APPLIES TO All Employers with Tipped Employees

EFFECTIVE March 3, 2023

QUESTIONS? Contact HR On-Call (888) 378-2456

Quick Look The DOL revised two fact sheets addressing the 80/20 rule, tip credits, notice to tipped employees, tip pooling, and the prohibition on managers and supervisors receiving tips. In addition, the DOL updated its Field Operations Handbook to reflect this updated guidance. The fact sheets and Field Operations Handbooks include examples which are useful to employers with tipped employees.

Discussion

In November and December 2021, the U.S. Department of Labor (DOL) issued two rules governing tipped employees and expanding the agency’s authority to assess penalties for violations. The rules also clarified the circumstances under which managers and supervisors can receive tips. Most notably, the rules reinstated the “80/20” rule – tipped employees must perform tip-producing work at least 80% of the time and supporting work that does not produce tips should take up the remaining 20%. On March 3, 2023, the DOL issued two revised fact sheets providing additional guidance in addition to updated examples in the Field Operations Handbook to meet the minimum wage and overtime requirements under the Fair Labor Standards Act (FLSA).

Fact Sheet #15 reiterates several points employers with tipped employees should already know. In addition to the below main points, it also addresses credit card fees, service charges, and recordkeeping along with common problems.

• Tip Credit. The FLSA permits an employer to take a tip credit toward its minimum wage and overtime obligations for tipped employees. Employers claiming a tip credit must make sure an employee receives enough tips from customers and direct wages per workweek to equal at least the minimum wage and overtime requirements under the FLSA.
• Notice. Employers must provide oral or written notice to tipped employees prior to taking a tip credit. The notice must include: 1) the amount of the direct (or cash) wage the employer is paying a tipped employee, which must be at least $2.13 per hour; 2) the additional amount claimed by the employer as a tip credit, which cannot exceed $5.12 (the difference between the minimum required direct (or cash) wage of $2.13 and the current minimum wage of $7.25); 3) the tip credit claimed by the employer cannot exceed the amount of tips actually received by the tipped employee; 4) all tips received by the tipped employee are to be retained by the employee except for a valid tip pooling arrangement limited to employees who customarily and regularly receive tips; and 5) the tip credit will not apply to any tipped employee unless the employee has been informed of these tip credit provisions.
• No Tips for Managers. Employers, including their managers and supervisors, cannot keep or require a tipped employee to give any portion of employees’ tips either directly or through a tip pool. Managers and supervisors can only keep tips directly received for service directly and solely provided.
• Tip Pools. In a traditional tip pool, participation is limited to employees in occupations in which they customarily and regularly receive tips, and the employer takes a tip credit. If an employer pays all its employees direct wages of at least the federal minimum wage, then they can create a mandatory tip pool that includes employees who are not employed in an occupation in which employees customarily and regularly receive tips. Tip pools still exclude managers and supervisors.

Fact Sheet #15A addresses employees who perform both a tipped and non-tipped occupation for the same employer, also known as a dual job. An employee performs work that is part of a tipped occupation if it is any work performed that provides service to customers for which the tipped employee receives tips or the employee performs work that directly supports tip-producing work for a limited time. Examples of work directly supporting tip producing work include, but are not limited to, dining room prep work, such as refilling salt and pepper shakers and ketchup bottles, rolling silverware, folding napkins, and setting tables.

In order to claim a tip credit, the employer must make sure the tipped employee is not performing directly supporting work for a substantial amount of time. A substantial amount of time is more than 20% of the hours in a workweek for which the employer has taken a tip credit or a continuous period of time that exceeds 30 minutes. Time spent cleaning the restaurant kitchen and bathrooms must be paid at least the full minimum wage per hour and is not subject to a tip credit. This fact sheet also includes examples illustrating the limitations which employers should review and understand for their own specific situations.

 

Action Items

1. Review the DOL Fact Sheets and corresponding updates in the Field Operations Handbook.
2. Review work performed in tipped and nontipped roles.
3. Review and update payroll and timekeeping processes.
4. Have appropriate personnel trained on tipping and tip credit requirements.
5. Subscribers can call our HR On-Call Hotline at (888) 378-2456 for further assistance.

