United States: 3 Biggest Workplace Law Concerns For Breweries And Brewpubs

Last Updated: December 8 2016
Article by Christopher Morehead

As virtually all startups and small businesses know, one of the surest ways to kill a promising enterprise is to get involved in costly litigation. Breweries and brewpubs are no exception. The current rise in employment litigation shows three primary types of lawsuits to which craft beer employers should pay particular attention to avoid getting in the crosshairs of a legal nightmare.

Craft Breweries Feel Growing Pains

The craft beer industry is growing at a remarkable rate. In fact, by the end of 2015, there were approximately 4,150 breweries in the United States, with more than two new breweries opening each day. It's estimated that approximately 450,000 employees currently work at breweries and brewpubs alone. And with craft beers continuing to increase in popularity, there are no signs that those figures will decrease in the foreseeable future.

But as the industry continues to realize spectacular growth, the number of employment lawsuits directed at breweries also continues to climb. In the last three years, court filings show that breweries and brewpubs have been involved in approximately 900 lawsuits, roughly 10% of which were employment lawsuits. The bad news is that these numbers increased significantly in 2016.

These figures are consistent across all industries, with employment lawsuits jumping 400% in the last 20 years. At present, almost half (42%) of employment lawsuits are brought against private employers with fewer than 100 employees. Notably, these figures do not include state and federal administrative agency charges or informal demands resulting in pre-litigation settlements, each of which can carry thousands of dollars in associated legal costs. There's a common belief that the craft beer industry, with all its charm and good vibes, is not subject to the virulent and costly nature of employment disputes. But as these filings show, workplace disputes are, in fact, a real and growing concern.

But what are the most common types of employment suits brought against breweries? And what should craft breweries, brewpubs, and similarly sized hospitality employers pay attention to this holiday season? Here are three main areas of concern.

Wage Claims

Craft breweries and brewpubs have been hit with scores of wage and hour lawsuits in the last three years, particularly claims alleging failure to pay all wages due at termination, and failure to pay overtime wages. To avoid such issues, craft breweries and brewpubs should implement several processes to minimize the risk of running afoul of what often amounts to a mere technical violation.

For example, in states that require all final wages to be tendered within one business day, and where a termination decision occurs rather spontaneously, it could be a good idea to suspend the employee for one or two days before termination. This will buy you some additional time to make sure the employee's final paycheck is accurate, and allows you to complete your investigation into the underlying situation to ensure termination is proper.  

With regard to overtime claims, even with the relatively shocking November 22, 2016 court decision blocking the Department of Labor's salary increase for "white collar exempt" workers (which would have become effective December 1, 2016), employers in the craft beer industry should nonetheless take this opportunity to revisit their overtime and compensation practices. While the regulation would have significantly increased wages for many restaurant and brewery managers, and could still be resurrected, the decision nonetheless reemphasizes the importance that employers ensure their employees classified as overtime exempt meet the "duties test."

Employers of all shapes and sizes have found themselves on the receiving end of wage claims for misinterpreting this requirement and mistakenly categorizing their employees as exempt. Craft beer employers that currently classify employees as exempt should take the time to make sure they don't make the same mistake.

Pregnancy-Related Claims

Pregnancy-related claims have also seen a major uptick in recent years. One of the most common pitfalls for employers has been failure to provide an employee with the same job duties upon returning from maternity leave. Breweries and brewpubs can get in trouble if they don't know whether they are subject to federal law. That's because the Family and Medical Leave Act (FMLA) requires businesses with at least 50 employees to restore an employee returning from maternity leave to her original job, or to an "equivalent" job, which essentially means the job cannot differ in terms of pay and benefits.

Even where breweries and brewpubs have fewer than 50 employees, however, many are nonetheless subject to state and local leave laws – which often have even more stringent requirements. For example, many states require that mothers be given the opportunity to work the same schedule they had before they went on maternity leave. This, of course, can cause tensions with other employees who worked those shift hours in the interim.

Another major pregnancy-related issue that could lead to legal liability relates to milk expression laws. More than half the states (28) have laws related to breastfeeding in the workplace. A common error employers make is failing to provide a "reasonable break time" for mothers to pump milk, or otherwise failing to provide such mothers a private area – other than a bathroom – that is shielded from view and free from intrusion of coworkers and the public.

While legislatures often provide "undue hardship" exceptions for smaller employers, the reality is that getting into a dispute with a mother needing to express milk at work is a no-win situation for any employer, no matter the size. Even if the employer can show a legitimate undue hardship, the brewery or brewpub is at risk of attracting negative publicity and diminished morale in the workforce, which can ultimately cost far more in lost sales or turnover costs than it would to accommodate the employee's needs.

"Contractual" Disputes Regarding The Employment Relationship

Court filings over the last three years show that another common employment lawsuit for breweries and brewpubs relates to contractual disputes governing employment relationships. There are myriad ways that breweries – whether new and small or established and large – can introduce contractual agreements into the workplace relationship.

For example, it is not uncommon for breweries that are just getting started to allow people to "volunteer" at tasting events, with the understanding that there could be an employment opportunity at the brewery at some point down the road. Even though this type of arrangement is often well-meaning, the reality is that the Department of Labor and similar state regulatory entities consider such "volunteers" to be employees, meaning they are entitled to be paid at least minimum wage.

Similarly, new breweries often mischaracterize workers as "independent contractors," when the government actually considers them employees. Getting this characterization wrong can lead to nasty and costly disputes with workers and government agencies alike over the appropriate payment of wages. To avoid falling into this trap, make sure you consult with legal counsel before designating any of your workers as a contractor. If part of your existing workforce already includes independent contractors, work with employment counsel to conduct a review and audit to make sure you're doing it right.

Finally, court filings have also shown an uptick in litigation over trade secrets and restrictive covenants, which are likely to come into play with brew masters who are recruited to a competing business. To protect proprietary information and trade secrets, you should strongly consider having employees sign confidentiality, non-disclosure, non-recruiting, and assignment of inventions agreements. For breweries interested in restrictive covenants, you should know that the laws governing such agreements can vary significantly by state, and should be prepared – or at least reviewed – by an employment attorney for enforceability.

Conclusion

While these types of employment disputes appear to be the most common in recent years, there is no question that breweries and brewpubs have also been hit with other kinds of claims. While it is impossible to predict each brewery's future, the more steps you take now to avoid potentially litigious employment issues, the more time you can spend winning your next gold medal brew, and less time worrying about costly personnel disputes.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Christopher Morehead
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.