Category: Labor & Employment

Marijuana in the Manufacturing Workplace

The requirement to maintain a safe workplace often clashes with state and local laws that protect the rights of individuals who use marijuana while off-duty, creating unique challenges for manufacturing employers.

Manufacturing employers still may prohibit the use of marijuana at work, as well as marijuana impairment at work. But marijuana drug testing is complicated and controversial because of the legal protections for off-duty marijuana use in some states and cities, the legal protections for medical marijuana users in many jurisdictions, and because there are no drug tests that can detect current marijuana impairment or very recent use of marijuana.

Federal Law

Manufacturers no longer should defend “zero tolerance” marijuana drug testing policies. Previously, employers could argue that marijuana still is illegal under federal law or that the employer is a federal contractor that must comply with the federal Drug-Free Workplace Act. The federal government has not enforced the law that makes marijuana illegal for some time, and it has permitted states to create and enforce their own laws with respect to medical and recreational marijuana.

Some courts have recognized that the federal government is allowing state governments to regulate marijuana and, therefore, courts are enforcing state marijuana laws despite marijuana’s illegal status at the federal level. Courts also have rejected arguments that federal contractors “must follow federal law” because the federal Drug-Free Workplace Act does not require drug testing and does not permit employers to regulate off-duty conduct.

State Laws

At present, 39 states and the District of Columbia have medical marijuana laws, while 22 states and the District of Columbia have recreational marijuana laws (Maryland’s law will take effect in July and others will be enacted in the coming months). Many of these laws provide employment protections to applicants and employees. The variations in the laws make it difficult for multi-state manufacturers to have consistent marijuana policies in all locations.

What It Means for Employers

Due to the recent trend in some states to protect off-duty use of marijuana, and even prohibiting pre-employment marijuana testing, many manufacturers are discontinuing pre-employment marijuana testing, especially in states where marijuana is legal. Applicants often are surprised to learn that a positive marijuana drug test will lead to withdrawal of the job offer. If the positive marijuana drug test result is due to medical use (and there are no general off-duty protections in the state), manufacturers must be familiar with the applicable law.

Some states prohibit discrimination against medical marijuana users, while other states may allow an employer to take an adverse employment action if the job is considered “safety-sensitive,” i.e., a job with dangerous duties, as defined by applicable state law.

In certain other states where discrimination is prohibited and the manufacturing employer has safety concerns, the employer should engage in the “individualized assessment” and “direct threat analysis” required under state laws that mirror the federal Americans With Disabilities Act. This process includes discussions with the applicant and the applicant’s physician to assess the safety risk.

Reasonable suspicion marijuana testing is permissible in most states because impairment at work never is permitted. In states where off-duty marijuana use is protected, manufacturers should rely on the impaired behaviors when taking disciplinary action, rather than rely solely on the positive marijuana drug test result (assuming that testing for marijuana is permitted). This is because marijuana stays in the human body for a long time, so the positive drug test result is not conclusive proof that the employee was impaired at work. Manufacturers also should make sure that supervisors and managers are trained to observe and document reasonable suspicion determinations properly, as these documented observations will be key evidence in a potential lawsuit.

To make matters even more complicated, CBD (cannabidiol), “low THC,” and hemp products are being marketed and sold everywhere since Congress legalized hemp (having no more than 0.3 percent THC, the psychoactive component of marijuana) in 2018. Separate from marijuana laws, the use of “low THC” or CBD products is allowed in a number of states, usually for medical purposes, which means that manufacturing employers should tread carefully when an applicant or employee claims to use CBD products for medical reasons. While many CBD and hemp products are marketed as having little or no THC, these statements may not be true, because the U.S. Food and Drug Administration does not yet regulate them. These products may cause positive drug test results for marijuana. There has been an increase in lawsuits where former employees claim that their positive marijuana drug test results allegedly were caused by CBD products.

While it appears that marijuana eventually will be legalized at the federal level, manufacturers must ensure they are complying with all applicable laws. Manufacturing employers should:

  • Review drug and alcohol policies for compliance with applicable drug testing and marijuana laws;
  • Remove marijuana from the drug testing panel in locations where testing for marijuana is prohibited and locations where off-duty use is protected and consider removing it in other locations where it may be an obstacle in the hiring process;
  • Train Human Resources employees and other managers to engage in the interactive process with employees who use medical marijuana (or medical CBD products); and
  • Train supervisors to make appropriate and timely “reasonable suspicion” determinations.

Jackson Lewis P.C. © 2023

For more cannabis legal news, click here to visit the National Law Review.

Automating Entertainment: Writers Demand that Studios Not Use AI

When the Writers Guild of America (WGA) came with their list of demands in the strike that has already grinded production on many shows to a halt, chief among them was that the studios agree not to use artificial intelligence to write scripts. Specifically, the Guild had two asks: First, they said that “literary material,” including screenplays and outlines, must be generated by a person and not an AI; Second, they insisted that “source material” not be AI-generated.

