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Thoughts on the Wage Discrimination Claim Against US Soccer

It’s been a busy month for Jeffrey Kessler. Earlier this month, the all-star appellate lawyer fielded some tough questions from a panel of judges in the Deflate-Gate appeal and this week he filed a wage discrimination complaint with the EEOC on behalf of four soccer players from the United States Women’s National Team. I have a feeling that this is a story that is going to get much bigger in the coming months unless US Soccer takes fast action to make peace (which looks increasingly unlikely).

My friend Neil Blackmon is an attorney who also has an excellent blog covering both of the US National Teams in soccer, The Yanks Are Coming. His breakdown of the wage discrimination complaint is well worth a read, and you can find it here.

The EEOC complaint is the first step in the process of bringing a wage-discrimination lawsuit in federal court, but as Neil astutely points out, it has strategic value which may pay dividends before a suit is filed. In addition to the leverage the complaint may lend in pending collective bargaining negotiations, I believe it is more probable than not that the complaint will result in a finding of reasonable cause by the EEOC, which most likely will come in the wake of a period of high exposure and adoration for the US Women’s National Team at the 2016 Olympic Games. This would be a public relations disaster for US Soccer, as the conclusion by a federal agency will play out in the public eye and in the media like a conviction for civil rights violations against a team that, more than any other, can be said to be a symbol of equal rights for women’s athletics.

With the passage of Title IX of the Education Amendments Act of 1972, Congress prohibited public and private institutions receiving federal funds from excluding anyone from activities or programs on the basis of gender. The program created unprecedented opportunities for female athletes to compete in college athletics and resulted in a significant increase in women’s soccer programs and scholarships. With generations of women taking advantage of these opportunities, the USA has become a powerhouse in women’s soccer, with international success that vastly exceeds their male counterparts. With this rich history, the US Women’s National Team and its stars are the perfect champions for wage equality.

Now imagine if the women can pull off another Olympic Gold in Rio and just a few months later the EEOC concludes that there is reasonable cause to believe that US Soccer has a practice of wage discrimination. It will be a real strategic coup by Kessler if the dominoes fall that way and will result in tremendous pressure from the public, and possibly lawmakers, to address this disparity. As the father of a two-and-a-half year old daughter who is already eagerly kicking a soccer ball around the backyard, I’m rooting for these girls. Now if Kessler could just figure out how to get Tom Brady out of trouble…

What’s With All These Questions?

What’s With All These Questions?
Making Sense of Judicial Behavior at Oral Argument

Last week attorneys for all-time great NFL quarterback Tom Brady Go Pats!faced a blind-side blitz by a panel of judges on the United States Circuit Court of Appeals for the Second Circuit hearing oral arguments in connection with the ongoing Deflategate legal saga. Sports media outlets quickly seized upon the harsh tone of some of the questions put to Brady’s lawyers to predict the ultimate outcome of the case. As a die-hard fan of the Pats, these reports got me pretty fired up. As an appellate attorney, they put me into blog mode! So, this week’s topic: what can we make of the questions we get at oral argument?

Legal scholars at the University of Chicago conducted a statistical analysis in 2009 of Supreme Court oral arguments to determine whether there were any patterns that emerged to empirically connect questions asked with the court’s ultimate ruling on a case. The authors of the paper reached a conclusion that won’t surprise many lawyers: the sides that were asked more questions were statistically more likely to be on the losing end of the court’s ultimate ruling.

Further analyzing the data, the authors presented two explanations. The first is a “legalistic” explanation – that judges ask questions when they perceive a weakness and want to explore whether or not the concern is valid. More questions equate to more concerns, which in turn equate to a greater likelihood of an adverse ruling. The second proposed explanation is “realistic”, that most often judges have already made up their mind and are asking questions to persuade other judges on the panel by demonstrating weaknesses in a case.

It’s not hard to speculate what frame of mind Judge Chin was in when he asked a “question” to Brady’s attorneys that began by noting that evidence against Brady was “compelling, if not overwhelming.” By all accounts, Judge Chin is a plain-spoken, well-prepared, and highly intelligent jurist. His question indicates he’s read the briefs and the substantial record and he’s got a pretty good idea which way he’s leaning. A canny appellate attorney will realize that a fifteen-minute oral argument is not likely to change Judge Chin’s mind at this point.

