On this episode of What The Hell Just Happened?!, CEDR CEO Paul Edwards sits down with Compliance Specialist and Digital Communications Coordinator Ally Dagnino to discuss a high-profile case in which an employer tried to pay employees with chicken sandwiches instead of dollars. Paul and Ally break down the compliance considerations associated with paying employees in trade for products or services (including why it is against the law to do so) and explain when employees do and don’t need to be paid for their time. Bottom line: you can’t pay your employees in chicken!
Links and Related Reading
Voiceover: You’re about to listen to another episode of What The Hell Just Happened?! Join Paul Edwards and his guests as they discuss and sometimes even solve some interesting HR problems.
Paul: And… I’m gonna go off the rails sometimes and talk about whatever I want!
Ally: Hey, Paul.
Paul: Hey, Ally. So, normally I say, “Hey, Ally, what’s up? And what’s…what’s…what the hell just happened in HR?” And then, you know, we take off and we start talking about something. But, this time, I already know what the hell happened in HR because it was all over the news, and it is in my home. It happened in my home state of North Carolina. So it caught my attention when it came across the news feed.
Ally: Yeah, I think this was a really popular one.
Paul: It kind of was everywhere, right?
Ally: It was everywhere. Yeah. So today we’re going to talk about the Chick-Fil-A in North Carolina offering up a handful of entrees per shift for volunteers to come in and work at the… at the Drive-Thru.
Paul: I love this story. I think it has intrigue and like, it’s… it’s just… it’s pretty cool. There’s a lot of different angles to this. And I, I just want to say that I think it was the guy was, or I don’t know if it was a male or female manager, but I think the manager was somehow well-intentioned on some… on some level.
I found the article, so I just want to read what they posted… “We are looking for volunteers for our new drive thru express.” The store in Hendersonville wrote this on a Facebook post and their offer to everybody was in quotations, “earn five free entrees per shift and that’s one hour… per one hour worked. Message us four for details”. And then, I’m just going to go ahead and read the second thing that they posted. You called it doubling down. [Laughs]
Paul: “We’ve had multiple people sign up and enjoy doing and have done it multiple times”. The store wrote in a separate post. “People who sign up for this choose it voluntarily”. And I want to focus on that for a minute, okay?
It seems to imply that, if you choose something as an employee voluntarily, if you agree to that, then it’s okay. Because we’ve all seen on television what contracts mean. And, I mean, I was forced to watch soap operas when I was a child and we all know how the law works from that.
Paul: And if you can get someone [laughs] to agree to it, then, you know, that’s what you need.
And I just want to say to anybody who’s listening right out of the gate, employees cannot give up their rights that are given to them by public policy, by regulation, or any… or any… in any other manner. So an employee can’t agree to a lower minimum wage. An employee cannot agree to work more than 40 hours and not get paid for overtime. An employee can’t agree to work under unsafe working conditions that, you know, underneath the OSHA rules. An employee cannot agree, an employee cannot agree, they cannot agree away their rights.
Ally: So, I just want to add something there because this is something we see all the time. And I think that sometimes people don’t realize that, as you mentioned, with the contracts: by “They can’t agree,” you don’t mean like, “Oh,” you know, “they can’t verbally agree and that doesn’t count.” Like, it does not matter if you have a contract drafted by a lawyer that says that this employee is waiving those rights. All that means is that you’ve got a bad lawyer. [Laughs]
Paul: Yeah. No lawyer would, no lawyer who knew anything about anything would draft this kind of thing. And, unfortunately, when you do draft something like that – and it’s usually someone, again, doing it themselves as a manager or an owner – if they do that, they are actually creating evidence and they’ve signed it. And now it’s in the record to show whatever governing body there is that would come in and investigate this or in a lawsuit. It’s just, it’s a gift. It’s a gift to the other side.
Let’s get back to this thing. Okay. So, look, people can’t be paid in chicken. How about that? You can’t pay people in chicken no matter how delicious those chickens may be. Don’t get me wrong, I love me a Chick-Fil-A sandwich. Although I do want to say that Bojangles spicy chicken biscuit is way, way better. I mean, I’m from the South, and we’re talking about North Carolina, and there’s a place they’re called Bojangles. Okay.
