Ikea’s Voluntary Pay Raise Experiment Deemed a Success

This photo taken Wednesday, June 3, 2015, shows an IKEA store in Miami. (AP Photo/Alan Diaz)
This photo taken Wednesday, June 3, 2015, shows an IKEA store in Miami. (AP Photo/Alan Diaz)

June  25, 2015– In March of 2015 this forum reported that regardless of the contentious minimum wage battles that have been plaguing the City, State, and Federal governments this year that some major corporate employers were voluntarily implementing pay increases for their hourly workers. (http://newyorkovertimelaw.com/blog/10-companies-that-have-vowed-to-raise-their-minimum-wage/)  Ikea, the furniture giant,  was one of the employers on that list.  The preliminary results of their voluntary wage experiment have been examined and what they reveal is dramatic and enlightening.

Ikea’s Chief Financial Officer, Rob Olson, has announced that as a result of the positive consequences of their voluntary wage increases that they intend to implement a second round of such wage hikes.   Ikea’s pay increase structure was based upon the relative cost of living in the various jurisdictions where it maintained stores.  Stores where the cost of living was the highest implemented more aggressive increases, creating greater financial parity among its U.S. Employees.

Olson made the announcement after summarizing what Ikea saw as the noticeable benefits to their company following the  implementation of the increase.   The first was a dramatic decrease in employee turnover from prior to the increase.  This factor alone reduced the company’s spending on the recruitment and training of new employees, whereby, balancing the cost increases of higher salaries.  Perhaps less tangible but, maybe, more significant was what Olson cited as the ability to recruit more qualified candidates for open positions.   The increase resulted in a noticeable increase in the hiring of more qualified applicants, which resulted in better employees, according to Olson.

So, while others debate the positive and negative consequences of wage increases and their impact on corporate employers Ikea seems to have settled the question as to whether major employers can sustain the impact of wage increases for their lowest earners.  They, clearly, can.

To view the entire article: http://www.huffingtonpost.com/2015/06/24/ikea-minimum-wage_n_7648804.html

Los Angeles Becomes Largest City to Enact $15 Wage Law

“Los Angeles - Feb 9, 2014: View Of Hollywood Boulevard In Sunset” by David Castillo Dominici
“Los Angeles – Feb 9, 2014: View Of Hollywood Boulevard In Sunset” by David Castillo Dominici

June 11, 2015-While the nation debates the issue and large companies promise some movement on their minimum wage floor, the City of Los Angeles has acted, and acted swiftly.   Wednesday night, by an overwhelming majority, the City Council voted to increase the City minimum wage to $15 per hour.  While the measure still needs to be signed into law by Los Angeles mayor, Eric Garcetti, he has already indicated that he will do so without hesitation.

This increase makes the minimum wage in Los Angeles double the Federal Standard and on parity with only a few jurisdictions.   The size and visibility of the city make the increase historic.  Mayor Garcetti and Mayor De Blasio of New York City have have both been vocal advocates of this change, yet, New York City’s leader has not managed to garner enough support to accomplish this goal.   It remains to be seen if this change on the West Coast will prompt a similar response in the East.

While labor advocates have applauded the action, many large employers have renounced it as crippling to their profitability during a time when the economy is still fragile.  Overtures are already being made to engage in massive lay-offs or corporate relocations.  The impact on these employers may not be as significant as these companies would have the public believe as the increase phases in over the course of several years, with provisions to extend the commencement time for smaller employers.

While the impact of the increase is being debated labor advocates and businesses will be keenly focused on signs of the impact on the Los Angeles economy and how it relates to the rest of the national employment picture.