The Alliance of Motion Picture and Television Producers (AMPTP), which represents the studios, rejected this proposal. They countered that they would be open to holding annual meetings to discuss advancements in technology. Alarm bells sounded as the WGA saw an existential threat to their survival and that Hollywood was already planning for it.

Writers are often paid at a far lower rate to adapt “source material” such as a comic book or a novel into a screenplay than they are paid to generate original literary material. By using AI tools to generate an outline or first draft of an original story and then enlisting a human to “adapt” it into screenplay, production studios potentially stand to save significantly.

Many industries have embraced the workflow of an AI-generated “first draft” that the human then punches up. And the WGA has said that its writers’ using AI as a tool is acceptable: There would essentially be a robot in the writers’ room with writers supplementing their craft with AI-generated copy, but without AI wholly usurping their jobs.

Everyone appears in agreement that AI could never write the next season of White Lotus or Succession, but lower brow shows could easily be AI aped. Law and Order, for instance, is an often cited example. Not just because it’s formulaic but because AIs are trained on massive data sets of copyrighted content and there are 20 seasons of Law and Order for the AI to ingest. And as AI technology gets more advanced who knows what it could do? Chat GPT was initially released last November and as of writing we’re on GPT-4, a far more powerful version of a platform that is advancing exponentially.

The studios’ push for the expanded use of AI is not without its own risks. The Copyright Office has equivocated somewhat in its determination that AI-generated art is not protectable. In a recent Statement of Policy, the Office said that copyright will only protect aspects of the work that were judged to have been made by the authoring human, resulting in partial protections of AI-generated works. So, the better the AI gets—the more it contributes to cutting out the human writer—the weaker the copyright protection for the studios/networks.

Whether or not AI works infringe the copyrights on the original works is an issue that is currently being litigated in a pair of lawsuits against Stability AI, the startup that created Stable Diffusion (an AI tool with the impressive ability to turn text into images in what some have dubbed the most massive art heist in history). Some have questioned whether the humans who wrote the original episodes would get compensated, and the answer is maybe not. In most cases the scripts were likely works for hire, owned by the studios.

If the studios own the underlying scripts, what happens to the original content if the studios take copyrighted content and put it through a machine that turns out uncopyrightable content? Can you DMCA or sue someone who copies that? As of this writing, there are no clear answers to these questions.

There are legal questions and deeper philosophical questions about making art. As the AI improves and humans become more cyborgian, does the art become indistinguishable? Prolific users of Twitter say they think their thoughts in 280 characters. Perhaps our readers can relate to thinking of their time in 6 minute increments, or .1’s of an hour. Further, perhaps our readers can relate to their industry being threatened by automation. According to a recent report from Goldman Sachs, generative artificial intelligence is putting 44% of legal jobs at risk.

© Copyright 2023 Squire Patton Boggs (US) LLP

For more Employment Legal News, click here to visit the National Law Review.

The End of the COVID Public Health Emergency and Its Effect on Employee Benefit Plans

The COVID-19 public health emergency ends on May 11, 2023. The emergency resulted in two big changes to welfare plans: the relaxation of certain notification and timing requirements, and the requirement for plans to cover COVID testing and vaccination at no cost to plan participants. While the public health emergency ends May 11, 2023, plans have a grace period until July 11 to take certain actions and come into compliance with the normal rules.

Plan Sponsor Requirements

Before the grace period ends, plan sponsors will generally need to follow the rules that existed before COVID. Among the most important of these rules are the requirements for plan sponsors to:

  • Timely provide all notices, including those for HIPAA and COBRA.
  • Review COVID-related coverage under their employee assistance programs (EAPs) to determine if such coverage would be considered “significant medical care,” which can result in additional reporting and compliance obligations.
  • Review telehealth options to ensure they are properly integrated and provided by an entity that can comply with the post-COVID requirements. Telehealth rules were substantially relaxed during COVID. With telehealth now expected and utilized by more participants, getting telehealth right is more crucial than before.

Plan Sponsor Decisions

With the end of the public health emergency, plan sponsors must also make several important decisions with respect to their employee benefit plans:

  • Whether testing will continue free of charge or will be subject to cost sharing.
  • Whether non-preventative care vaccines for COVID will continue to be free of charge.
  • Whether costs for certain COVID-related services will continue to be posted.

As they are mostly based on what costs the plan sponsor or plan will cover going forward, these plan sponsor decisions are largely business-related. In the absence of a choice by the plan sponsor, the insurance provider will likely make a default choice. The important legal consideration is that the plan documents and employee communications should be consistent and accurately reflect the plan sponsor’s decisions.

Participant Requirements

In addition to the changes for plan sponsors, the end of the public health emergency will result in the reinstatement of a number of rules applicable to participants. Participants will need to:

Follow the HIPAA Special Enrollment timing rules.

Elect COBRA within the 60-day window for elections.

Make all COBRA payments timely.