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Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2023 ManagEase

APPLIES TO All Employers

EFFECTIVE February 17, 2023

QUESTIONS? Contact HR On-Call (888) 378-2456

Quick Look OSHA is implementing a pilot program to administratively close whistleblower complaints that are facially flawed or deficient. Closure of cases that are deficient will improve the backlog of cases that are pending investigation.

Discussion

The Occupational Safety and Health Administration (OSHA) launched its pilot program creating a new intake process for whistleblower complaints. With the pilot program, OSHA is targeting the backlog of whistleblower complaints it has received and hoping to create a shorter timeline to complete investigations. The pilot program applies to whistleblower complaints made under several federal laws and not just the Occupational Safety and Health (OSH) Act.

The new pilot program creates a screening intake process that allows for the administrative closure of facially flawed or otherwise deficient allegations. There are three categories under which complaints can be closed during intake: 1) complaints that are not facially covered by any OSHA-administered whistleblower statute; 2) complaints that on their face are untimely but may not be subject to equitable tolling; and 3) complaints that allege safety or compliance concerns but not retaliation. Under the current requirements, OSHA investigators have to contact every individual filing a complaint to confirm the information in the complaint. The pilot program removes this substantial time burden for complaints that are facially unfit for investigation.

The pilot program is expected to last one year before being made permanent. OSHA will review data after the 6-month and 12-month period and compare it to the 12-month period prior to the pilot to determine its success. In addition to analyzing the accurate administrative closure of cases, OSHA will review whether the pilot program resulted in an adverse impact on whistleblowers.

 

Action Items

1. Review OSH Act requirements for compliance.
2. Have appropriate personnel trained on health and safety requirements.
3. Review adverse actions taken against whistleblowers with legal counsel.
4. Subscribers can call our HR On-Call Hotline at (888) 378-2456 for further assistance.

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Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2023 ManagEase

APPLIES TO All Employers with Employees in CT, NY, and VT

EFFECTIVE March 13, 2023

QUESTIONS? Contact HR On-Call (888) 378-2456

Quick Look Without providing sufficient evidence, employees cannot avoid mandatory non-discrimination and harassment trainings on religious discrimination grounds.

Discussion

In Zdunski v. Erie 2-Chautauqua-Cattaraugus BOCES, the Second Circuit Court of Appeals said that failure to repeatedly attend mandatory LGBTQ anti-discrimination trainings was not protected by an employee’s claim for religious discrimination. Here, a public school in New York mandated a LGBTQ anti-discrimination training to “maintain an environment free of harassment and discrimination” when a transgender employee requested reasonable accommodations to assist them in their gender transition. The training was also considered a supplement to New York’s mandatory Dignity for All Students Act (DASA) which requires public schools to create a safe and supportive environment free from discrimination and harassment on school property.

An account clerk for the school told his supervisor that he would not attend the training since it would be against his religious beliefs as a devout Christian. He requested the school provide a training about discrimination against Christians. The employee also posted a public statement on his personal Facebook page that criticized the mandatory training. The school notified the employees who missed the mandatory training that they were required to take a make-up training. The account clerk once again requested a training to counter discrimination against Christians but never lodged a formal complaint about religious discrimination. In a meeting following this email, the account clerk was issued a counseling memo for insubordination and was directed to attend the make-up training or face discipline up to, and including, termination. He did not attend the training and was terminated. He then filed a claim for unlawful discrimination.

In his claim, the account clerk alleged the training was meant to change his religious beliefs about gender and sexuality and attendance would have caused him to violate religious teachings. The Second Circuit agreed with the lower court’s ruling that the employee failed to provide sufficient evidence to support his claims. The evidence in the record supported the school’s position that he was terminated due to repeatedly refusing to attend a mandatory training. It was the employee who made an unsupported assumption that the school thought he was bigoted due to his religious beliefs. The employee did not provide any evidence that he was treated differently from other employees who refused to attend the training. The Court also noted that the employer would have violated its training requirements under DASA if it allowed the employee to avoid the training. Employers should note that the employer’s documentation of the employee’s refusal to attend training, a statutory requirement to provide training, and consistent treatment of all employees avoiding the training led to a ruling in the employer’s favor.

