file0001835967537The Connecticut Supreme Court, in a unanimous decision that will be officially released April 4, 2017, has ruled that employers may not use the “tip credit” for pizza delivery drivers and therefore, the employees must be paid the standard minimum wage.

You can download the decision in Amaral Brothers, Inc. v. Department of Labor here.  The decision is no doubt a disappointment to employers who believe that the Connecticut Department of Labor’s regulations in this area far outstretch the plain language of the applicable wage/hour statute.

The case arises from a request by two Domino’s franchises for a “declaratory ruling” from the Connecticut Department of Labor (DOL) that delivery drivers are “persons, other than bartenders, who are employed in the hotel and restaurant industry, …who customarily and regularly receive gratuities.” The request arises from Conn. Gen. Stat. §31-60(b), which has been amended over the years.

Why would the employer make such a request? In doing so, the employer wanted to take advantage of the “tip credit”, in which employees are paid below the conventional minimum wage, but his or her salary is supplemented by tips from customers.

Originally, as noted by the employer’s brief to the Court: “The DOL denied Plaintiff’s Petition for the following stated reasons: (1) the regulations were valid because they served a remedial purpose, were time-tested and subject to judicial scrutiny…; and (2) the only act of “service” was handing the food to the customer at the customer’s door and so delivery drivers’ duties were not solely serving food as required under Regulations of Connecticut State Agencies § 31-62-E2(c). The DOL’s decision was that only employers of “service employees” as defined by the DOL could utilize the credit, and Plaintiff’s employees were not service employees.

A lower court upheld the DOL’s conclusions “agreeing that the regulations were ‘reasonable’, ‘time tested’, and had ‘received judicial scrutiny and legislative acquiescence’. The court also determined that the ‘minimum wage law should receive a liberal construction.'”  (You can also view the DOL’s brief to the Court here.)

The Connecticut Supreme Court upheld the Department of Labor’s interpretations here finding that the regulations issued by the agency were “not incompatible” with the enabling statute.  In doing so, the Court noted that this is a bit unusual because the employer was contending that the regulations were originally valid when issued, but repealed by implication when there was an amendment to the statute at issue.

The Court’s decision traced the origin of the tip credit in a portion of the decision that only lawyers will love. But then they get to the heart of the matter: “It was reasonable for the department to conclude that the legislature did not intend that employees such as delivery drivers, who have the potential to earn gratuities during only a small portion of their workday, would be subject to a reduction in their minimum wage with respect to time spent traveling to a customer’s home and other duties for which they do not earn gratuities.”

While the court’s decision directly implicates delivery drivers, it only impacts those employed directly by the employer (see also: UberEats, GrubHub etc.).  Nevertheless, in upholding the DOL’s interpretation here, the scope of who falls within the tip credit at restaurants is going to be further challenged in the courts.

Before employers make any further conclusions, Connecticut businesses should also be aware that the scope of the tip credit and of tip pooling is being debated at the federal level as well.  The National Restaurant Association has joined many others in asking the U.S. Supreme Court to hear a case on the subject. We should hear shortly whether the Court will accept such a case.

The Court’s decision is yet another reminder that restaurants in Connecticut should review the situations in which the tip credit is being utilized. Issues regarding tip pooling should be reviewed as well.  This case doesn’t answer all the questions that come up in the restaurant context. But in terms of figuring out the scope of the law, it helps to answer (albeit in a manner not helpful to employers overall) some outstanding questions.

And so, the Case of the Little Pepperonis ends with a whimper.

After settlement discussions over the late summer, the pizzaria owners who had sued to state regarding enforcement of child labor laws quietly withdrew the case in late August 2010.  No word on whether the children will be allowed to assist their parents in the pizza place on a going forward basis though presumably the state will continue to enforce its labor laws

The Hartford Business Journal reports that the attorneys for the pizzaria owners and the state have resolved the matter "amicably".

