Changing Policies and Practices? Don’t Just Question if it’s Legal, Question the PR Consequences

Over the past few days, while many were preparing turkeys or throwing out lettuce, the Boston Globe posted Trouble is brewing at craft beer darling Trillium.  The article is accessible here, and another article by Paste on the same subject is here, but the long and the short of it is that Trillium changed how it was paying employees, and employee’s aren’t happy. Without getting into the truth behind any of the allegations made by the employees, I think that there are two things we can focus on: 1) sometimes the PR of a change in policy/practice costs more than you’re trying to save by changing the policy or practice; and 2) there are specific factors that must be met when we use a tipped minimum wage.

CH CH CH CH Changes . . . .

There are a multitude of reasons why a company will change its practices relative to an employee practice or policy.  Sometimes it’s financial, sometimes it’s cultural, sometimes it’s efficiency based.  Whatever the reason, it’s important to recognize that many states require advanced notice of changes that could affect time and rate of pay—check your state laws or contact an attorney before you institute any changes in pay practices.  Additionally, while employers in most cases have the prerogative to change general policies and practices, having language in the company employee handbook that puts employees on notice that this could happen is best practices.

Using the Tip Credit

First, unsurprisingly, while under federal law you may be entitled to use the tip credit when paying employees that does not mean that using a tipped minimum wage is permissible under state law, or, that the amount you can use to pay a tipped minimum wage is the same.  Under federal law, known as the Fair Labor Standards Act or the FLSA, an employer can use a tip credit to meet the minimum wage for tipped employees when the employee receives sufficient tips to bring the employee’s hourly wage above the minimum wage.  Second, in order to use the tipped minimum wage under federal law, a number of factors must be met, including:

  • The amount of cash wage the employer is paying a tipped employee, must be at least $2.13 per hour (remember it could be more under state law);
  • The amount claimed by the employer as a tip credit cannot exceed $5.12 (which is why you must pay at least $2.13 per hour ($7.25 federal minimum wage minus $2.13 tipped minimum wage);
  • The tip credit claimed by the employer cannot exceed the amount of tips actually received by the tipped employee;
  • All tips received by the tipped employee are retained by the tipped employee; and
  • The tip credit will not apply to any tipped employee unless the employee has been informed of these tip credit provisions.

Back to Trillium

While the matters unfolding at Trillium could have legal consequences, what is at the forefront of everyone’s mind is the public relations.  From a PR standpoint, don’t just read the article, take a look at the comment section where current, former, and prospective customers are sharing their thoughts on the article and the employee’s statements.  Always remember that any policies that are instituted, whether for the long-term benefit of employees or for economic reasons for the employer, the way the information is presented, effects the perception of how information is received.  If you use a tipped workforce and have questions concerning best practices, or generally are considering changing your current policies and practices related to some form of employee relations, contact Tawny Alvarez in Verrill Dana’s Labor and Employment Practice Group to discuss best practices.

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