In a recent court decision in the restaurant industry -- with implications for all businesses that rely upon tipped employees -- a California state court judge awarded more than $100 million to a class of former Starbucks "baristas."

The award gave restitution to these customer service employees for tips illegally paid to shift supervisors through the company's tip-pooling practice.

In summary, the case stated that shift supervisors were agents of the employer and therefore should not have shared in tips from patrons in tip jars located at the registers under California law.

While the plaintiffs in the case relied upon state law, employers should be aware of the issues affecting tipped employees under the federal Fair Labor Standards Act.

The Act offers a tip credit to employers, which allows them to combine direct wages and tips to achieve their minimum wage obligation.

Tips may be redistributed through the pooling of tips among employees who customarily and regularly receive tips.

An employer may lose its eligibility for a tip credit if employees who share in the tips are determined to be employers or employer agents, including those who act in a managerial capacity, ranging from holding an ownership interest in the company to directing the work schedules of other employees.

-- Chris Ramsey
Morgan, Lewis & Bockius
cramsey@morganlewis.com

Most employers may not know that courts began applying the Computer Fraud and Abuse Act to civil cases a few years ago.

What that means is that employers can now collect damages in court when employees cause damage to a computer system.

Employers typically file civil lawsuits under the act when employees or former employees access computer data to gain a competitive edge at their new place of business.

But the law also enables employers to get restitution for a wide scope of other damages, including for destruction of proprietary information and for knowingly downloading a program that damages computers or computer networks.

To recover damages the employer may sue in federal court, and the damages must be at least $5,000.

Possible damages include:

• Time and resources spent to hire a computer expert

• Cost of hiring the expert to determine and remedy the damage

• Cost of hiring the expert to create a method to prevent future damage

• Loss of confidential or trade secret information.

Employers cannot include loss of revenue and good will or interference with customer relations in its calculation of damages.

-- Jane Lewis
Volk Meyer Unkovic & Scott
jlv@muslaw.com

With a traditional health insurance plan, a company pays monthly premiums to the insurance carrier, and the carrier pays for treatment costs and medical claims.

If the claim costs exceed the premium amounts collected from the employer, the carrier pays the difference.

More and more employers are reducing their health insurance costs by turning to self-insured plans.

Under a self-insured arrangement, the employer incurs the expenses for treatment costs and medical claims.

The employer pays a specific amount to the insurance carrier to act as the claims administrator, process the employees' claims and manage the benefit plans.

By not asking someone else to assume the health insurance risk, a self-insured plan typically lowers the overall program costs.

Self-insured plans typically work best for employers with at least 500 employees, because the larger employee population enables the employer and carrier more accurately to predict the expected claim costs.

A large organization also can make the most use of the cash flow advantages created through self-insurance.

To self-insure, employers should find a health insurance carrier that can provide administrative support to a wide variety of health care plans and innovations, including health savings accounts, health reimbursement accounts, out-of-network options, preventive care and wellness programs.

The carrier also should be able to provide fast and accurate claims processing, courteous service, periodic claim activity reviews and coordination of benefits when a spouse or significant other has other health-care coverage.

-- Stephanie Bernaciak-Massaro
UnitedHealthcare
svbernaciak@uhc.com