Workforce Bulletin

Gratuities are often helpful for both employees and their employers: tips supplement a worker’s income, and federal law and the laws of most states allow employers to credit a portion of a worker’s tips toward the company’s minimum wage obligations. But what exactly is a tip and how do employers take this so-called “tip credit?”

What is a tip or gratuity?

As we previously reported, the US Department of Labor, Office of Federal Contract Compliance Programs (“OFCCP”) announced back in August 2022, that it had received a Freedom of Information Act (“FOIA”) request from the Center for Investigative Reporting (“CIR”), for any and all Type 2 Consolidated EEO-1 Reports for 2016-2020 (“Consolidated Reports”) filed by federal contractors (“Covered Contractors”).  In response to the request, OFCCP has provided Covered Contractors with the opportunity to object to the release of the Reports and on February 15 extended the deadline for objections to March 3, 2023.  

On February 21, 2023, the National Labor Relations Board (“NLRB” or “Board”) continued its aggressive application of the National Labor Relations Act (“Act” or “NLRA”) to workplaces without union representation and lessened the value of severance agreements for all employers by finding it unlawful for an employer to merely proffer a severance agreement that includes broad non-disparagement and confidentiality provisions to an employee. In McLaren Macomb, the Board held that a severance agreement that contains a confidentiality clause and a non-disparagement clause was unlawful because, in the Board’s view, these provisions impermissibly infringe on employees’ rights under the Act. Specifically, the Board found that these two provisions limit employees’ ability to discuss their wages, hours, and working conditions (which could include disparaging remarks) with other employees, prevent employees from assisting other employees seeking assistance, and hinder employees themselves from seeking assistance from the NLRB, unions, and other outside organizations.

As we reported earlier this week, on February 22, 2023, the Supreme Court issued its decision in Helix Energy Solutions Group, Inc. v. Hewitt, finding that a daily-rate worker who earned over $200,000 annually was not exempt from the Fair Labor Standards Act’s (FLSA or Act) overtime requirements. The Court reasoned that, although the employee’s compensation exceeded the amount required under 29 C.F.R. § 541.601’s highly compensated employee (HCE) exemption, and he customarily and regularly performed at least one exempt duty (there, the “executive” duty of supervising a crew of workers), his employer did not pay him on a “salary basis” because he did not “receive a fixed amount for a week no matter how many days he … worked.”

Practically, Helix’s holding is unlikely to have broad consequences. Most employers pay employees who earn enough to qualify as an HCE (currently, $107,432 annually) and perform at least one exempt administrative, executive, or professional duty a predetermined salary. But employers who have classified non-salaried high earners as exempt HCEs will acutely feel its effects.

On January 17, 2023, the U.S. Court of Appeals for the D.C. Circuit partially reversed and partially upheld a District Court decision that enjoined five rules promulgated by the National Labor Relations Board (“NLRB” or “Board”) in 2019 by the Trump-era Board (“2019 Rule”) to modify the Board’s representation election procedures.  The 2019 Rule attempted to ease some of the “quickie election” rules established in 2014 by the Obama-era Board (“2014 Rule”).  For a further discussion of the 2019 Rule, see “NLRB Issues Proposed Rule to Scale Back 2014 Expedited Election Rules.”

The D.C. Circuit held that because the Trump-era Board did not seek public notice and comment as required under the Administrative Procedure Act (“APA”) when issuing the 2019 Rule, “substantive” rule changes could not take effect, but “procedural” rule changes were valid under the procedural exception to the APA’s requirement for notice and comment.

On February 21, 2023, the Seattle City Council passed a first of its kind ordinance that amends Seattle’s existing anti-discrimination laws to prohibit caste discrimination. The ordinance, CB 120511, prohibits employers from discriminating against individuals based on caste with respect to “hiring, tenure, promotion, terms, conditions, wages or privileges of employment, or with respect to any matter related to employment.” The amendment also bans discrimination based on caste with respect to public accommodations. Seattle employers should take note of the new amendment and update their policies to include caste as a protected category.

On February 13, 2023, the New York State Legislature approved an amendment, S1326 (the “Amendment”), to the upcoming New York State Pay Transparency Law S9427A (the “Law”), clarifying that the Law’s requirement that employers to disclose a minimum and maximum salary range in advertisements and postings for job opportunities applies, with limited exception, to remote positions. In addition, the Amendment would also eliminate one of the Law’s recordkeeping obligations and define the term “advertisement.” If signed by the Governor, as is expected, the Amendment will be part of the Law when it takes effect this Fall.

The California Office of Administrative Law has approved the California Division of Occupational Health and Safety’s (Cal/OSHA) COVID-19 Prevention Non-Emergency Regulations (Non-Emergency Regulations). As a result, on February 3, 2023, Cal/OSHA’s COVID-19 Prevention Emergency Temporary Standards (ETS) expired, and the Non-Emergency Regulations went into effect.

Although extending many of the ETS requirements, as we previously reported, the Non-Emergency Regulations contain some notable changes. A redline comparing the Non-Emergency Regulations to the ETS is available here. Some important changes include:

On February 2, 2023, the Illinois Supreme Court filed an opinion in Jorome Tims v. Black Horse Carriers, Inc., holding that Illinois’ Biometric Information Privacy Act (BIPA) is subject to a single, five-year statute of limitations period.

The Ninth Circuit has issued its long-awaited ruling in Chamber of Commerce v. Bonta, perhaps putting a nail in the coffin of the controversial California law known as AB 51, which would have made it criminal conduct to require an applicant or employee to sign an arbitration agreement.

The history of AB 51 and the case challenging it is a tortuous one, to say the least, but the issue has always remained the same: was the California legislature too clever in its attempt to circumvent the Federal Arbitration Act (“FAA”) and the Supreme Court’s landmark decision in Epic Systems?