Timely notify the plan of disabilities and qualifying events under COBRA.

Follow the timing limitations of their plans and insurance policies regarding filing claims, appeals, and external reviews.

Next Steps

First, plan sponsors should decide what COVID-related coverage will remain fully paid by the plan, if any. Some insurance companies are already starting to communicate with participants, and maintaining a consistent message will avoid unnecessary problems.

Second, plan sponsors should review their EAP and telehealth coverages for compliance with the rules that will soon be in effect. To the extent necessary, plan sponsors should update the documentation for their plans.

Finally, plan sponsors should consider a voluntary reminder communication to participants. Many rules have been relaxed over the last two years or so, and participants may be confused regarding the rules. A reminder may save stress for participants and those administering the plan, and will also serve to document the plan sponsor’s intention to properly follow the terms of the plan.

© 2023 Varnum LLP

For more healthcare legal news, click here to visit the National Law Review.

DOJ Fighting for E-Sports Player Compensation

The Biden administration continues its campaign against wage suppression as a source of harm to workers, competitive markets, and the economy. In its latest move, the Department of Justice is supporting players in professional e-sports leagues with a suit to stop Overwatch and Call of Duty developer, Activision Blizzard, Inc., from capping player compensation. Unlike salary restrictions in traditional sports leagues, those implemented by Activision were not produced through collective bargaining and, therefore, are not exempt from antitrust scrutiny.

Complaint and Consent Decree

The DOJ filed suit to challenge Activision’s wage restrictions on April 3rd, alleging Activision and independently-owned teams in two e-sports leagues agreed to implement certain wage restrictions, including a “Competitive Balance Tax.” The tax penalizes teams in the Overwatch and Call of Duty leagues if player compensation exceeds a threshold set by Activision. According to the complaint, this agreement violates Section 1 of the Sherman Act.

The DOJ concurrently filed a consent decree to address the competition issues. If approved by the court, the consent decree would prohibit Activision from implementing any restriction that would limit player compensation directly or indirectly. It would also require Activision to, among other things, certify it has terminated competitive balance taxes and implement antitrust compliance and whistleblower policies.

Ongoing Antitrust Issues Concerning Activision-Microsoft Merger

 While Activision was negotiating the consent decree with the DOJ, its potential parent company, Microsoft, was continuing to defend its proposed $69 billion acquisition of Activision. In December 2022, the FTC sued to block the merger, claiming “the largest ever [acquisition] in the video gaming industry” would enable Microsoft to suppress competitors of Xbox and its rapidly growing subscription content and cloud-gaming business. This case remains pending.

[Read Jonathan Rubin’s Dec. 12, 2022, commentary on the FTC’s challenge, titled, “An Unstoppable Force Meets an Immovable Object: Microsoft to Fight FTC Over Activision Deal.”]

Microsoft has had more success with antitrust agencies overseas. While the European Commission initially put the deal on hold in December 2022, Reuters and Polygon.com reported the Commission’s concerns have been mollified by Microsoft’s commitment to offer licenses to rival gaming companies. Polygon has also reported that the U.K. Competition and Markets Authority has “set aside some of its main concerns” about the merger. It quotes the CMA as stating that “the cost to Microsoft of withholding Call of Duty from PlayStation would outweigh any gains from taking such action.” The deal has also been approved in Japan, Chile, Brazil, Saudi Arabia, and Serbia, Polygon reports.

Non-Statutory Exemption Inapplicable to E-Sports Salary Restrictions

Readers may be wondering why salary caps are commonplace in traditional sports leagues like the NFL, NBA and NHL but not permitted in e-sports leagues. The key distinction is that the salary caps in traditional sports leagues are negotiated and agreed to by player unions as part of the collective bargaining process. As a result, these salary caps (and the agreements containing them) fall under the “non-statutory antitrust exemption,” which was created by the Supreme Court to resolve the inherent conflict between the underlying goals of antitrust laws and labor laws.

Specifically, the non-statutory exemption relieves parties to an agreement restraining trade from antitrust liability where (1) the restraint primarily affects the parties to the agreement and no one else, (2) the agreement concerns wages, hours, or conditions of employment that are mandatory subjects of collective bargaining, and (3) the agreement is produced from bona fide, arm’s-length collective bargaining. The restraints at issue here do not satisfy either the first or third prongs because they affect the e-sports players, who were not parties to the agreement, and were not produced through collective bargaining. Therefore, unlike salary restrictions in other professional sports leagues, those agreed to by Activision and the independent teams are subject to the antitrust laws.

© MoginRubin LLP
For more Antitrust legal news, click here to visit the National Law Review

Legal News Reach S3E1: The DEI Dialogue: How Feedback Fosters Inclusion and Diversity in the Workplace

Welcome to Legal News Reach Season 3! We begin the new year with a conversation between the National Law Review’s Social Media Manager, Crissonna Tennison, and Bracewell’s D&I and Community Outreach Director, Monica Parker.

