“Millionaire Matchmaker” Contestant Facing Labor Law Allegations

Last January, Californian Stephanie Costa appeared on Millionaire Matchmaker, a reality TV program on Bravo. The show helps self-described millionaires find suitable romantic partners. On the show, the 30 year-old Costa boasted about her Beverly Hills mansion and her multiple motor vehicles, all of which she stated she paid for by owning the company Bedford Care Group. Bedford Care Group runs six assisted living facilities for the elderly throughout California.

While Costa was trying to become a reality TV star and flaunting her wealth, she was also allegedly mistreating her employees by violating several state labor laws. Now, just over a year after her luxurious television appearance, Costa instead finds herself in a legal hearing to appeal a decision against her by the Office of the California Labor Commissioner.

Labor Commissioner Decision

Last year, after an investigation, the California Labor Commissioner found that Costa and Bedford Care Group violated several state wage and hour laws with the following actions:

• Expecting employees to work significantly extended shifts;

• Not allowing the proper breaks for meals or rest under the law;

• Not paying certain employees the 2013 state minimum wage of $8.00 per hour (the CA minimum wage will rise to $9.00 per hour on July 1, 2014);

• Not paying the required time and a half overtime wages for hours worked over 40 per week;

• Failing to provide proper itemized pay statements that would allow employees to track their hours and check for accuracy.

The employees stated they continued working for Costa because they cared about the elderly residents of the Bedford Care Group facilities, however 11 former employees finally brought a claim against Costa and the company. The plaintiffs stated they could no longer stand for the injustice of the labor law violations, and that they hope their case will not negatively affect the residents of the facilities in any way.

After investigating the claims, the Labor Commissioner determined that Bedford Care Group owes the 11 former employees and the state nearly $1.6 million in compensation and penalties. The penalties break down as follows:

• $1.3 million to the employees for unpaid overtime;

• $95,053 to the employees for missed meal and rest breaks;

• $17,025 to the employees for unpaid minimum wage;

• $114,500 to the state in civil penalties for the violations.

Costa Appealing

Costa and the Bedford Care Group are not going down without a fight, as she entered the Labor Office for an appellate hearing in late January 2014. Costa claimed she had timesheets to demonstrate that the company paid all employees adequate wages for the hours they worked. However, the 11 former employees stated these timesheets were falsified and maintain their allegations. Employees of the Bedford Care Group took to the streets in protest while Costa was in her appeal to try to make their case public. The appellate decision is still pending.

California takes wage and hour laws very seriously. If you believe your employer has violated any labor laws, you should not hesitate to contact the Pershing Square Law Firm for assistance with a possible case today.

DOL Investigating Oakland Raiders Labor Lawsuit

Professional sports leagues in the United States have faced a rash of lawsuits in the past year, many of which involve allegations of labor law violations. Both the San Francisco Giants and the Miami Marlins faced lawsuits from former unpaid interns who claimed they should have received a minimum wage as employees. The Giants further agreed last year to pay a group of security employees over $500,000 for various labor law violations. The most recent professional sports team to garner national attention for possible labor law violations is the Oakland Raiders.

The lawsuit was filed by Lacy T., who is part of the cheerleading squad for the team, known as the Raiderettes (for safety purposes, cheerleaders only reveal their first names). Both current and former cheerleaders have joined in the class-action suit, which alleges several wage and hour violations against the football organization.

The plaintiffs claim the Raiders violated state labor laws in the following ways:

                                   

• The cheerleaders were expected to work more than eight-hour shifts without necessary breaks or overtime compensation, violating state requirement for meal and rest breaks, as well as overtime laws.

• The Raiders withheld pay until the end of the season, violating California laws regarding paydays and pay periods.

• That paycheck at the end of the season paid $125 per game for 10 games, which adds up to only $1,250 for 9 months of work, including 3 rehearsals per week, workouts, fittings, event appearances, photo shoots, and other mandatory meetings. Overall, the pay comes out to approximately less than $5.00 per hour for a season’s work, which violates California’s minimum wage laws.

