Are You an Independent or Joint Owner If You Own a Franchise Restaurant?

Author Stephen D. Hans

For more than thirty years, a line was drawn that differentiated a franchiser and franchisee. The relationship between the two served each other well. Entrepreneurs looking to start a business found security in the franchiser relationship. The franchiser protected the brand and the franchisee made daily business operations thrive.

A recent article in describes a National Labor Relations Board (NLRB) determination regarding McDonald’s and its franchisees. The NLRB’s determination goes against the decade long defining rule that distinguished franchisers from franchisees. Traditionally, franchisees were considered independent owners. For years the NLRB adhered to its standard, which stated:

“To establish joint employer status, there must be a showing that the employer meaningfully affects matters relating to the employment relationship such as hiring, firing, discipline, supervision and direction.”

In recent determinations the NLRB has found that the franchiser and franchisee are joint owners. Claims were brought against McDonald’s and the franchisees alleging on the part of both entities “discriminatory discipline, reductions in hours, discharges, and other coercive conduct directed at employees in response to union and protected concerted activities,”.

The result of this finding holds the franchiser responsible for the actions of the franchisee, which in the long term will probably make business less profitable for McDonald’s and therefore less attractive for franchisees. This major shift in NLRB policies favors unions in the ongoing conflicts between unions and independent business owners.

Another case, the International Brotherhood of Teamsters against Browning-Ferris Industries  also has been brought before the NLRB. In this issue, Browning-Ferris Industries urges that the NLRB uphold its standard of treating franchisees as independent owners. The outcome of this case will shed further light on the standard and the direction the NLRB is taking with its determinations.

Our attorneys at Stephen Hans & Associates have more than 20 years of experience representing small and mid-sized business in union-related issues.

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Are Your Dress Code and Grooming Policies Violating Discrimination Laws?

Companies have the right to expect employees to be neat in appearance and follow a company dress code. Some companies require short hair for men and no one gives it a second thought. Cut your hair or lose your job. In most cases, such policies do not violate discrimination laws.

However, a recent claim submitted to the Equal Employment Opportunity Commission (EEOC) against Mims Distributing Company challenged the company’s failure to hire a male Rastafarian who had not cut his hair since 2009. He belonged to a religious order that requires men to wear long hair. He applied for a delivery driver position in 2014 and was told to come back after he cut his hair. Even after explaining that his long hair was part of his religion, Mims said they could not hire him because he failed to comply with their company grooming policy.

Under Title VII of Civil Rights Act of 1964, employers must accommodate employees’ religious beliefs and the only allowable exception is if doing so creates undue hardship on the company. In this case, the EEOC failed to see that the company would suffer undue hardship and attempted to reach a pre-litigation settlement based on the claim.

A settlement was reached and the company agreed to pay $50,000 and agreed to a two-year consent decree to adopt a formal religious accommodation policy and an annual program on Title VII requirements and the prohibition of religious discrimination.

It is wise to consult with a lawyer about potential discrimination issues before they lead to claims or lawsuits. If you face discrimination issues as an employer, Stephen Hans & Associates  offers effective legal representation to help you resolve your issues. Our firm has successfully defended employers for more than 20 years.

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Ruby Tuesday Is Accused of Gender Discrimination Involving Men

It is common for the media to report on cases of gender discrimination where females did not receive equal pay or the same promotional opportunities as men. In contrast to the norm, the EEOC is now pursuing a class action lawsuit involving gender discrimination against male employees.

The restaurant chain Ruby Tuesday broadly promoted within a 10-state region to hire temporary employees for summer work at a Utah resort. Working in the resort town offered an opportunity for higher pay and also included company-provided housing for those hired. Andrew Herrera, a longtime employee working at Ruby Tuesday since 2005, applied for the job. He even had experience training new hires. However, he was rejected because of his gender. The hiring announcement stated that only females were under consideration for the summer job openings. The company justified its limited promotion for hiring to females because it was avoiding privacy issues by not housing both sexes together.

The Equal Employment Opportunity Commission (EEOC) alleged that the hiring promotion was in violation of the Civil Rights Act of 1964, which prohibits discrimination based on sex. It argued that Ruby Tuesday could have housed employees in separate units but instead implemented a solution that resulted in discrimination. Because the EEOC and Ruby Tuesday were unsuccessful in reaching a pre-litigation resolution, the EEOC is pursuing a lawsuit.

Ruby Tuesday is an international restaurant chain with more than 800 restaurants in the United States, 15 restaurants in other countries and an estimated total of 34,000 employees. Its reported annual gross revenue is $1,251 billion. It is highly unusual for a company of this size to have a lawsuit brought against it for alleged discrimination in hiring and employment practices.

Seasoned employment defense attorneys often work with companies to help them avoid discrimination issues. Our employment defense attorneys at Stephen Hans & Associates  have extensive experience representing employers in the restaurant and other industries.

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Know and Follow the Regulations for Tip Pools

In the restaurant business and hospitality industry in general, employees who provide services, such as servers, hosting staff, bartenders and bus persons typically receive tips from customers. Under the Fair Labor Standards Act (FSLA),  which is a federal law, tipped employees are workers who “customarily and regularly receive more than $30 per month in tips.”

A tip pool is a common fund used by an employer where all tipped service employees pool their tips together, and the employer then divides the tips fairly among the employees.