By now, most firms understand that diversity and inclusion are nonnegotiable foundations for a successful organization, but feedback conversations remain a commonly overlooked—or avoided—tool for fostering deeper professional connections amongst colleagues with different backgrounds and experiences. What role does feedback play in successful D&I practice, and how can attorneys approach it?

We’ve included a transcript of the conversation below, transcribed by artificial intelligence. The transcript has been lightly edited for clarity and readability.

 

Crissonna Tennison

Thank you for tuning in to the Legal News Reach podcast. My name is Crissonna Tennison, Web Publication Specialist and Social Media Manager for the National Law Review. In this episode, I’ll be speaking with Monica Parker, Director of D&I and Community Outreach at Bracewell LLP.

Monica, can you tell me a little bit about your background, what led you to practice law in the first place and eventually to Bracewell?

Monica Parker

Well first of all, thank you for having me. I’m excited to be here to have this chat with you today Crissonna.

As you mentioned, I’m a former practicing attorney. I have spent about two decades in law firms and professional development and, recently, diversity and inclusion. And what made me practice law, I’m not the typical law student. I didn’t go straight from college to law school, I worked for four years. And you know what, I missed school. So I appreciated the intellectual rigor, I would say, of law school, and then I ended up falling in love with Harvard Law’s negotiation program. That’s where I went to school. So I ended up becoming a teaching assistant for the negotiation program while I was there, and then came back as a lecturer in law to teach the course after I graduated.

What led me to Bracewell–I would say here is the plug for the importance of your network. I heard about this position through someone that I knew when I was a summer associate many years ago at a law firm. This person was then working in professional development for that firm. She’s now the Chief Talent Officer at Bracewell. So that’s how I heard about the opportunity. I will say that when I interviewed I had conversations with the firm’s Managing Partner, as well as the chair of the D&I Committee, the firm’s General Counsel, the hiring partners, and others, and really just appreciated the genuine, authentic nature of the leadership. They were candid with me about what’s working, what the challenges are, and it was an opportunity to have an impact and work with some good folks to that timeline at Bracewell.

Crissonna Tennison

It’s always great when your workplace is transparent with what’s going on and shows that they’re willing to have ongoing conversations. What brought you more specifically into the diversity and inclusion world and practice?

Monica Parker

I would say, like many folks who work in this arena, I was motivated by my own experiences of being a woman of color in this profession. At this stage of the game, I have a wealth of experience. And I’ve been fortunate in my career, and I saw this as an opportunity to help lift others up. Plus, I really wanted to have the opportunity to have an impact. And there’s lots of space to have impact in the world of diversity and inclusion these days.

Crissonna Tennison

Definitely. Broadly speaking, what would you say some of the hurdles are to ensuring diversity specifically in the legal business and legal field?

Monica Parker

There are three major challenges among others, right? There are several, but I would say pipeline is one, recruiting is another, and then retention is a third.

So when I think about the pipeline piece, not everyone has the same opportunities, right? They can’t all necessarily go to the best schools, they may not have family members or family friends who sit around the dinner table talking about the practice of law, they may not have opportunities with college applications or law school applications. So that’s one hurdle, right? And if you do make it over that hurdle, and you graduate from law school, then not everyone is going to come to a large law firm. So this is actually a very competitive market that we’re operating in to begin with. And then once you get there, for underrepresented groups, you have to make sure that they’re getting the same kinds of opportunities as everyone else. So for example, you need there to be a lot of candid feedback conversations, people need mentors and sponsors. But often people tend to connect with those who are like them. So those are some of the challenges specifically for the legal industry, it can be kind of difficult to feel comfortable enough with people to have the kind of conversations you’re talking about. So if you have people that look like you that makes all the difference in the world.

Crissonna Tennison

So when it comes to diversity and inclusion, what are some general patterns that you’ve noticed that have been productive, and some patterns that are not quite so productive at this time that you’re hoping might change?

Monica Parker

So let me talk about the not so productive patterns, right? So in the world of D&I, you sometimes can see what I call “check-the-box” exercises. So, for example, if everyone jumps onto the training bandwagon, training in and of itself doesn’t have the greatest return on investment. Here’s what you can do to be more productive: you can pair that with coaching, you can choose a particular area. So let’s say you want to do unconscious bias training when it comes to hiring practices, then you can do the training with folks who are involved. And you can provide coaching for those folks as they’re going through the hiring process. And then you can notice what’s working, what’s not working, continue to develop it and iterate it. And I think that’s how you shift from a not so productive practice or pattern to something that is more productive.

I think just telling people that you need them to do something, but then not giving them any tools to do it, is probably not the best approach. So for example, I mentioned feedback. We know it’s good. We know it’s important, but if people aren’t doing it, especially if you notice they’re not providing feedback to folks of color, you want to dig into that and you want to understand why and then offer some specific support around that.