To read the entire story:

http://americasmarkets.usatoday.com/2015/06/10/10-an-hour-minimum-wage-passed-in-la/?utm_source=feedblitz&utm_medium=FeedBlitzRss&utm_campaign=usatodaycommoney-topstories

New York State Nail Salons Come Under Fire For Worker Abuses

Courtesy of Freedigitalimages.net
Courtesy of Freedigitalimages.net

May 21, 2015– On a daily basis, women, and often men, across the City of New York patronize one of 2,000 nail salons in order to treat themselves to grooming at the hands of professional manicurists. The customers, often financially middle and upper class individuals, shell out significant fees for these periodic treatments in luxurious salons by industrious workers skilled at the art of beautifying their clients’ nails through the art of manicure and pedicure. Despite the, sometimes, exorbitant fees paid New York City residents for this service, a recent study has revealed that many of the workers performing the pricey services have been subject to extreme wage and hour abuses at the hands of their employers.

According to a NY Times survey of 150 nail salons in NYC, “a vast majority of workers are paid below minimum wage; sometimes they are not even paid. Workers endure all manner of humiliation, including having their tips docked as punishment for minor transgressions, constant video monitoring by owners, even physical abuse.”

In addition to wage related employment abuses recent studies have revealed that salon workers are exposed to various, toxic chemicals associated with the trade without the benefit of proper training, proper safety equipment, sufficient ventilation, or a proper understanding of the hazards they are exposed to.

New York State, and New York City in particular, has the highest per capita of the, over, 17,000 nail salons found throughout the United States. With the high cost of living in New York, the $1.50 per hour that is estimated to be the prevailing wage, including tips, for these workers is far below any established poverty line anywhere in the country.

These abuses seem to disproportionately impact the immigrant population in New York City because it is immigrants that fill the majority of these positions. The two largest groups impacted are Asian and Hispanic immigrants. Many of these workers, despite being the subject of gross employment abuses fear recrimination or unemployment as retribution for hiring employment law firms to present their grievances.

So what does the future hold for these oppressed salon workers?  Is there a roadmap to relief from the onslaught of abuses they sustain daily?  The Salon industry does not seem poised to make meaningful changes on its own.  State Salon Licensing Boards and Government Agencies are currently overwhelmed with large caseloads offering no relief for these hard working employees.  The one thing that is certain is that until someone does more than just study the conditions for this large group of workers their lives will not improve.

McDonald’s Workers Stage Protests In Spite of Voluntary Pay Increases

The center of the wage controversy
The center of the wage controversy

May 7, 2015–  Earlier this year McDonald’s Corporation announced it would be voluntarily raising its base pay to $9.90 an hour.   This figure exceeds the current Federal and State minimum wage requirements.  While the fast food giant’s compensation also exceeds the base pay for numbers of large employers throughout the United States it is far below the increase sought by a vocal band of fast food workers that call themselves Fight For 15.

Fight For 15 is an emerging band of increasingly organized fast food workers seeking a base pay of $15 an hour as their minimum wage.  These workers make it clear that it is more than a matter of principle for them.   It is economics.   The group, through its video and literary campaign, have spotlighted full-time employees with several years of employment with McDonald’s, and similarly situated companies, that are unable to meet the most basic of household expenses.   Many of these full-time employees are on government assistance because their full-time pay does not exceed the established poverty line.   Fight For 15 is looking to dispel the notion that being on government assistance and lacking work ethic are synonymous concepts.  They argue they are just being undervalued and underpaid.

McDonald’s workers have announced their intention to stage a protest at the May 21st Annual Shareholder’s meeting to highlight the economic plight of the workers.  They intend to present a petition signed by, over, 1 million Americans calling for the pay raises they are seeking.  This would not be the first such protest by the group.

Meanwhile, McDonald’s is in the midst of increasing economic pressure from rising food costs, diminishing sales, and competition.  Announcements have been made to close a number of locations and to undergo a revitalization of the company into a more “progressive” burger company.  New CEO Steve Easterbrook has made verbal commitments to address training, pay, and benefits on an ongoing basis; however, with 420,000 workers nationwide he has been unwilling to commit to a, more than, $6 per hour increase per worker.  The economic impact of this dramatic increase on the company is unclear.

Workers and employers across the country are carefully watching the McDonald’s saga unfold. The impact of the changes, or resistance thereto, for such a large employer and industry leader will likely resonate far beyond the purview of the Golden Arches.

