep you posted if we hear anything.