Crissonna Tennison

I can see how that’s definitely something that comes up a lot. Leaning more into the feedback piece, that’s something that you speak a lot about. When it comes to feedback, these conversations obviously are not fun for most parties involved. Can you talk more about how you can navigate those conversations in a positive way, and what some of the benefits are of doing so?

Monica Parker

Sure. As you said, having feedback conversations can be difficult. And I can say this because I’m a lawyer, lawyers are often conflict averse. And so what happens is, you need to give this feedback, you know you do, you don’t want to give feedback because you’re worried about how the other person’s going to respond to it. So then you don’t do it, the behavior continues or gets worse. And you need to have this conversation. It ends up being this vicious cycle. Also, as we’ve talked about, if people tend to work with those that they like, or who look like them, then they tend to be more comfortable giving feedback to those folks as well. And let me just point out also, everyone’s very busy. And it can feel like giving feedback is one of those things that can take so much time. And “you know what, maybe it’s just better if I do it myself.”

Well, the challenge there is that if you’re not giving that feedback, then you’re not giving the person the opportunity to grow and to develop. And that’s the benefit of giving feedback. And then also as a way of showing your commitment to your employees too, if you’ve spent the time and the money to invest in them joining your firm, then you want to make sure you’re giving them the feedback that they need in order to be able to succeed there.

And I think that sometimes we think it’s going to take a lot of time to give that feedback. But it actually can take less time than you think. If you think about what you want to share, provide specific examples. Give the person the opportunity to ask questions, and then see how they do.

Crissonna Tennison

Unfortunately, I relate to the putting off things part. And what’s interesting about that is when you notice something that requires feedback early on, that conversation, it would seem, would tend to go a bit better than if you let it go on for a while and now you’ve built up resentment and the problem’s bigger. I can see how maybe creating a framework for doing it in a positive way might decrease the dread that might make you put it off. I can see how that can be really important.

Can you talk about some actionable tips that managers can take to provide feedback, maybe more routinely and in a more comfortable way?

Monica Parker

The first thing to do is to think about how you want to frame the conversation, especially if it’s making you nervous that you have to give this feedback and you’re worried about how the other person’s going to respond. So even a simple line, something you can remember and say easily, “I care about you and want you to do well here,” and then provide the feedback, it demonstrates to the other person, “This is about helping you grow and develop, and that’s important to me.” And I think that’s often what people want to hear when they’re on the receiving end of that feedback.

The second thing you want to do is share specific examples rather than talking in general terms. I can remember when I was a junior associate at a law firm and I received back work covered in red lines, you know, it looked like it was written in blood, just a marked up memo of my work. And the partner had put a handwritten note at the top of the memo that said, “Do better.” Who? What? What does “do better” mean? Some specificity would help. Now in my case, what I did is I went and talked with a more senior associate, to get a sense of what needed to be done to improve the memo. But being specific with your feedback is very helpful.

And then…it’s time to let the feedback sandwich go. Okay! The feedback sandwich is where you say something good, then you give them some other critical feedback, and then you say something good. The reason why it’s time to let it go is because everybody knows it’s coming. People are very savvy now. So they can tell when there’s a feedback sandwich in the works. And they can never actually hear the good stuff you’re saying because they’re waiting for that other shoe to drop where you tell them what’s not working. So why not just offer the critical feedback upfront? That’s one option. Another option is to ask the recipient, “What do you want to hear? Do you want to hear the feedback about what I want us to improve on first and then tell you what’s going well? Or the opposite?” You can ask!

Crissonna Tennison

Right as you said “it’s time to let go the feedback sandwich go” I was going to ask whether we should do the feedback sandwich, because I feel like if I received that paper that said “do better” with just a bunch of red marks I would shut down, at least at first. So yeah, there’s definitely room for being kind in the way that you do it.

Out of curiosity, when it comes to offering feedback, is it helpful if you’ve already developed some kind of a positive relationship with the person you’re giving feedback to? Can you speak to that a little bit?

Monica Parker

I think that’s a really good question. I think that to the extent there’s rapport and trust has been developed in relationship, it does make it easier to give that feedback because the recipient already knows that you care about them and knows that you want them to do well, and also hopefully feels comfortable asking more questions or sharing their perspective about whatever the situation is. With that being said, that can’t always be the case, right? If you’re just starting at an organization, if you’re a new person, building that rapport is going to take some time. Interestingly enough, I think if you were to give candid feedback, if you were to provide examples, if you were to do that in a timely fashion that would actually help you to build that trust and rapport, that will suit you further in the relationship as you go forward.

Crissonna Tennison

If you’re an employee, what should you be looking out for in terms of indicating that you’re not getting the level of feedback that you should be getting or that you deserve to get?

Monica Parker

If all you’re hearing is you’re doing fine, you want to dig deeper. It could be true that you’re doing fine. But it also may not be true that you’re doing fine. It could be that you’re working with someone who has difficulty sharing critical feedback or who’s very busy. And in that case, you’re going to want to dig a bit. Also, if you find yourself in your annual review, and you’re surprised by some critical feedback that you get, that’s an example that you haven’t been getting the feedback that you need, because what you hear in your annual review should never be a surprise, in terms of offering feedback. And it’s something that you want to offer regularly.