As I indicated back in July, the owners had a tough road. And they likely saw that.

Of course, the case generated tons of publicity and one wonders how that impacted the pizzaria’s bottom line.

Remember the federal case of the pizza restaurant owners suing the state to allow their children to be able to learn the pizza business through observation and participation? Part of their case involved a challenge to the constitutionality of the state’s child labor laws. 

It has been over two months since we’ve heard much about the case.

It turns out that the parties are in the midst of negotiating a possible settlement and have agreed to have the case stayed (i.e. put on hold) while those discussions are ongoing.

According to a memorandum from the Court (download here), the court held a conference on July 20th in which they notified the court that they are making attempt to resolve the matter outside of court. If the matter is resolved, they are to notify the court of that fact.   As of today’s date, the matter remains stayed and no word on a settlement has been reported.

Are the owners of a pizza of the pizza restaurant who filed suit challenging the state’s child labor laws making a mountain out of a molehill?

A new report by the Advocate newspapers this week suggests that is the case.  It’s worth the read.  It’s something I’ve been wondering about as well because what was missing in the media reports was a detailed description of the actual action by the Connecticut Department of Labor. Absent from the reports was any suggestion, for example, that the state was ready to bring a lawsuit or levy fines against the restaurant.

The Advocate piece is one of the first reports that has looked at what the state Department of Labor’s actions havPhoto courtesy of Library of congresse been. Indeed, it is hard to believe that the state was going to take any action against the pizza place owners and the report challenges the very notion that there was a grand "investigation" as has been suggested in earlier reports:

In early May, a DOL officer appeared at Grand Apizza to inform the Nuzzos it’s illegal for minors under the age of 16 to work in restaurants in Connecticut. The Nuzzo kids are 8, 11 and 13. The officer represented the DOL’s Wage and Workplace Division, which investigates potential violations of child labor law. According to director Gary Pechie, protocol requires the agency assess the severity of allegations. If, say, a child is alleged to be using a wood chipper, an investigation is launched. If, say, a minor is said to be working in a pizzeria, which is relatively less hazardous, then his agency moves to “educate and inform,” Pechie says. That was the case here. The agent’s goal was to inform the Nuzzos of the law. There was no investigation and no penalty. It was like a traffic cop pulling you over for speeding and then letting you off with a warning.

Indeed, this could be another roadblock for the lawsuit itself. Without any real case or controversy, courts are reluctant to merely rule on the legality of a law.  The Advocate reports that

Given there was no investigation and no fine was levied, some are saying this lawsuit is an expression of the current anti-government furor. You can see this in media stories that repeat uncritically a key phrase — that the state is “prohibiting the Nuzzo children from learning the family trade.” Strictly speaking, the state makes no such assertion. Others say the lawsuit is political. Reid Maki, of the Child Labor Coalition, says a primary belief among conservatives is that children are subject to their will. “The odds are against [the Nuzzos], but theoretically, the courts could go with the rights of the parents.”

I am quoted in the article as saying that the parents have a "tough road" ahead because of the rigid contours of the state’s labor laws.   That’s certainly the case.  Challenges to child labor laws on constitutional grounds have a high threshold to cross.  The parents may know that, though, and — as their attorney suggested in last week’s interview with NPR — may be seeking a quick settlement.

That said, the lawsuit has brought legitimate questions of the state’s child labor laws to the public’s attention.  Should there be a limited parental exception? Are our laws too rigid? Are there changes that should be made? What IS the right age for kids to work? 

These are all good questions to ask; it is just that the parents in this case may find that these questions may be better answered by the General Assembly, than the courts.

This morning, I served as a guest on the terrific "Where We Live" program that airs daily on WNPR.  You can listen to the broadcast here.  It’s difficult to recap a one-hour broadcast in a short blog post so here are a few of my random observations and thoughts after today’s session. 

