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Arbitration in Employment Contracts

Forced Arbitration in Law Firms

For decades, most big law firms have required new attorneys and other employees who become part of the firm to sign a mandatory arbitration agreement as a condition of employment. By signing a mandatory arbitration clause when someone is hired, the employee forfeits their right to settle any disputes with their employer in court. Instead, the dispute is handled through binding arbitration, overseen by a (supposedly) neutral, third-party arbitrator.

Last summer, this all started to change because of one tweet. It began when parts of a mandatory arbitration agreement from BigLaw firm Munger, Tolles & Olson, LLP were leaked. The leaked portions of the agreement were tweeted by a Harvard Law lecturer, and they were subsequently retweeted hundreds of times. Several media outlets also picked up and reported on the leaked documents.

The documents showed how the firm’s forced arbitration clause protected them from lawsuits over issues such as sexual harassment and racial discrimination. This created an immediate and overwhelming backlash against the firm and their mandatory arbitration policy. Within a day, Munger caved and announced that they would end the policy. Soon after, the cause was picked up by the Pipeline Parody Project, a group of Harvard students whose mission is to put an end to harassment and discrimination in the legal field. Since the PPP got involved, several other BigLaw firms have announced that they will end forced arbitration policies.

Forced Arbitration vs. Litigation in Employment Contracts

Law firms are not alone in their widespread use of mandatory arbitration clauses in their employment contracts. It is estimated that more than 60 million American workers across a wide range of industries work under a similar type of agreement, and many do not even realize it. These clauses are seen as advantageous for employers for a number of reasons:

  • No Right to a Jury: The Civil Rights Act of 1991 gives employees the right to have discrimination claims heard by a jury of their peers. Arbitration does not provide employees with this opportunity. With arbitration, the dispute is heard by an arbitrator who is supposed to be neutral. Unfortunately, this is not always the case. For example, some arbitrators regularly handle employment disputes for the same organizations. When this is the case, it is very reasonable to question exactly how neutral they really are.
  • Discovery is Limited: During a court trial, both sides exchange information, evidence, and lists of witnesses in what is known as the “discovery” phase. Parties who are going through arbitration are generally limited in their ability to request information from the other side. This makes it more difficult for an employee who has been harassed or discriminated against to prove their case.
  • No Right to an Appeal: With arbitration, the arbitrator acts as the judge and jury. In general, their decisions are final and cannot be appealed. So, if you are unhappy with the decision of an arbitrator, there is no available legal mechanism to have your case reviewed by a higher authority.
  • Recoverable Damages are Limited: Even if an employee does win their arbitration proceeding, the forced arbitration contract they signed often limits the damages that they are able to recover.

Arbitration can be a viable form of alternative dispute resolution (ADR), and it certainly has its place. For example, parties to a dispute may voluntarily choose to try to resolve their dispute through arbitration. This allows them to settle their dispute in a less formal setting and save time and money vs. taking the dispute to court. But when an employee is forced to agree to mandatory arbitration to settle a dispute as a condition of employment, they have very little choice except to sign the agreement if they want the job.

In the wake of the #MeToo movement, law students across the country are starting to realize how unfair forced arbitration clauses are. And the backlash against BigLaw is likely only the beginning. Sooner or later, the rest of corporate America is going to have to confront this issue and make appropriate changes that protect their employees and ensure their right to a safe work environment.

Harassed or Discriminated against in the Workplace? Call Our Skilled Alabama Employment Law Attorney

If you have been subjected to harassment or discrimination at your place of employment, you have legal rights, even if you signed a forced arbitration agreement. Attorney Kira Fonteneau understands the frustration employees feel when their civil rights have been violated, and she has been an aggressive advocate for the working people of Alabama for the past 13 years. Kira can take a look at your case and advise you of your legal options, so you can make the most informed decision on how you wish to proceed. For a consultation with attorney Fonteneau, call our office today at 205-564-9000, or send us a message through our online contact form.

What are the Most Common Violations against Tip Earning Employees?

What are the Most Common Violations against Tip Earning Employees?

Waiters, waitresses, bartenders, delivery drivers, and many others in the hospitality industry depend on tips for their living. In fact, many tipped employees earn more in tips than they do with their hourly wage. These workers are typically paid no more than minimum wage, and in many cases, establishments pay them below minimum wage.

Federal law and the laws of most states (including Alabama) allow employers to pay tip-earning employees less than the minimum wage, as long as these employees earn enough in tips to at least make up the difference, and as long as the employer is in compliance with the Federal Labor Standards Act (FLSA). When an employer counts an employee’s tips toward its obligation to pay minimum wage, this is known as a “tip credit.” In order to take a tip credit, an employee must earn at least $30 per month in tips.

Although employers are required to be in compliance with federal wage and hour laws, many of them engage in routine violations. According to a study by the Economic Policy Institute of the 10 most populous states, wage theft by employers is rampant, and it costs employees billions of dollars each year. Wage theft can come in many forms; such as overtime violations, forcing employees to work off the clock, denying workers meal breaks, taking illegal deductions from wages, misclassifying employees as independent contractors, and many others.