Crissonna Tennison

Would it be helpful for people to establish more frequent check-ins instead of the once a year, big one?

Monica Parker

It’s definitely helpful to establish regular check-ins. In some of my previous roles, I’ve had the opportunity to have a weekly or every other week check-in with the folks that I was supervising. And those are fantastic opportunities, not only for me to give feedback, but also for me to receive feedback. And again, that’s another way to build that relationship of trust and rapport. But if you’re doing this on a regular basis, even if it’s just a quick check, and a quick coaching session, you can catch a lot of things early and repair those things early as opposed to waiting until the annual review. By the time you get to the annual review, it’s actually too late. At that point, it really should just be a review of the year and then looking forward. So it’s very important to establish those regular check-ins again, even if they’re very short, for sure.

Crissonna Tennison

So I’m an employee, and I’m finding that I’m not getting the feedback that I think I deserve. What are some tips you have for an associate to proactively ask for that feedback if their supervisor hasn’t reached out recently, or may be dropping the ball in that area?

Monica Parker

I think a common mistake that people make is they just say “I’d appreciate any feedback.” And you may not get it when you ask that question. I think you want to be more specific than that. You could say something like, “Well, how would you have handled this?” Or “What would your approach with the client have been?” in case of an associate talking to the partner, or “I noticed you changed this point here? Will you tell me more about that?” Because when you’re asking very specific questions, you’re much more likely to engage the person in the conversation. And I think also sometimes being on the receiving end of critical feedback is hard for a lot of us, myself included. And so then you want to be prepared to take in what you hear. I often suggest that people take notes, because sometimes it can be hard to hear and taking notes can help you digest a bit better. And then also go find someone to process it with, someone who can help you understand the feedback that you received, you know, help you stay on an even keel. So those are some of the things that I would recommend.

Crissonna Tennison

That is really helpful advice. I can see how asking, “Oh, how would you have done that?” or “What was your thought process behind that?” makes it less about you, which makes it easier for everyone involved.

What can leaders do to ensure that people of color and other minoritized people feel comfortable being open about their experiences and evolving needs? I think you already spoke to this a little bit when it comes to building rapport, but is there anything else that you think would help?

Monica Parker

For sure, I think providing opportunities for underrepresented groups to share their perspective is really important. But then you have to take it a step beyond that. You have to be sure to look for ways to act upon what it is that you hear. And then there’s a step beyond that, where you then have to communicate that you’ve done so. So as an example, when I joined Bracewell, I did a listening tour. So I talked with over 100 attorneys about their experiences with diversity and inclusion at the firm. And then I had the opportunity to go to the partner retreat to present my findings as well as to make recommendations. And then from there, the D&I committee has spent its energy and time implementing those recommendations. So it’s really important, if you’re going to if you’re going to ask people to share about their experiences, you want to make sure that you’re demonstrating that you heard it, you’re trying to make an effort to do something with that feedback, and you’re making sure that they know that that’s what you’ve done.

Crissonna Tennison

Yeah, I can see that being helpful because it is a bit of emotional labor, sharing your feedback as a person of color or someone with a different experience, especially in a professional context. That can be a bit challenging, and it’s helpful to know that the other parties involved are also doing their part.

You talked a little bit about it, but what does a day in the life of a D&I consultant or leader look like? I’ve always been curious about that.

Monica Parker

I can tell you first, it’s always a mix, always. So for example, I could be talking with firm leadership about a strategic diversity initiative, I could be immersed in programming, I mentioned the feedback workshops. That’s something that I’ve designed and then delivered to the partners of the firm. There can be times where I’m meeting one-on-one with a partner or an associate to talk about an issue. Also Bracewell likes to collaborate with clients on diversity initiatives. So for example, we partnered with a client through our mutual summer programs where our summer associates of color got to meet with the clients of color, and then the General Counsel and members of the legal team for that client had lunch with all those folks and they got to talk about diversity and inclusion in that legal industry. So it’s always a fun mix of activities, it means that there’s never a dull day.

Crissonna Tennison

No, I can imagine there would not be a dull day in that area. So shifting a little bit, you mentioned that you used to work as an Associate Executive Director for a Seattle-based education nonprofit. Would you be interested in talking a little bit more about that and how it informs your current practice?

Monica Parker

Sure. At the education nonprofit we worked with students of color who are often the first in their families to go to college. So I got to see pipeline issues firsthand. Our students were rising fifth graders, and we worked with them all the way through college. And what I learned more than anything else is the importance of starting early, and then also looking for opportunities to continue to support the pipeline. But I think one of the major lessons was thinking about what it’s like to be the first. So not everyone has a parent or a family friend, or connections, right? Folks who went to law school or practice at large law firms or work for large corporations. Not everyone has that. They have a very different experience coming into a law firm, and that can be all new for an associate. And so it’s both recognizing the challenges for folks as you think about the pipeline issues, then it’s also about thinking about the challenges once that person enters a law firm. So that very much informs the work that I currently do.