 

How Raising the Minimum Wage Can Impact Workers

April 23, 2015-2015 has been marked by political and media debate over the relative benefits and pitfalls of significant raises in the current minimum wage law.  While politicians on the Federal and state level propose and debate legislation on this important topic many major corporate employers have begun to undertake voluntary increases, ranging from negligible to substantial.  As 2015 proceeds the outcome of this legislation, these voluntary increases, and their economic impact will continue to be an issue of national discussion and analysis on both sides of the argument.

Dave Jamieson, of the Huffington Post, wrote a thoughtful article entitled “How Raising The Minimum Wage To $15 Changed These Workers’ Lives” which considers one position on the impact of raising the minimum wage for workers:

SEATAC, Wash. — In late 2013, voters in this airport town outside Seattle narrowly approved a groundbreaking measure setting a minimum wage of $15 per hour for certain workers. When the new law went into effect last year, Sammi Babakrkhil got a whopping 57 percent raise.

A valet attendant and shuttle driver at a parking company called MasterPark, Babakrkhil saw his base wage jump from $9.55 per hour, before tips, up to $15. Having scraped by in America since immigrating from Afghanistan 11 years ago, he suddenly faced the pleasant predicament as his co-workers: What to do with the windfall?

To read the remainder of the article: http://www.huffingtonpost.com/2015/04/22/life-on-a-15-minimum-wage_n_7107792.html?utm_source=Alert-blogger&utm_medium=email&utm_campaign=Email%2BNotifications

Mixed News For Employees As 2nd Fiscal Quarter Begins

Photo by David Castillo Dominici.  Image ID: 100157605
Photo by David Castillo Dominici.
Image ID: 100157605

April 9, 2015-U.S. workers, as they attempt to understand what is happening in the American job market, are being confused by mixed economic signals which, simultaneously, forecast an economic expansion and economic slow down.  For many workers these mixed economic signals have made financial planning for their family’s future a nightmare.

Last week’s economic indicators foretold of some instability in the employment sector.   For the first time this year unemployment claims increased over the prior month’s filings, indicating, potentially, that an increased number of Americans were out of work.  Similarly, the hiring numbers for new employees also indicated a contraction over the, more robust, prior six months. These two factors, in isolation, could be the signs of a real economic slowdown and trouble for working families that have not yet recovered from the depths of the Great Recession. However, it may be too early to judge the state of the economy based on these factors because the relative increases, and contractions, were not significant enough to demand panic, yet.  There could be a number of fluctuating components, from the weather, to increased eligibility for unemployment filing, that may have contributed to these alarming figures.   The real test of whether this is a trend, or an anomaly, will be the results of April’s figures in these areas.

Meanwhile, there appears to be some hopeful signs for American workers as some of the country’s largest employers have begun to raise their minimum wage, voluntarily, above the Federal and state standards.   Employers such as Walmart, McDonalds, and AETNA have all begun implementing these increases, with other companies, likely, to follow suit.  While the raises they have instituted are not close to the wages some labor groups and government officials have been calling for, they are a positive economic trend for employees.

For employees looking to improve their standard of living by seeking higher wages, within, or outside of their current positions it may be a difficult time to forecast what the remainder of 2015 will bring.  For many, perhaps, fear of a second wave of economic downturn will inhibit their willingness to leave the security of their current position for a new, higher paying job.   It may also impede their confidence in seeking an increase in wages in their current employment, if they are employed. The net result may be a kind of economic stagnation and paralysis that is the result of the insecurity caused by years of economic fear and struggle for American workers.

 

 

 

 

Papa John’s Drivers Win Wage Claims Against Franchisee

(Huffington Post)
(Huffington Post)

March 12, 2014–  When customers of Papa John’s Pizza Franchise, in New York City, were charged a mandatory $1.50 “service fee” they were, falsely, led to believe this was a tip for the delivery driver; however, it was kept, entirely, by the franchisee employer.  At least, this was among the allegations of the New York State Attorney General when he filed an employment lawsuit against the owner of five Papa John’s locations last year.