Ally: You heard it here first. [laughs].
Paul: Yeah. I wish they would come here, but they probably won’t.
Paul: But Bojangles, if you’re listening…[laughs]. Okay, the thing that governs this is the Federal Labor Standards Act and it says right in Section One that you can’t pay people in chicken.
Ally: Verbatim. [Laughs]
Paul: Verbatim. It says right there. So that was his first mistake, was trying to pay people in trade. Okay. This is just in trade. He’s trying to trade something for him. And I want to point out something that he kind of made two mistakes here. First of all, he put a public… he publicly stated, “We violate the Federal Labor Standard Act. We’re a giant company”, even though this was an independently owned franchise, “We’re a giant company and here’s how we violate both federal and state law when it comes to paying people”. That was a big mistake. And I think, on the other side of it is, if I’m not mistaken, a Chick-Fil-A entree is about $9 on average, $9 to $11. And I’m, you know, that’s $36 an hour to work the express drive thru. You add sauces to that and this is a good deal. I mean, I’m… it would it would have drawn me in.
Ally: You’re interested? [Laughs]
Paul: I’m interested. I would have… if we… if we were based in North Carolina, I would have been like, “Guys, I’m going to go to lunch right now,” and I would have gone in and got paid.
Ally: Paul’s moving back home so he can take this volunteer opportunity. [Laughs]
Paul: Mom, mom, if you’re listening, I’m on my way back home. Okay. So, back to the Federal Labor Standards Act. You have to pay people in… in dollars. And, you know, we see this in other ways. I mean, we see a lot of different kind of unintentional violations of the FLSA, or misunderstandings of how you can sort of trade something in return for something else when it comes to employees working. Another thing I see often is, I’ll give them a gift card or, you know, I’ll do something like that. I’ll give them products at a Medi spa. You know, we’ll do treatments. They’ll get their supplements and their shots and their stuff for free.
Paul: And it’s… it’s… you can’t do that.
Paul: You can’t trade it. You have to… you have to pay them. And then if you want them to buy it back from you at a discount, then that would work. So Chick-Fil-A could have said, “Look, we’re going to pay you minimum wage and a chicken sandwich”. And I think that would have been okay as long as they didn’t go into overtime because then you got time-and-a-half chicken sandwiches and that’s the chicken in it… Yeah, okay. I digress again. [Laughs]
Ally: So how many sandwiches is time and a half?
Paul: I don’t know any. And is it a large order of waffle fries or a small order or waffle fries when you go into overtime?
Ally: There’s so many factors to consider here.
Paul: There’s… there are a lot of factors.
Ally: But yeah, like you said, this comes up in our industry quite a bit. You know, the trade for product thing. And something that we see often is, “Hey, we got to have our monthly meeting. We’re going to have it during lunch time when they’re clocked out but I’m going to buy everybody lunch”. And that’s the exact same thing. It’s trade and it’s not going to fly.
Paul: Yeah, you have to pay… People have to stay on the clock for those meetings, by the way.
Ally: Mmm hmm. Mmm hmm.
Paul: I think we also see it kind of come up in… we worked with a lot of different industries that take their employees to conventions and the conventions usually are work-related in some way. You know, the American Dental Association puts on a big event or, you know, something like that. And they want to take their employees there and their employees can go and they can take CE’s or they can take courses and better themselves, learn more about certain, you know, systems and stuff like that.
I mean, there’s no other reason for them to go. It’s work has initiated this and says, “We’d like to go.” And, a lot of times, owners or managers think that the fact that you’re putting them up in a hotel, buying all their meals and paying for their airfare – and these things are usually in cool places, I mean, you know: Vegas, Miami and outside of Disneyland and all these other things – you… you may think that you don’t have to pay for the travel time under specific circumstances, or the time that they spend at the convention, but the fact is that you do.
Paul: Yeah. The hotel and stuff is just stuff you’re obligated to do. The meals, you’re obligated to do. Everything else that they named, you’re obligated.
