How to Make Millennials Like You, Part 4 :-) The #Millennial with the Dragon Tattoo (and why it doesn't matter)
For many restaurants, bars, and hospitality companies, tip-pooling is a common practice. Contrary to what many believe, "tip-pooling" is a concept heavily regulated by the Fair Labor Standards Act ("FLSA") and the North Carolina Wage and Hour Act ("NCWHA"). Not surprising is the fact that the tip-pooling rules are convoluted, subject to varying court interpretations, and therefore difficult for even the brightest of minds.
What is a "Tip-Pool" and How do I Get One?
For all my servers out there, the tip-pool is the part of your day where you become extremely annoyed that you have to "share" some of your tip money with the bussers you have argued with all night for not keeping your tables clean. (For the bussers out there, the "tip-pool" is how you seek revenge). The U.S. Department of Labor defines a "tip-pool" as an arrangement to share a certain percentage of one's tips among employees who customarily and regularly receive tips. Its a socialistic method to even up the playing field among tipped employees by ensuring the Employer gets a tip credit for all those working below minimum wage. (See last week's blog for more info on tip credits). It may also help employees work as a team.
Who is Eligible to Dive in the Tip-Pool?
Only employees who "customarily or regularly receive tips" are eligible to participate in a tip-pool. The key here is "CUSTOMER INTERACTION." If an employee does not regularly interact with customers, then they should be omitted from any tip-pool (THINK: back-of-house staff like chefs, dishwashers, cooks, janitors, etc). If the employee regularly interacts with customers (THINK: front-of-house staff like servers, bartenders, hosts, bussers, etc), then he or she can participate in a tip-pool if they customarily and regularly receive tips.
Can the Employer Swim in the Tip-Pool?
No, no, and no. One of the trade-offs with the tip credit is that the employee has 100% ownership of his or her tips, absent a valid tip-pooling arrangement. This means that employers using the tip credit to fulfill their minimum wage requirement cannot participate in a tip-pool. One other thing, "employer" has a broad definition in the FLSA and is defined as: "any person acting directly or indirectly in the interest of an employer." Therefore, be careful when managers, floor supervisors, trainers, or employees with sufficient managerial/supervisory authority are in a tip- pool because this may be violating the FLSA.
Voluntary vs. Mandatory Tip-Pools.
If a tip-pool is voluntary, participation by the employee is optional. Optional means without retaliation, coercion, control, or employer involvement. In other words, if the tip pool is voluntary, it better be truly voluntary and perceived as such by your employees. The U.S. Department of Labor is still unsure if an employer can take a tip credit in connection with a voluntary tip-pool (surprise, surprise). You should also know that despite the hands-off nature of a voluntary tip- pool, the employer must continue to keep an accounting of the tips being distributed. So the employer cannot be in the pool but they should at least function as a lifeguard.
If a tip-pool is mandatory then it is required as a condition of employment. READ: It better be clearly stated in your Employee Handbook. Only those who regularly or customarily receive tips can be in a mandatory tip-pool. The employer is required to notify employees of the amount of tips they must submit to the tip pool and the employer can only take a tip credit for the tips each employee actually receives as part of the tip pool. Finally, the employer cannot retain an employee's tips for any reason other than the required tip-pool.
What about NC?
North Carolina says tip-pooling is okay for those who regularly and customarily receive tips, so long as no employee is forced to relinquish more than 15% of his or her tips. If you do the math, this means employees should be leaving the pool with at least 85% of their tips.
1. NOTICE NOTICE NOTICE: Although there no absolute remedies against lawsuits, putting policies in writing is always a good start. If you want to have a mandatory tip-pool, thats totally fine. But you need to put that policy in writing and circulate it among employees. If you want to earn an A++, you'll have each employee sign an acknowledgment stating that they understand the tip pool is mandatory and have been told the percentage of tips required.
Similarly, if you want to have a voluntary tip-pool, you should also verbalize the voluntariness of the tip-pool in a written policy and practice what you preach. No retaliation against employees who do not wish to participate.
2. CONSISTENCY: The percentage contribution should be the same for all participants. Otherwise, you are setting yourself up for disaster in the form of a discrimination lawsuit. These typically never end well.