Crissonna Tennison

It’s so easy to fall through the cracks. Do you have any D&I initiatives at Bracewell that you’re particularly proud of, or that have been particularly effective?

Monica Parker

I mentioned one of them, so let me dive a little bit deeper into it. I have a background in training folks on how to navigate difficult conversations, this came out of my work at Harvard Law School. And so I developed an interactive workshop on how to give feedback for the partners of the firm. And so what I’m doing in the workshops is I’m sharing a framework for how to have these conversations that allows you to prepare for them and hopefully navigate them with a little less anxiety and with more ease. And then we also talk about differences in feedback, that concept of how it can be easier to give feedback to someone who is like you or looks like you. And when there’s differences in feedback that can create some challenges.

So let’s say, for example, that a white male partner is wanting to give feedback to a woman of color associate. He might be worried that what he says can be perceived as sexist or racist, in which case he’s not going to share that feedback, he’s gonna say you’re doing just fine. So we talked about how differences in feedback can impact the relationship and the associate’s ability to grow and develop at the firm. And I think of the workshops too as a luxury for partners to have a dedicated span of time where they can just talk about delivering feedback and what’s challenging about it, and how to improve upon it. And also to hear about the experiences of their colleagues and know that they’re not the only ones navigating this and that it can be very difficult.

One of the things that’s funny to me about doing workshops, I’ve done training for lawyers, and of course, being a lawyer, I know what lawyers are like, and I know what we think about training. So one of my favorite comments was after a workshop when a partner came up to me and said, “I was skeptical. But this was good.” It’s a tough crowd! It’s a tough crowd.

I would also say that one of the things I’ve loved is that after the workshops, partners will request individual coaching. I remember one partner coming up to me right after the workshop and saying, “I’ve got a feedback conversation coming up with an associate and I’m worried about how the associate’s going to respond.” So we did some coaching on how to frame the conversation with specific examples on what to do with your own strong emotions that you might be experiencing as you’re giving the feedback. So the partner had that conversation with an associate and came back and told me that it went well and that the training was time well spent. That is high praise.

Crissonna Tennison

Honestly, I feel like if you can master the feedback conversation, especially in this kind of a high stakes environment, that has to be transferable to life. I feel like your communication skills would be through the roof. I would love to attend a workshop.

Monica Parker

You’re right. What I tell participants is, it will absolutely help you at work in terms of feedback with associates, it will help you in your work with clients, in your relationships with your colleagues; in general, it can help you at home as well with your significant other. The only folks that this material does not work on would be toddlers. They are quite skilled at difficult conversations and negotiation. I have lost every single negotiation that I’ve had with my nephew starting when he was a toddler and now his toddler sister. So forget it. It won’t work on toddlers but everyone else yeah, okay,

Crissonna Tennison

Well, we’ll just have the toddlers tell us how to communicate. They’re very clear with their needs.

So you wrote a book that was published by the American Bar Association, it’s called “What It Takes: How Women of Color Can Thrive Within the Practice of Law.” Can you talk a little bit more about what motivated you specifically to write that book and what you think readers might get from it?

Monica Parker

At the time, there was a study that the ABA had published called “Visible Invisibility,” and it was about how women of color tend to slip through the cracks at large law firms. There have been studies done on women, done on people of color, but women of color just weren’t in the mix. And so this particular report focused on women of color at large law firms, and I will say what I read was sobering, but absolutely necessary. And what I started thinking was, this was needed. I wonder if it’s possible to do a follow-up where we talk with women of color partners at large law firms who are doing well and see what we can learn from them. So I had a chance to conduct interviews with women of color partners across the country, which was wonderful. So we got a wide range of perspectives on what was working for them, what was challenging, and then lots of tips and tricks on how to be successful at large law firms. So it’s a fantastic read for associates, of course, but it’s also a great read for law firms as well.

Crissonna Tennison

Do you think it would be helpful to read even if you’re not a woman of color?

Monica Parker

Absolutely, it is. It’s useful for anyone to get perspective on what it’s like to be a woman of color. And interestingly enough, and probably not a surprise, but a lot of the advice offered there is valuable for anyone in any role, essentially. So yes, it’s a great read. If I do say so myself.

Crissonna Tennison

Oh, no, I love it. I believe you. And it’s good to advocate for yourself. So I will probably read it.

Can you talk a little bit more about what you feel the stakes are when it comes to developing diversity and inclusion practices in law? Like what do you feel like the larger stakes are?