Ally: Yeah. There’s actually, and I don’t know if you touched on this earlier, there’s several different factors, actually, that people – or that an event – has to meet for it to actually be qualified as a volunteer event that you don’t have to pay for.
Paul: Okay. So, now, a volunteer event.
Paul: Or volunteering.
Paul: So, volunteering events and volunteering are kind of, really – it’s the same conversation. A volunteering event would be – again, I’m going to do this in dentistry but I’ve seen medical practices do this – you do something in the community to treat the community for free. So it’s like a free treatment day. Everybody come in, you know, doctors are pulling teeth and referring to a specialist, you know. Everybody kind of bands together. The employees come in that day and work and do what they do. And the fact of the matter is, is even though… even though this is a big community event and the practice is not being paid by these patients who are coming in, you still must pay all of your employees and count those hours for that day. They can – and this goes back to the very first thing I said – they cannot sign something and volunteer away their right to be paid for the work that’s associated. What’s the other one? It’s like assisting, like, um…
Ally: It’s got to… it’s got to fall outside of work hours. So, if it’s something… you know… and, so, like an example would be if your team volunteered to, on a Sunday, as your… as your whole office together, hand out waters at a 5K or something.
Ally: That’s a volunteer event. You know… there… there’s… your office isn’t benefiting from it. You’re simply there as a group. You’re not bringing people into your office.
Paul: But let me flip it. What if they’re in their scrubs and you got a little tent set up and the water is sitting there and it’s advertising the dental practice?
Ally: I was just going to say… Or you’re like… it’s different if you’re handing out, you know, cards…
Ally: … or those little, like, goodie bags that you get…
Ally: … at the dentist. So there’s… you’ve got to be careful there with what you’re actually doing during the activity…
Ally: … to decide whether or not it will need to be paid.
Paul: You know, another way we see this come up, too, is in a… in a business where the business may be providing some service to a family member. So, look, everybody who’s… you may not know this but, in dentistry, this is common and we also see it in some of the other industries we work with. You will treat your employees for a discount or for free, and you may even extend that to close family members.
And, so, a close family member comes in to, say, a dental office for a cleaning or a procedure – let’s make it a procedure – and that means the dentist… and… and maybe the dental assistant’s dad is sitting in the chair. You still have to pay the dental assistant. You can’t have her clock out. She’s still doing her job, even though it’s a benefit to her and her family. Everybody wants their… them to clock out because, “Hey, I’m doing this treatment for free. It’s taking up chair time. I’m not seeing a patient.” But the fact is, is that the way the Federal Labor Standards Act works, there’s no… no… no allowment for you to get out of that.
Ally: Right. You have to pay for work being done.
Ally: And, at the end of the day, there’s work being done.
Paul: So, back to Chick-Fil-A. I mean, I.. I don’t want to judge but, I mean, I would have done it. But I, anyway, they… you got to pay. You can’t pay people in chicken. You’ve got to pay them in dollars. It’s time worked. It’s time counted. You know, there’s some other things here as we go… as we go out and we finish this.
You also missed putting them on your payroll, which means that they’re covered by workman’s comp. So they’re standing out there in the express and get bumped by a car. Homeboy would have to pay for that out of his pocket. He wouldn’t be able to make a work… a workman’s comp claim, there. And I could just go on and on and on. They lost all the protection… all the protections that are afforded to an employer when you onboarded an employee. So, I just want to be clear with everybody out there: it’s good when you bring someone in and don’t pay them under the table because there’s a ton of protections – both legally and just in your insurance and everything else – that really help you. So, you don’t want to fly underneath the radar. All right.
So, I’m hungry.
Ally: Yeah, that was a lot of chicken talk.
Paul: A lot of chicken talk.
Ally: I’m vegetarian so I won’t be eating chicken, but I am definitely hungry. [Laughs]
Paul: Oh no!
Ally: Thanks, Paul. That was a lot of really good information about a very interesting article. I think this one got a lot of traction, so it’s cool to hear some feedback from a HR perspective.
Paul: Yeah, yeah. I’m headed to the drive thru.
Ally: See you there.
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