Working for Food? What the Law Says About Non-Traditional Methods of Compensating Workers

There are lots of reasons an employer might want to pay a worker or former employee in an unconventional way. It might be a marketing promotion, it might be an attempt to embrace cutting-edge currencies, or it might be a passive-aggressive expression of hostility. Whatever the reason, workers and employers alike should recognize that when work is compensated in anything other than cash, electronic payment (like a direct deposit,) or a negotiable instrument (like a check,) that compensation method has the potential to run afoul of the Fair Labor Standards Act. A knowledgeable Atlanta wage and hour lawyer can help you, as a worker, determine if the compensation you received complies with the law or not.

Some months ago, this blog covered a disgruntled Georgia employer who caught the attention of the U.S. Equal Employment Opportunity Commission for the non-traditional way it paid a fired worker’s final wages. The $915 payment arrived in the worker’s driveway, in the form of a wheelbarrow full of 572 pounds of “oil-soaked” pennies. That, plus a final pay stub with an expletive written on it, amounted to illegal retaliation, according to the EEOC.

More recently, news outlets focused on an unusual work arrangement at a fast food establishment in North Carolina. A Chick Fil A restaurant there posted to its Facebook page that it sought “volunteers” to work at its new “Drive Thru Express.” The so-called volunteers would receive “5 free entrees” for each one-hour shift they worked.

A for-profit business generally cannot escape its minimum wage and overtime obligations under the FLSA by labeling a worker as a “volunteer.” A worker may only volunteer their time compensation-free “to religious, charitable, civic, humanitarian, or similar non-profit organizations.”

What Employers Can Do in Terms of Providing Food as Compensation

At this point, you might say, “OK, so they’re not volunteers. Chick Fil A charges anywhere from $4 and up for its entrees. 5 works out to $20 per hour or more, so the employer is compliant with the law, right?

Actually, it’s not that simple. The Labor Department’s regulations say that wages, including overtime, must be made in “cash or negotiable instrument payable at par,” plus certain board, lodging, and facilities (in some circumstances.) And, while the law does allow some employers to include certain free meals in the total compensation package (for purposes of FLSA compliance,) the amount of that set-off isn’t the meal’s menu price, it’s the “reasonable cost” of that food, meaning the actual cost to the employer.

Obviously, the actual cost of a Chick Fil A chicken sandwich is something much less than its $4+ menu price. Forbes looked at restaurants and reported that they typically marked up menu items like salads and sandwiches anywhere from 250% to 400%.

Furthermore, the compensation-through-food method must be something the employer “customarily furnishes,” the employee must “actually receive” the meal, and must have accepted the meal free from coercion. In other words, no paying all your coworkers in cash and forcing you to accept payment in coupons for free french fries.

In short, if your employer has decided to pay you in something other than cash, check, or direct deposit — even if it’s tasty Chick Fil A entrees — then your employer may potentially have violated the law.

To get knowledgeable and experience-driven advice and analysis about your minimum wage or overtime case, look to the skilled Atlanta wage and hour attorneys at the law firm of Parks, Chesin & Walbert. We’ve helped countless workers to get what the law says they’re owed, and we’re eager to get to work for you. Contact us through this website or at 404-873-8048 to schedule a consultation.

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