Among tipped employees, there are several ways employers frequently violate the law. Here are some of the most common legal violations against tip earning employees:

Illegal Tip Pooling

Tip pools are common in many establishments. This is when an employee contributes all or part of their tips to a pool that is then divided among a certain group of employees. Federal law allows employers to implement tip pooling whether they pay their employees a full minimum wage or not. However, there are some strict guidelines about who is allowed to participate in the pool. Employers, supervisors, and managers are not allowed to be part of a tip pool under any circumstances.

There is another important distinction between employees who have direct interaction with the customers, and those who work behind the scenes, such as bus boys, dishwashers, and cleaning staff. The FLSA was clarified in 2018 to say that only employers who pay full minimum wage and do not take a tip credit are allowed to establish a tip pool that includes “back house” staff. If you work for an establishment that does not pay a full minimum wage (in lieu of your tips), and they have a tip pool with employees that do not interact with the customers, your employer may be in violation of the FLSA.

Forced Payment for Uniforms

Another area in which employers sometimes engage in violations against tip-earning employees is with their uniform. An employer is not allowed to force an employee to pay for a mandatory uniform. In many establishments, this is pretty straightforward. If you are required to wear a specific uniform that displays the company’s logo, colors, etc., you should not be forced to pay for it. There are some gray areas, however, when it comes to requirements of certain styles of dress that may be required. For example, if the entire wait staff is required to wear a tuxedo with bow ties, and the shirt and ties must be a certain color, this could be considered a uniform.

Over-Deducting for Credit Card Processing Fees

Many employers deduct a percentage of tips an employee receives by credit card to cover the cost of the credit card processing fee. Generally, employers are allowed to do this in most states as long as the amount deducted does not put the employee below the minimum wage, and as long as the employer does not profit from this deduction. Employers who engage in this practice are on very dangerous legal ground, however. This is because of the complexity of credit card processing fees.

With many merchant processing services, an establishment pays the interchange fees for a credit card transaction. These fees may vary from as low as under 1% on most debit cards to as high as 4% for credit cards with rewards programs (such as cash back and airline miles). If, for example, an employer automatically deducted 4% of the tips an employee received through electronic (credit and debit card) transactions, they may very well be illegally profiting from the deduction.

Excessive Non-Tipped Work

Tip-earning employees frequently engage in work that does not earn them tips; such as cleaning tables, sweeping the floor, washing dishes, and many others. If an employee spends more than 20% of their work day performing non-tipped activity, an employer may not take a tip credit for that employee. In addition, employers must pay at least the minimum wage for any non-tip work a tip-earning employee performs.

Contact Alabama Employment Law Attorney Kira Fonteneau

If you are a tipped employee in Alabama and you believe your employer has engaged in wage theft against you, it is important for you to speak with an employment law, so you fully understand your legal rights and options. Attorney Kira Fonteneau has aggressively advocated for working people in Alabama for the past 13 years. Kira was recently named president of the Alabama ACLU, and she has helped numerous workers obtain justice during an employment dispute. For a consultation with attorney Fonteneau, call our office today at 205-564-9005. You may also send us a message through our web contact form.

Sexual Harassment in the Hospitality Industry

Sexual Harassment Part 2: Sexual Harassment in the Hospitality Industry

Last time, we talked about sexual harassment in the medical field and the dire need for reforms to give female health professionals a safer work environment. This time, we turn our attention to another industry that is in badly need of reform; the food and beverage/hospitality industry. For as long as there have been bars, restaurants, hotels, and resorts, owners of many of these businesses have used a sexual undertone to attract customers.

Discriminatory hiring practices are rampant in this industry. For example, how many male waiters or female waitresses over the age of 40 does Hooters hire? Hooters is not alone, however. These same preferences are used openly by casinos in Nevada, Atlantic City, and on reservations when they are considering who to hire as cocktail waitresses to serve drinks to their patrons. So, given the atmosphere in many establishments that serve food and drinks, it comes as no surprise that sexual harassment has become ingrained into the culture.

How bad is the problem? According to the Harvard Business Review, more sexual harassment claims in the United States are filed by hospitality industry workers than by workers of any other industry. It is estimated that as many as 90% of women and 70% of men who work in this industry have reported experiencing sexual harassment.

While the #MeToo movement has helped shine the spotlight on the widespread sexual harassment and assault among members of the media, movie industry, politicians, and other high-profile professions, very little attention has been given to the issues hospitality workers routinely have to deal with.