•  The Raiders require the cheerleaders to pay for their own expenses related to required hair styling, makeup, and travel.

• The Raiders further unlawfully deduct from a cheerleader’s paycheck for minor infringements, such as chewing gum, bringing the wrong set of pom-poms to practice, or wearing the wrong type of outfit to rehearsal.

After all of these alleged violations, many Raiderettes do not even break even for the season.

The federal Department of Labor (DOL) has recently involved itself in the lawsuit by launching an investigation into violations of federal labor laws. The DOL is apparently looking into how several other teams treat their cheerleaders, as well. If the DOL finds that the Raiders violated federal employment laws, they have the power to order the organization to reimburse the cheerleaders for twice the amount of compensation they were originally denied. For this reason, the Raiders may end up paying significantly more than if they had simply followed labor laws to begin.

Some employers, such as professional sports organizations, believe they are above labor laws and do not have to follow them. However, cases like this demonstrate that employment laws apply to professional sports teams like any other employer, and the Raiders may face the consequences like any other company.

If you believe your employer has violated any wage, hour, or other labor laws, contact the Pershing Square Law Firm for assistance today.

Will Automatic Gratuities Disappear in 2014?

 The restaurant industry has traditionally been a hot bed for wage and hour violations.  Restaurants across the country have recently attracted a lot of attention from the Department of Labor (DOL) due to investigations of possible violations of the Fair Labor Standards Act (FLSA), which regulates wage and hour requirements on the federal level.  In a recent crackdown in Portland, Oregon, the DOL discovered FLSA violations in an incredible 79% of the restaurants investigated.  Many violations in the restaurant industry stemming from confusion and complications regarding tipped employees.  Though many servers and bartenders receive an hourly wage below the standard minimum wage, their hourly wages plus tips must add up to at least the mandated minimum wage.  Furthermore, many restaurant owners regularly miscalculate overtime rates for these employees as well.

New Tip Regulations for 2014

Distinguishing tips from wages has also been a controversial practice for both wages and for tax reporting purposes.  Because of the tax implications, the Internal Revenue Service (IRS) released an advisory bulletin last year that goes into effect as of January 2014, clarifying the tip-wage distinction for restaurant employees.  The bulletin states, in short, that any mandatory gratuities added on to a restaurant bill should be counted and taxed as wages, not tips.  Specifically, the bulletin reasons that a tip is defined as the following:

·         A payment by a customer free of compulsion

·         The amount of the payment is determined freely by the customer

·         Payment must not be negotiated or required by an employer’s policy

·         The customer may decide to whom they directly give the payment

Mandatory gratuity does not fit any of these four requirements for “tips.”  Therefore, the IRS has deemed that mandatory gratuity is instead a service charge, which would be considered a wage under federal tax guidelines.

Why is Wage v. Tip important?

Currently, service industry employees report their own tips to their employer for tax withholding purposes and employers must not withhold taxes on any unreported tips.  However, since mandatory gratuities are considered wages, employers must keep track of all of these gratuities, withhold taxes, and report them to the IRS.  Any failure to do so could result in penalties.  Additionally, if an employer does not factor such wages from mandatory gratuity into an employee’s hourly rate, overtime compensation rates may be inaccurately low.  Not providing enough overtime pay can result in FLSA violations.

In response to the IRS bulletin, many restaurants are choosing to eliminate mandatory gratuities, even for large parties.  First, most restaurant owners do not want to deal with the additional tracking of the gratuities.  Furthermore, because the Department of Labor is already keeping a close eye on restaurants, looking for possible FLSA violations.  Therefore, there is a greater chance that violations be discovered and will result in claims and penalties against the restaurant.

If you work in the service industry, you should know that you are entitled to all mandatory gratuities and must pay taxes on those wages as of January 2014.  If you believe your employer is not complying with the new laws or with any other tax laws, contact the Pershing Square Law Firm to discuss a possible case.