3. EVALUATE THEN REEVALUATE THEN EVALUATE AGAIN: Only those employees who customarily and regularly receive tips can participate in a mandatory tip-pool. Remember: CUSTOMER INTERACTION is key to this analysis. People who do not regularly interact and engage with customers are probably ineligible to participate. People who regularly interact and engage with customers are probably eligible, so long as they are not managerial so as to be considered the "Employer." Because people's roles change over time and because in the service industry employee turnover is always high, it is important to reevaluate mandatory tip-pools every few months to make sure you are still in compliance. You will also want to make sure employees in the tip pool are still maintaining 85% of their tips.
If you need a written policy, want help notifying employees, or have found yourself confused, let me know. I like to talk and as long as you like to listen, you may learn a lot!
Today the North Carolina Court of Appeals filed an opinion in Holliday v. Tropical Nut & Fruit Co. in which the North Carolina Court of Appeals upheld the North Carolina Industrial Commission's decision to award worker's compensation benefits to an employee injured during company-mandated laser tag. Yes, I said laser tag.
First of all, I know very little about the defendant employer in this case, other than the fact that I want to be them. They did, after all, REQUIRE laser tag for their employees at their annual conference. I'm sure this practice of laser tag-teambuilding was a popular event at said conference but my guess is they are re-thinking their coolness. #wompwomp
In Judge Davis's opinion for Holliday, the third element of the North Carolina Worker's Compensation Act is discussed at length: whether or not the injury "arose out of employment." This is often the element at issue in worker's compensation disputes and will likely remain a hot topic after this decision. When it comes to out-of-office activities, courts will look at several factors to determine if an injury during one of these activities "arose out of employment:"
- Did the employer sponsor the activity or outing? For example, did the employer pay for employees to attend a conference?
- Were employees required to attend the activity or outing? For example, did the employer schedule the employees to attend the activity or outing or otherwise pay their salary during this time?
- Did the employer "encourage participation" in the activity or outing? For example, did the employer leave out the fact that participation may be voluntary or did the employer take attendance?
- Did the employer benefit from the activity or outing? For example, is the employer gaining a market advantage or otherwise benefitting from employee camaraderie?
In Holliday, the employer clearly sponsored the laser tag event since they organized it and paid all relevant expenses. The employer also "required" attendance by pre-scheduling employees for certain events, such as laser tag, and by making attendance at the conference a mandatory and paid event.
It is the last two factors that made for great discussion. Tropical Nut & Fruit (the employer) encouraged participation by not expressly informing its employees that participation was purely voluntarily (read: even though they intended the laser tag to be a voluntary event for employees, they did not expressly state this to employees). Because of this lack of employee-notice, the Court of Appeals said participation was encouraged.
Finally, Tropical argued that there was no benefit from the laser tag and that it was in fact used as a fun gesture for employees and nothing more. However, they noted that it also served the purpose of "putting faces to names" for employees. The Court of Appeals said that even a "get to know your co-workers" event stood to benefit the employer by boosting employee relations. Therefore, the fourth factor was also present.
Before you panic and cancel all your laser tag and team-building events, you should keep in mind that courts consider a lot of factors and look at worker's comp on a case-by-case basis. There is no need to cancel all the fun stuff but here are some things to keep in mind:
1- Fun should always be voluntary AND you should make this very, very clear to employees. If you host a laser tag game, bowling tournament, or bar crawl, make it clear that it is VOLUNTARY. Do not take attendance, do not overly encourage participation (a.k.a don't make it a "come or be fired" event) and tell people its voluntary (hint: using the word "voluntary" is helpful).
2- Know that employer-sponsored events carry a risk. If you are sponsoring an event or conference (regardless of where it is located) and you are requiring employees to attend, know that this is likely considered "work" for purposes of worker's compensation. By accepting this risk from the get-go, you will be well-informed if an injury occurs.
Fun events are extremely valuable for HR and employee relations. Don't let this new opinion scare you, just be aware that even fun may come with a price.
Yesterday Netflix announced that they would be offering new parents unlimited maternity and paternity leave for the first year following a child's birth or adoption. It is also highly important to note that this unlimited parental leave is PAID.