However, if we accept that Judge Chin has likely made up his mind, it’s worth considering that his motivations for asking the question in this manner might be more “realistic” than “legalistic.” If that’s the case, it behooves an oral advocate to resist the urge to engage Judge Chin in an extended dialogue that emphasizes weaknesses in the case to other potentially-undecided judges. Instead, it may be better to answer the judge’s question as directly and succinctly as possible, and to immediately try to transition the conversation towards the case’s stronger points. If there is a sympathetic judge on the panel, it is frequently at this point that they may chime in with a question of their own, seeking to steer the dialogue in a direction that bolsters their own position.

We’ll find out in the coming months which way Judge Chin and the rest of the panel rule in the Brady case and it will be interesting to review the oral argument transcript to see how Brady’s lawyers responded to these tough questions. However, they rule, one thing is certain – Tom Brady is the greatest quarterback of all time, and this ridiculous case against him is a bunch of trumped up nonsense. Go Pats!

Make Sure Your Payroll is as Good as your Pork Belly

When I saw in the news this week that the team behind Michael’s Genuine Food and Drink settled a class action wage and hour lawsuit for nearly half a million dollars, I had two thoughts. The first was about how truly unbelievable the pork belly at that place is. Perfectly crisp in a sweet and sour kimchi glaze, it is truly one of my favorite South Florida restaurant dishes. I lingered on that first thought a while and wished my office was closer to the Design District mainstay.

The second thought I had was that this case would be a good subject for the brand new Hyman & Lewis blog, because the lawsuit Michael’s Genuine found itself embroiled in is a great example of how even a well-run operation can face exposure from the tricky contours of the Fair Labor Standards Act (“FLSA”). The class of plaintiffs in the suit consisted of sixty employees of the restaurant who asserted that the restaurant failed to properly handle tips paid to servers and failed to pay tipped employees appropriate overtime wages. The settlement means that the specifics and accuracy of these claims won’t be fleshed out in a court of law, so I won’t speculate about what the restaurant did or didn’t do wrong. Instead, I’ll take the opportunity to provide a few “tips” for employers to stay on the right side of the FLSA with respect to tipped employees.

I often hear people say that minimum wage is lower for waiters and waitresses because they earn tips. That’s not entirely accurate. State minimum wage (and overtime) requirements apply equally to tipped and untipped employees, but an employer can claim a “tip credit” for money that servers earn in tips. The amount of the tip credit is set by state law, and some don’t allow it all. In Florida it is $3.02 per hour. So for example, with Florida’s minimum wage of $8.05 per hour, an employer can pay servers and other tipped employees $5.03 per hour in wages IF AND ONLY IF the employee has earned enough in tips that their take-home pay equates to at least $8.05 per hour when added to the portion paid by the employer.

For employees who work more than forty hours in a week, Florida’s overtime minimum wage is $12.80, but the same tip credit applies. So employers claiming the tip credit must pay at least $9.78 per hour for overtime AND ensure the employee makes enough in tips that their take-home pay adds up to $12.80 per hour. To be clear, it is not OK to pay employees $5.03 per hour for overtime work, even if their wages with tips add more than $12.80 per hour. No, it’s also not OK to pay employees $7.54 (5.03 x 1.5) for overtime work.

When tips are paid by credit card, employers are allowed to deduct up to 2% from the tips to reimburse costs for credit card processing, BUT they can only do this if the deduction does not bring the employee below minimum wage. Also, they can only do this if they are actually charged 2% for card processing. They can’t make any “processing” deduction for cash tips.

Tip pooling arrangements are another hugely problematic and poorly defined area of FLSA. Many cases involving failure to pay minimum wage claims arise as a result of employees’ tips being redistributed so the tipped employee earns less than the hourly minimum wage. Even if everyone is paid minimum wage, employers can still run afoul of FLSA by including employees who don’t customarily receive tips in the tip pool. This week, the 9th Circuit Court of Appeals issued a ruling against the Wynn Casino in Las Vegas, holding that the casino improperly divvied up tips to kitchen staff and casino floor supervisors. The 9th Circuit held that this was improper even though the casino paid all its employees more than the minimum wage and wasn’t claiming any tip credits. There was also an allegation in the Michael’s Genuine lawsuit that money was taken from the tip pool and improperly allocated to cover lost and broken inventory. The common thread of these cases is that, minimum wage issues aside, tips are the property of the tipped employees and can’t be allocated by employers for other purposes.

Every employer should regularly audit their payroll to ensure they’re properly complying with wage and hour law, but it is especially important for those in the hospitality and restaurant industries. If you have questions regarding tip pooling, tip credits or restaurant payroll, consult with qualified legal counsel and make a small investment in shoring up your process to avoid large liability exposure down the line.

If you have questions regarding the Fair Labor Standards Act (“FLSA”), or another employment issue, please contact us.