Based on the NY Hospitality Industry Wage Order, employers can require directly tipped employees to participate in a tip pool. This law also establishes tip credits for employers using tip pools. It also allows tipped employees to take legal action against employers who violate tip pool regulations.
As an employer, here are some violations to avoid:
• Including employees in tips pools who do not belong based on their duties, such as cooks, dishwashers and other kitchen workers
• Failing to pay tipped employees overtime when their schedules exceed 40 hours or their work day exceeds 10 hours
• Including managers and employers in tip pools
• Failing to keep daily records that show tips collected by employees for each shift, occupations eligible for tip pooling, shares each occupation receives and the amount each employee received in tips by date

Participants have the right to view the tip polling records.

Employers are at risk for collective or class action lawsuits when employees believe restaurant owners have violated tipping pool regulations. By working closely with a New York employment defense lawyer, you can ensure you comply with regulations and protect your restaurant and your bottom line.

Our employment defense attorneys at Stephen Hans & Associates bring decades of legal experience to the table and help restaurant owners handle all types of employment related disputes.

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A Different Slant on Class-Based Hiring Discrimination

Most employers are familiar with the pitfalls of discriminating against applicants in protected classes under Civil Rights laws. For the most part, African Americans, Hispanics and other minority groups experience the brunt of this type of discrimination. Some companies bend over backwards to accommodate Hispanic and Spanish-speaking job candidates so they can show diversity in hiring. However, recently a case brought by the Equal Employment Opportunity Commission (EEOC) had a different twist.

The EEOC charged Lawler Foods, Inc. and Lawler Foods, Ltd. in Houston, Texas with discrimination against African-American and non-Hispanic applicants.

Since 2007, Lawler staff who were hiring for the company had been telling non-Hispanic applicants that they could not hire them because they were not Hispanic or did not speak Spanish. Statistical and anecdotal evidence showed the following about Lawler Foods’ treatment of non-Hispanic applicants:
• Rude behavior towards them
• Making them wait endlessly for interviews while at the same time interviewing Hispanic applicants
• Non-Hispanic applicants typically having better qualifications of more education and more relevant work experience than Hispanic applicants, but not being hired
• Reliance on word-of-mouth hiring
• Advertising that indicated a preference for Spanish-speaking applicants

When the EEOC could not reach a settlement with Lawler Foods, it pursued a lawsuit, alleging that the Lawler companies were in violation of Title VII of the Civil Rights Act. Company employers had excluded people on the basis of national origin or race, and this was, in effect, class-based recruitment.

Employers who face unusual employment situations should consult with an employment defense attorney to ensure their policies and hiring practices are in compliance with discrimination laws. Our attorneys at Stephen Hans & Associates have extensive experience as employment defense lawyers and can help you deal with employment related disputes and litigation.

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Are Employers Free from Liability When Using Staffing Agencies to Terminate Employees?

Companies often find that staffing agencies are valuable resources for helping them fill temporary or permanent positions and for handling human resources issues.
However, recently, an outside staffing agency was involved in a disability discrimination lawsuit the Equal Employment Opportunity Commission (EEOC) brought against Sony Electronics.
Both Sony Electronics and Staffmark Investment LLC ended up settling the lawsuit, which addressed alleged discrimination against a temporary employee who had a prosthetic leg. Staffmark sent the employee to inspect Sony televisions on a temporary basis. While working her second day, a Staffmark employee approached the woman and removed her from the workplace. The explanation given was that the company had concerns she would get bumped or knocked down. The EEOC investigation revealed that Sony’s management had prompted the Staffmark employee to remove the worker. Consequently, the judge considered Sony to be complicit in the violation of the Americans with Disabilities Act (ADA).
It was an expensive error for both companies, resulting in payments from Staffmark of $100,000 and from Sony of $86,000 to the employee.
In addition to the monetary penalty, the federal judge ordered the following:
• Sony must report all employee complaints of disability discrimination to the EEOC for the next two years
• Sony must train certain management and supervisory employees in employment discrimination laws, including the ADA
• Sony must not require that the employee keep the facts of the case confidential, must not waive her rights to file discrimination with a government agency or prevent her from applying or working with Sony or any of Sony’s clients
If you face discrimination issues as an employer, Stephen Hans & Associates can provide you with effective legal representation. For more than 20 years, Stephen Hans & Associates, has successfully defended employers and helped them resolve employment issues that have resulted in litigation.

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How Do 2015 Minimum Wage Increases Affect NY Restaurants?

Minimum wage increases took effect on December 31, 2014, raising the New York minimum wage from $8.00 to $8.75 per hour for employees who work based on hourly wages. By the way, another minimum wage increase also occurs approximately a year from now, on December 31, 2015, raising hourly wages to $9.00 per hour.

According to the New York Department of Labor , most employees working for restaurants or hotels in New York State are covered by the wage increase. However, the hourly wage increase does not apply to tipped employees, such as servers, persons busing tables or hotel bellhops. Even so, their overtime rates are affected and must increase when they work over 40 hours per week or work days with spreads over 10 hours for that day.
The maximum tip credits employers can claim also increased by the same amount that minimum wages increased, which would be $.75 beginning 2015 and $.025 beginning 2016. Tip credits are $3.75 in 2015 and $4.00 in 2016. Non-overtime hourly wages along with credits for meals and lodging did not increase.

Pay increases apply for tipped employee’s call-in pay and uniform maintenance pay. In addition, employers must pay the difference for any tipped employee’s hourly pay combined with tips that does not add up to the minimum wage figure.
It is important to comply with changes in wage and hour laws. Business owners who fail to do so often find themselves embroiled in disputes and subject to lawsuits. Our employment defense attorneys at Stephen Hans & Associates  offer employers decades of legal experience from protecting our clients’ rights in wage and hour disputes

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