State Statutes May Drive 2014 Increase in Wage and Hour Class Actions

New 2014 IRS guidelines regarding so-called service charges or mandatory tips could buttress the ongoing growth in the number of wage and hour class action lawsuits filed by service employees as a whole.

The new rules on mandatory service charges and their affect on employee wages took effect Jan. 1. Under the new guidelines, when an employer institutes a mandatory gratuity or tip of a set percentage on a customer bill, it counts as a wage unlike those freely given by consumers.

This impacts overtime laws because time-and-a-half wage multipliers must now account for those mandatory service charges or customer charges whether over the course of an 8+ hour day or a work week that spans more than 40 hours. In various states, it could also affect workers in states where tips can be counted toward minimum wage where the service charges would not apply, according to wage and hour lawsuit attorneys.

Wage and hour litigation increased by a significant percentage in 2013, perhaps because of more stringent statutes protecting service industry employees in large states like California, New York and Florida, but also because of increased publicity regarding the actual language that governs overtime pay and what payments constitute wages. Parallel efforts by the Equal Employment Opportunity Commission are also raising the profile of employment lawsuits.

The EEOC has been given a sort of carte blanche to resolve employment discrimination complaints quickly before they turn into lawsuits. Similar growth in complaints by whistleblowers may grab even more headlines; in certain cases they receive a percentage of the penalty the government obtains from a company and they can range into the millions of dollars.

As a result of the increasing publicity, more service employees are becoming aware of their rights, and the most important in 2014 will likely be the IRS definition of a service charge and the potential for wage and hour class action lawsuits.

If you think that you have been kept from earnings you deserve because of violations of these rules, you may have legal options available to you. Learn more and submit your information at the Service Charge, Wage & Hour Class Action Lawsuit Investigation. It entitles you to a free consultation with one of our partner wage and hour lawsuit attorneys. The changes in the laws and regulations require careful legal action, so be sure to work with professionals with experience in these types of cases.