USA Today offers some additional insights into why sexual harassment seems to be more accepted in the food and drink industry:

  • Men still rule the roost: While there are more female owners and managers in the bar and restaurant industry than ever before, the industry is still dominated by men. Owners, chefs, and managers often have absolute power, and this tends to feed their egos and make them believe they can get away with anything.
  • Sex is often part of the marketing plan: As mentioned earlier, many bars and restaurants build their entire business model around selling sex. This means that those on the frontline, especially female bartenders and waitresses, are expected to give the customers what they want. And since bartenders and waitresses depend largely on tips for a living, they feel enormous pressure to oblige.
  • Fast-paced environments: Restaurants are high-pressure environments, especially during busy times. With everyone rushing around to serve the customers, many snarky and inappropriate comments are made in the heat of the moment.
  • Work done in close quarters: Bartenders, waiters, waitresses, bus boys, dishwashers, chefs, and cleaning staff often work together in very tight and enclosed areas. This makes it more tempting for workers to engage in inappropriate behavior.
  • Disproportionate number of young workers: The hospitality industry tends to hire most of its staff from the 16 to 34 age group. For many workers, this is their first job, and they may not have a clear understanding about what types of behavior are appropriate, and what crosses the line.

Another issue that makes sexual harassment such a widespread problem within the hospitality industry is that, like in the medical field, workers are often harassed by customers. In fact, customer-based harassment accounts for a large percentage of sexual harassment claims in the industry.

What Can be Done About Sexual Harassment in the Hospitality Industry?

There are many steps that need to be taken in the food and beverage industry to effectively address the problem of sexual harassment. Here are a few of the most important:

  • Create strict anti-sexual harassment policies: It all starts with making absolutely clear to all who work at the establishment that sexual harassment will not be tolerated. If an employee believes that the company doesn’t care about it, tolerates it, or ignores it, they are much more likely to engage in inappropriate behavior. Bars, restaurants, and other establishments in the hospitality industry need to make a commitment to create a safe work environment for everyone.
  • Implement more effective reporting procedures: Having a good policy on paper is a start, but it does little good if there is not an effective way for an employee to report harassment. For example, if you are supposed to report harassment to your manager, and the manager is the one who harassed you, your complaint is not likely to get too far. There should be a separate department, perhaps online or through human resources, where an employee can safely report harassment and know that their complaint is being investigated.
  • Give all managers and workers comprehensive sexual harassment training: Everyone in the company needs to be fully trained on the sexual harassment policy, and what constitutes inappropriate behavior. There should also be training on how to effectively intervene when someone witnesses harassment, so the situation can be diffused.
  • Implement policies to protect employees from customer-based sexual harassment: Finally, restaurants and bars need to be fully committed to protecting their employees from being harassed by customers. For example, if an employee is uncomfortable serving a patron after they have made inappropriate remarks and/or advancements, they should have the right to stop serving that person. The establishment should also have a policy in which they warn customers who behave inappropriately, and if they do not comply, ask them to leave.

Harassed in the Workplace? Contact Our Experienced Alabama Employment Lawyer

If you have experienced sexual harassment as a hospitality industry worker or a worker in any other industry, it is important to speak with a skilled attorney, so you fully understand your legal rights and options. Attorney Kira Fonteneau has over 13 years of experience aggressively advocating for working people in Alabama. Kira was recently appointed president of the American Civil Liberties Union of Alabama, and she has a successful track record obtaining justice for those whose civil rights have been violated in the workplace.  For a consultation with attorney Fonteneau, call our office today at 205-564-9005. You may also send us a message through our online contact form.

Human Resource Employees and Retaliation - Kira Fonteneau Attorney at Law

HR Employees can be victims of Retaliation, Too

Many employees view Human Resources as the enemy, helping management to carry out unfair or discriminatory policies.  Did you know that Human Resources employees who advocate for employees can be the victims of retaliation themselves?

HR Employees May Help Other Employee Victims of Discrimination

Recently, the Eleventh Circuit decided that Title VII protects HR representatives from retaliation in certain situations.  The Case, Gogel v. Kia MFG. of Georgia, Inc., involved an HR employee who received a complaint from an employee.  The employee reported that she felt another woman was being treated more favorably because of a romantic relationship with a senior manager.   When Gogel reported the complaint through her chain of command, she was discouraged from pursuing it.

Later when Gogel complained about being overlooked for a promotion, she concluded that the reason was her prior advocacy for the employee who complained and gender discrimination.  After Gogel filed her Charge of Discrimination with the EEOC, management approached her to sign a document promising not to discuss her charge of discrimination, get other employees to give her information about her Charge, or to encourage other people to file Charges against the company.  Later Kia accused Gogel of working with another employee to further their Charges of Discrimination against the company because they had the same lawyer.  The company decided that the unproven allegation she was helping another employee with her Charge violated her duties as a Human Resources employee and terminated her employment.

The Eleventh Circuit decided that Human Resources employees can help the employees they work with sometimes.  The court explained that Title VII protects HR employees who try to resolve employee complaints internally if the employer fails to respond adequately and the HR employees actions were reasonable.

Get Help Before You Make a Decision

The bottom line is that Human Resources employees should not be afraid to advocate for their employees and not just co-sign unlawful behavior by their employers.  It is, however, a good idea to consult with an attorney to determine whether the course of action you propose to take is protected.  Kira Fonteneau is an employment lawyer with several years of experience helping Alabama employees level the playing field against their employers.  If you think you need to discuss an employment issue, call us at 205-564-9005.