BREAKING NEWS!! New Ruling on Tips in Colorado!!

July 7, 2017

BREAKING NEWS!! New Ruling on Tips in Colorado!!

We recently became aware of a Court case decision that directly impacts the restaurant industry. It changes the rules on tips depending on if you take the tip-credit or not. Due to the complexity of this issue, it is important for you to read the ENTIRE story before acting. You may or may not wish to make any changes based on the information provided. However, if you do choose to make any changes, we recommend that you seek council prior to doing so.

On June 30, the Tenth Circuit Court of Appeals decided a case concerning tipped employees that sets a new legal precedent for employers in the State of Colorado. In Marlow v. The New Food Guy, Inc, the Court decided in favor of the employer, closing the door on claims that tipped employees have a “property right” to tips paid as a result of customer service, as long as the employer pays the employees FULL minimum wage or more. This decision rejects the Federal Department of Labor rule stating tips are the property of the employee and outside of a legal tip pool, the employer can’t direct where that money goes.

The CRA recently told me I couldn’t share tips with the back of house, why has this changed?

Last year, the Ninth Circuit Court of Appeals ruled in a very similar case (Oregon Restaurant & Lodging Association v. Perez) that tips were the property of the employee and outside of a legal tip pool, the employer couldn’t direct where those tips went. Additionally, the Court determined that tips could only be shared with regularly tipped positions and not the back-of-the-house staff, regardless of the hourly rate paid to tipped employees. Because this was the most recent ruling on tips and tip pools, the CRA and labor attorneys suggested following the Ninth Circuit’s decision.

What has changed is the fact that restaurants in Colorado (and several other states) are subject to the Tenth Circuit Court of Appeals and that Court has just handed down a new ruling disagreeing with the ORLA case. This new ruling changes how restaurants in Colorado may want to handle tips and tip pools.

What does this mean for restaurants in Colorado?

As long as tipped employees are paid full minimum wage (not tipped minimum wage) or more by the employer, the employer can decide how tips are distributed. This means that in Colorado tipped employees currently must make $9.30 an hour and $13.95 for overtime, or more (note- this rate will increase every January 1). If your tipped employees are paid at least this much, then you as the employer can decide how tips will be distributed and can share them with the back of house or managers, and the business can even keep some or all of the tips. Keep in mind, however, that we still have the requirement in Colorado statute, C.R.S. § 8-4-103 (6), allowing an employer to assert claim to, right of ownership in, or control over tips only if the employer posts a printed card at least 12 inches by 15 inches in size with letters one-half inch high in a conspicuous location at the place of business. The card must contain a notice to the general public that all tips or gratuities given by the patron are not the property of the employee, but instead belong to the employer. If the employer does not post a printed card detailing tip ownership as described above, the employer may not exert any control over tips designated for an employee under Colorado law. For those of you who do business over the phone or email, such as the catering business in the Marlow case, you may want to include this same notice in your catering agreements as well.

Is this permanent?

We don’t know. A group of restaurants and trade associations (including the NRA) have petitioned the Supreme Court to take up the ORLA case. This case now directly contradicts it. If the Supreme Court decides to take up this issue and rules in a certain way, restaurants will have to go back to only sharing tips with regularly tipped employees. Currently, it is not clear if the Supreme Court is even going to take up the case and if they do, it could be years before there is a ruling.

What do I need to do now?

For all of these reasons, you may want to take a more conservative, wait-and-see approach and keep your business model as is. However, some employers may want to adopt the above-outlined steps. This is the time for you to reach out to your business advisers to determine the best solution for you and your employees.

If you have any questions about tip pools, wage and hour issues, or questions about this new precedent, please contact Nick Hoover by email or call 303-830-2972.

Pinnacol Pointers: Keeping Your Workers Safe Behind the Wheel

July 1, 2017

According to the National Census of Fatal Occupational Injuries from the U.S. Dept. of Labor, Bureau of Labor Statistics, employers experienced 4,836 fatal workplace injuries in 2015, and roadway incident fatalities claimed more than one-quarter of the total. You can protect your organization’s most valuable asset — your employees — by promoting safe driving practices.

In worksite procedures and workplace signage, encourage these 10 safe driving practices to reduce the risks faced by your employees when they get behind the wheel:

  1. Inspect the vehicle. Check the lights, gauges, brakes, horn, tires, windshield wipers, fluids, belts and mirrors.
  2. Secure cargo such as tools and other equipment.
  3. Buckle up. A seatbelt reduces risk of death by 45 percent in cars and by 60 percent in light trucks.
  4. Drive defensively.
  5. Avoid distractions. Put down the cell phone and do not text.
  6. Don’t wear headphones or earbuds while driving.
  7. Avoid impairment.
  8. Avoid aggressive driving.
  9. Maintain a safe distance between moving vehicles and slow down during inclement weather.
  10. Take security measures. Carry vehicle information at all times, secure the vehicle and avoid parking lots with poor lighting or sightlines.

 

Pinnacol Resources

Visit Pinnacol’s Knowledge Center page on driving safety. The many resources on this webpage for policyholders include a sample driving and traffic violation policy, defensive driving quizzes, a vehicle safety checklist, seatbelt safety posters in English and Spanish, a short defensive driving video, and additional tools and tips to enhance the motor vehicle safety of your employees. Pinnacol’s website also lists online, interactive safe driving training available from J.J. Keller. Or, contact Pinnacol’s Safety On Call online or at (303) 361-4700 or (888) 501-4752. Our Safety Services team stands ready to answer questions and help keep your workers safe on the road.