  • To some callers, the issue of child labor is an educational one — namely kids should be allowed to work so they get can understand the value of money and develop a strong work ethic.  Indeed one caller talked about how he had his kids (including an 8 year old) working on a brownfields site with machetes clearing land.  But lost in the conversation is the difference between giving kids some experience (fishing, for example) and making them do tasks we’d commonly view as work.  Where is the line to be drawn?
  • It remains to be seen whether a "parental exception" to child labor laws is something that will have any political backing in next year’s session. Representative Linda Scofield (D-Simsbury) called in to say that she might try to introduce something again but until more legislators view this as a priority, it’s hard to think that this will gain any traction.
  • Do you legislate to protect the worst-case scenarios even if a few incidents don’t really merit government intervention? So far, Connecticut has taken a strong approach only carving out some limited exceptions. 
  • Are 13 year old babysitters really violating state law?  The state’s website suggests yes, but that would put a lot of babysitters out of business. In the real world, these types of incidents are not policed by the Department of Labor. 
  • What you didn’t hear on the broadcast is that the computer system between the host and producer was down.  This led to the producers writing caller names and towns on paper and taping them to a window (see the picture above). The fact that you couldn’t tell this was going on is a testament to how good the host, John Dankosky, is.
  • Never underestimate the number of people who listen to NPR; I’m truly amazed at how many people tune in for a 9 a.m. show (replaying at 7 p.m.).

So what do you think? Are the state’s child labor laws too strict? Or do they strike the right balance between protecting kids and keeping them safe, and ensuring that they get some experience when they are older?

(Here are some photos taken by Chion Wolf from today’s session. My sincere thanks to her for permission to use these photos. )

Want to know more about the state’s child labor laws? I’ll be live in studio on Wednesday, June 23rd for the WNPR broadcast of Where We Live and we’ll be talking about the laws in the area and what’s being done to see that those laws are enforced. 

It’ll air at 9 a.m. EDT with a rebroadcast at 7 p.m. 

This will be the third time for me on the show and I’m very excited to be a repeat guest (with my own profile page on the WNPR website too!).   If you don’t listen regularly (or are outside the listening area), you can listen online to the broadcasts or any of the past episodes.  John Dankosky (the host) and his crew routinely provide a great extended perspective on issues of note and I expect tomorrow’s broadcast to be no different.   

Oh, and what does pizza have to do with child labor laws? Well, there’s a recent case that explains it all as I’ve previously covered in a prior post.  

So listen up and feel free to e-mail or tweet comments to the show. 

Two parents have recently sued the Connecticut Department of Labor, asking the court rule that the child labor protection laws should not apply to situations such as theirs where they want their own kids to work in the family pizza place.  Courtesy Morguefile "pizza"

The Connecticut Law Tribune has a good recap of the matter thus far.  I commented on the case last week for  NPR is working on a story about the lawsuit as well.

The issue in a nut shell is this. Federal labor laws have several exemptions to the child labor rules that allow kids under the age of 14 to work to deliver newspapers; perform in radio, television, movie or theatrical productions; work in businesses owned by their parents (except some hazardous jobs) and perform babysitting and other minor chores around a private home. 

But Connecticut has its own set of rules, primarily set out in Conn. Gen. Stat. Sec. 31-23 that sets a higher floor.  While there is a provision in Sec. 31-23(c) that states that, "No provision of this section shall apply to agricultural employment, domestic service, street trades or the distribution of newspapers", it cannot be said that any exemption applies to family businesses. 

So how are the parents trying to get around it? By claiming that their constitutional rights are being infringed. Whether or not they are successful, there is another legal path also available to the parents — get the law changed.

In many cases, our state’s laws in the areas are over 60 years old (and date back even further in some instances).  Indeed, the laws in this area are so old that one provision still prohibits minors from operating elevators! 

But one of the problems in this area is drafting a law to limit the abuse of kids while still affording parents the ability to raise and teach them as they deem appropriate. But since federal laws have work for many years, it seems like a challenge that can be met in the next session.