Why would the streaming movie giant take this risk? According to Netflix's Chief Talent Officer, Tawni Cranz, the reasoning is simple: "people perform better when they are not worrying about home." In other words, eliminate the "worry" and promote performance. Tawni further states: "this new policy, combined with our unlimited time off, allows employees to be supported during the changes in their lives and return to work more focused and dedicated."
Yes, you read that correctly. Netflix also has had an unlimited vacation policy for salaried employees since 2002.
Netflix's new parental leave policy is a clear stance in favor of work-life balance and certainly the sign of a trend that merits a conversation nationwide. Currently, the only federal law in the United States regarding maternity and paternity leave is the Family Medical Leave Act (FMLA) enacted in 1993. Although this federal statute requires employers with 50 or more employees to offer 12 weeks of job-protected leave for the certain qualifying events, such as the birth or adoption of a child, this leave is unpaid and often difficult to manage. For many families, unpaid leave is simply not an option and the requirement of "job-protected leave" has been interpreted by courts to actually mean that the employer need only return the employee to the "same or similar position" in terms of pay and scope of duties. This is all, of course, assuming the employer has an adequate HR department to properly handle FMLA leave (which is a lot harder than you may think). In terms of state equivalents, only a handful of states have them (less than 10) and North Carolina is not among those that do.
Will this Silicon Valley trend follow across the country to North Carolina? Maybe. At the very least this is a conversation companies should be having. It is completely understandable that unlimited time off is not an option for an employer but everyone should at least have a parental leave policy in place. Work-life balance is consistently ranked among young talent as a top concern with job hunting so being prepared to accommodate this concern is key to maintaining (and retaining) talent in your company.
If you would like to discuss your options in more depth, want a FMLA refresher, or would like a maternity/paternity policy drafted, give me a call and we can chat. Also checkout our Business Resources page for more information from the Department of Labor. #themoreyouknow
Many of our clients fall into the "small business" category, often with fewer than 20 employees. One of the most popular questions we get is "Why would a small employer need an employment handbook?" Answer: Because employment handbooks are the foundation of a solid business. If you are on the brink of getting an employment handbook, this post may be beneficial for you.
As easy as it would be to respond with "because I said so," I do understand that concern that a small business with a handful of employees does not need a Google-sized employment handbook. In fact, based on the employer's size, there may be a lot of standard policies that simply do not apply. However, having good human resources is really the foundation of a good business. Positive HR means a positive workforce and happy employees means happy corporate books and happy corporate books typically means you have quality talent working for you. In contrast, bad HR means an unhappy workforce which leads to unhappy corporate books which is typically a sign that you do not have the caliber of talent as do your competitors. In other words: Positive HR, GOOD. Negative HR, BAD.
So what makes HR positive? Part of it is having a strong set of company policies that are fairly and evenly enforced and easy for employees to learn and follow. A collection of said policies is what I refer to as an employment handbook.
Employment handbooks can be as thorough or simple as you want. It is also an excellent way to convey to employees the personality you want your business to carry. If you want a fun work environment that is also serious, your company policies can convey this feeling while serving as a guide for supervisors and employees alike.
That brings me to my next point: employment handbooks are also great because they are the perfect scape-goat for some really tough decisions. For example, supervisors and managers can always point to the employment handbook as the "rules" in which they must follow which can make disciplinary actions and even terminations a lot less painful. At the same time, employment handbooks help set some boundaries and guidelines for employees. Having everyone on the same page is a sign of positive HR and will save you a lot of pain in the future as problems inevitably arise. Plus, if you are ever under investigation by the EEOC or the state or federal departments of labor, one of the first things they ask for is a copy of the employment handbook. Trust me, when you do not have one in place, it does not look good on the employer.
Finally, employment handbooks can be customized to fit your company's needs. I've done handbooks as short as 10 pages and as long as 70 pages. I always review a long list of policies with clients and discuss which ones are "necessary" and which ones are completely optional. I also like to talk about the company's personality so I can tailor the handbook's language accordingly.
If you do not have a handbook and you do have at least one employee, give us a call so we can talk about the importance of handbooks and why it may be beneficial for you and your employees!