Last week, a New York State Supreme Court Judge agreed with the Attorney General when she ordered Papa John’s to pay, up to, six years in back wages, overtime, interest, and damages to these delivery drivers.  The court found that, in addition to keeping the “service charges”, the Defendant had utilized the delivery drivers to do numerous employee related tasks during their down time and, therefore, should have been compensated as employees. The court indicated that the tasks assigned were outside of the purview of what a delivery driver is expected to do.  The compensation and damage award is expected to exceed the sum of $2 million.

While the franchisee in this case has indicated an inability to satisfy the judgment, the drivers’ lawyers are considering whether the law will allow the franchisor, Papa John’s Corporate, to be held liable for the actions of the franchisee.  Last year similar labor cases held the McDonald’s Corporate liable for certain, egregious employment actions of their franchisees.

Cases like this will, undoubtedly, have both store owners and Corporate Franchisors examining their daily, routine labor practices with an eye on the possibility of future litigation.

To read more see: http://rhrealitycheck.org/article/2015/02/09/papa-johns-ordered-pay-almost-800000-wage-theft-case/

New York Food Workers Guaranteed Increased Wages

Photo by stockimages.  Stock Photo - Image ID: 100105597
Photo by stockimages.
Stock Photo – Image ID: 100105597

February 26, 2014- On February 24, 2015 the Acting Commissioner of New York State’s Department of Labor, Mario J. Musolino, announced the passage of certain dramatic wage changes which were, previously, proposed, studied, and debated for four months by the 2014 Hospitality Wage Board regarding the wages of tipped workers in the food and hospitality industries.  The direct impact of these changes is to increase the mandated, guaranteed wages for tipped food and hospitality workers.

Classically, workers in New York State that have relied, primarily, on tips for their compensation have been relegated to sub-minimum wages. Food and hospitality industry workers have relied on the benefit of the generosity of customer’s tips to offset the shortfall between their wage and the New York State Minimum guaranteed wage for all other workers.

Effective December 15, 2015 the NYS guaranteed cash wage for tipped workers in food and hospitality will be $7.50 per hour. This is the first such increase since 2011 when the standard for these workers became $5.65 per hour.

For New York City tipped food and hospitality workers the change allows for a $1 differential, or $8.50 per hour. This differential runs parallel to Governor Cuomo’s initiative to allow for a similar differential in the base minimum wage for all other New York City workers as compared the rest of New York State.

The Commissioner also committed to commence a study which examines the impact of the complete elimination of cash wages and tip credits in the food and hospitality industry in New York State.  The result of that study are expected later this year.

While the obvious impact of the measures are to increase the wages of tipped workers in New York State and New York City the ultimate true impact is not yet known. Currently, some food and hospitality spokespeople have indicated that the industry, in response to the Commissioner’s initiative, is examining a voluntary elimination of tipping for workers and the imposition of a service fee on all checks to consumers while transitioning workers to the State guaranteed minimum wage for all other workers.

First Analysis of Minimum Wage Increases Show Economic Promise

February 19, 2015–  Much of the debate surrounding an increase in the Minimum Wage is whether, or not, it will positively impact the U.S. economy. The initial analysis of the impact of the increases in over 20 states, which was written about in this column last month*, appears to indicate it has had a positive impact on the overall economic picture, albeit small.

Economists reported an, overall, increase in Labor force wages by .045%, in January, partially due to the substantial commitment of a number of states to these hourly wage increases. Morgan Stanley reported that 1.5% of the workforce was impacted by the increases in 21 states.  While this percentage is, actually, substantial it did not have a greater positive result on the economy because the increases in wages, themselves, were not substantial enough to have an impact when spread out over the entire wage pool.

Further commentary by leading economists seems to indicate that the economy was also helped by a continued increase in the number of laborers in the workforce. The Department of Labor reported the biggest three (3) month increase in 17 years, possibly, ending a trend towards months of alternating progress and set backs. There were no indications, whatsoever, that in the markets where wages were increased that the increases in hourly wage lead to layoffs, contractions, decreased profitability, or corporate re-locations as compared to jurisdictions with lower hourly wages.