 

Action Items

1. Provide consistent anti-discrimination and anti-harassment trainings to all employees.
2. Document attendance and refusals to attend consistent with company policy.
3. Subscribers can call our HR On-Call Hotline at (888) 378-2456 for further assistance.

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Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2023 ManagEase

APPLIES TO All Employers with Employees in CA

EFFECTIVE March 17, 2023

QUESTIONS? Contact HR On-Call (888) 378-2456

Quick Look AB 5 codified the “ABC test” for independent contractor classifications, and AB 170 and AB 2257 excluded several positions as exempt from employee relationship status. The Ninth Circuit said that certain gig economy workers could continue their legal challenge that AB singles out app-based transportation business while exempting other gig economy businesses.

Discussion

In Olson v. California, the Ninth Circuit Court of Appeals said that plaintiffs could continue their lawsuit alleging AB 5 violates the Equal Protection Clause. AB 5 codified the “ABC test” for independent contractor classification. There is a presumption of an employment relationship unless the following factors are met: 1) the worker is free from the control and direction of the hiring entity with the performance of the work both in fact and under contract; 2) the worker performs work that is outside the usual course of the hiring entity’s business; and 3) the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed. AB 170 and AB 2257 amended AB 5 to add several positions excluded from the presumption of employee status under the law. This included photographers, appraisers, home inspectors, and certain gig economy workers but notably did not include ride-hailing drivers. Plaintiffs from Postmates and Uber alleged that AB 5 targeted gig economy companies and was unconstitutional due to violations of the Equal Protection, Due Process, and Contract Clauses.

The Court applied a rational basis review to determine whether the law is rationally related to a legitimate governmental interest. Under this standard, the Court found it was plausible that AB 5 could violate the Equal Protection Clause while dismissing the Due Process and Contract Clause claims. AB 2257 gave exemptions for certain app-based gig companies with similar business models as that of ride-hailing apps. This exclusion indicated that the California Legislature specifically disfavored ride-hailing businesses although there is no explanation that such workers are less susceptible to being exploited as independent contractors. This ruling allows the plaintiffs to continue their claims in district court and determine whether they are entitled to preliminary injunctive relief for their Equal Protection claim.

 

Action Items

1. Review independent contractor agreements and classifications with legal counsel.
2. Subscribers can call our HR On-Call Hotline at (888) 378-2456 for further assistance.

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Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2023 ManagEase

APPLIES TO All Employers with Employees in IL

EFFECTIVE February 17, 2023

QUESTIONS? Contact HR On-Call (888) 378-2456

Quick Look Employers using and collecting biometric information must obtain consent each time such information is collected and transmitted. Damages may be assessed for each violation per employee affected.

Discussion

In Cothron v. White Castle Systems, Inc., the Illinois Supreme Court stated that each time a business scans or transmits an individual’s biometric information, a separate claim arises under the Biometric Information Privacy Act (BIPA). BIPA regulates the collection, possession, storage, disclosure, sale, and retention of biometric data. Here, a manager of a White Castle restaurant filed a class action alleging that White Castle unlawfully collected biometric information and disclosed it to a third-party vendor for verification each time employees scanned their fingers to access paystubs and computers. Earlier, in Tims v. Black Horse Carriers, the Illinois Supreme Court ruled a five-year statute of limitations applies to all provisions of the Biometric Information Privacy Act (BIPA).

In its ruling, the Court looked to the statutory language of BIPA. The plain language of the statute indicates that a claim arises each time a private entity collects or disseminates biometric data without prior informed consent. This interpretation by the Court, and due to the class action, could result in damages over $17 billion to White Castle. The Court attempted to soften its ruling by stating that a trial court could create a damage award that fairly compensated each class member and would deter future violations without destroying the defendant’s business. BIPA’s damages are also discretionary rather than mandatory. Regardless of the Court’s attempts to mitigate the significance of its ruling, employers using biometric information should consult with legal counsel immediately to ensure that proper notice and consent is obtained.

 

Action Items

1. Review procedures for the use and collection of biometric information.
2. Consult with legal counsel to obtain proper consent and provide notice to employees.
3. Subscribers can call our HR On-Call Hotline at (888) 378-2456 for further assistance.

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Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2023 ManagEase