There does seem to be a building forward momentum in the economy and the job sector. This increase in opportunities will continue to thin the unemployment ranks and should have a natural inclination to raise wages in the marketplace as competition heats up. The lurking danger is that as new higher paying Managerial opportunities are created they will have the tendency to demonstrate net increases in the wage pool figures and these increases may be used by opponents of mandated minimum wage increases as justification that such legislation is not needed.

What is needed as the economy continues to evolve and emerge from the Great Recession is an isolated, detailed analysis of workers and wages at the minimum wage level. By applying this analysis the most needy sectors of the workforce will not suffer from having their stagnation masked by members of the workforce on the more affluent segment of the labor force.

Yet to see an increase in your pay rate after the minimum wage increase? If you are making less than the state minimum wage in New York, contact the wage attorneys at Neil H. Greenberg and Associates for a consultation at 866-546-4752.

*To view the article written in this column last month, click here.

10 Tips on How Employers Can Avoid Lawsuits

Each year, thousands of employment-based lawsuits are filed, and more money is being awarded to claimants (according to the EEOC). Most employment-based lawsuits fall within one of the following ten categories.  Below are some tips to help you avoid getting sued by a current or former employee.

  1. Occupational Safety and Hazard Act (OSHA)

Every worker deserves a safe environment in which to make a living. If an employee reports a hazard, take care of it quickly, and warn all employees to avoid the hazard in the meantime.

  1. Equal Employment Opportunity

Employees have a number of federally protected rights that were created to ensure a discrimination-free work environment.  Avoid discrimination by working with an attorney to create discrimination policies and procedures.  Regularly review these procedures with all managers.

  1. Minimum Wage

According to the General Industry Minimum Wage Act, employers must pay all employees in New York State, including most domestic workers, at least $8.75 per hour (for tipped workers, they should be making this amount or more on average when you add in tips).

  1. Overtime

New York labor laws require an employer to pay overtime to employees, unless otherwise exempt, at the rate of 1½ times the employee’s regular rate of pay for all hours worked in excess of 40 hours in a workweek. Almost all hourly employees or salaried employees making less than $24,000/year are eligible for overtime.

  1. Paid Time Off (PTO)

In New York City, every employee accrues a minimum of one hour of time off for every 30 hours worked (for employers with fewer than five employees, this time is unpaid). Many employers offer more robust PTO practices which must be appropriately tracked and honored.  Any employee should be paid for unused vacation/sick days at the end of their employment.

  1. Uniform/Supply Reimbursement (if applicable)

The State of New York requires employers to purchase or reimburse employees for uniforms, unless the uniform could be considered normal, everyday clothing.

  1. Wage Garnishment

New York State wage garnishment laws (known as “income execution” laws) generally provide that creditors with judgments can only take up to 10% of your gross wages, although certain exceptions to this rule exist.  Employees may not be penalized (refused promotions, laid off, etc) for current, past or pending garnishments. Failure to properly garnish wages may result in fines.

  1. Family Medical Leave Act (FMLA)

Under the FMLA,  eligible and approved City of New York employees are permitted to take up to a maximum of 12 weeks of paid and/or unpaid leave in a 12-month period to care for an immediate family member or for the serious illness of the employee. During this time, employees may not be fired or otherwise harassed.

  1. Employment Retirement Income Security Act (ERISA)

Employers have the fiduciary obligation to provide promised benefits and satisfy ERISA’s requirements for managing and administering private pension and welfare plans.

10. Posters

Posters displaying notifications of workplace rights and employer rules and policies must be on display in a conspicuous area so that employees are able read it. Failure to do so will likely result in fines.

 

If you or someone you know, needs advice from experienced employment attorneys, contact Neil H. Greenberg & Associates. Our attorneys have the skill and experience necessary to help you overcome your legal problems.  Call us today to schedule a consultation: 516-228-5100.