Monica Parker

Well this one may be obvious, but it bears repeating: clients are wanting to see diversity in their legal teams. It’s going to vary from client to client. But we have seen this trend where it’s becoming increasingly important, and there are clients who absolutely demand diversity in their legal teams. And that’s something that’s not going to go away. So that’s a major stake. I would say also, firms, again no surprise, have invested a lot in their people. And so if you invested that much in your people, you want to retain your people, and you want them to succeed, and you want them to be fulfilled. Turnover is expensive.

I’d also say that you want to have a reputation for attracting diverse talent. And candidates for firms are asking about that. That’s something that I’ve noticed that’s also becoming increasingly the case, and not just candidates of color, but white candidates as well, because they want to work at a place that values diversity, equity, inclusion, and belonging. So if you want to attract the best talent, you want DEI to be top of mind.

Crissonna Tennison

I feel like I’ve been hearing that lately, that diversity issues are, in addition to all the other reasons why they’re so important, they’re also important when it comes to just the business elements of running a firm. Do you see any possible trickle down effects of diversity and inclusion in law affecting people in the broader world, like clients or just people who need legal services? Is that something that you think is relevant?

Monica Parker

It’s relevant, because as humans, we all want to see people who look like us. So if I’m a client of a law firm, I would like to see people who look like me working at that law firm, doing well at that law firm, whether it’s a client at a large law firm, you know, a medium sized firm, a small firm. That’s important too just because lawyers often are very involved in their communities as well. It’s important to see the representation match up with the community. So I do think it’s important for that to be there.

There are some of the standard arguments you may have already heard around how diverse teams perform better, have better results overall. So I think that just by nature of having that diversity, you bring a diversity of experiences to the table, and that’s at the end of the day going to be all to the good.

Crissonna Tennison

Do you have any final thoughts or messages to share for listeners or anything that you feel we should have asked or touched on that we didn’t?

Monica Parker

One final point: diversity, equity and inclusion is a team effort. So it’s not up to your DEI person or leadership to make things happen, although those are necessary, folks. I look at it as, D&I requires every person in the organization to be focused on making the workplace an inclusive space where everyone can achieve.

Crissonna Tennison

Yeah, I can see how in an office environment you have to work together to create an effective workplace. And that includes working together to build a more accessible, inclusive workplace where everyone feels comfortable to do their best work.

Thank you so much for coming on through and talking to us today. That was a lot of really interesting and good information. So yeah, thank you for coming and joining our show today and sharing your insights with us.

Monica Parker

Well, thanks again for having me. I enjoyed our conversation.

OUTRO 

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Copyright ©2023 National Law Forum, LLC
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Sexual Harassment Prevention Training Deadline Approaches for Chicago Employers

As a reminder to employers in Chicago, anti-sexual harassment training is required by Chicago’s Human Rights Ordinance and must be completed by July 1, 2023.  This requirement applies to all Chicago employers, regardless of size or industry.

The training consists of one (1) hour of anti-sexual harassment training for all non-supervisory employees and two (2) hours of anti-sexual harassment training for supervisory employees.  Regardless of supervisory status, all employees must also undergo one (1) hour of bystander training.  Employers must provide training on an annual basis.  Additional information about training requirements can be found here. Employers who fail to comply may be subject to penalties.

Article By Audrey H. Shinn of Vedder Price

© 2023 Vedder Price

Women in Whistleblowing: The Intersection Between Women’s Rights and Federal Employee Whistleblower Protections

Introduction

Pew Research Center data found that 42% of women in the United States have suffered discrimination in the workplace on the basis of their gender. Although there are statutory frameworks in place prohibiting such discrimination, the threat of retaliation can make it exceedingly difficult for employees who are already experiencing discrimination and harassment to come forward as whistleblowers under these provisions. On top of the personal and professional risks inherent in whistleblowing, federal employee whistleblowers have been saddled with added burdens by the statutory framework: in addition to proving her substantive claims, a federal whistleblower of sex discrimination is required to demonstrate that she has exhausted certain administrative remedies before she can be heard by a jury of her peers.  Because workplace discrimination disproportionally affects women, ensuring expansive and effective whistleblower protections and remedies, particularly for women in federal employment, is undoubtedly a women’s rights issue. To celebrate Women’s History Month, this article highlights just a few of the remarkable women who have come forward as whistleblowers within this framework to make enormous strides in preserving, enforcing, and expanding crucial protections for future generations of women in the federal workplace.

Statutory Framework

Title VII of the Civil Rights Act of 1964 (“CRA”) prohibits discrimination by private employers based on race, color, religion, sex, or national origin, and further prohibits retaliation by forbidding discrimination against an employee who has “made a charge, testified, assisted, or participated in” a Title VII proceeding or investigation. In 1972, the Equal Opportunity Act (“EOA”) expanded Title VII’s coverage to include certain categories of federal employees, providing that all personnel actions taken in regard to these employees “shall be made free from any discrimination based on race, color, religion, sex, or national origin.” Many courts have interpreted the EOA to extend both the anti-discrimination and anti-retaliation provisions of the CRA to federal employees. However, in a report on whistleblowing conducted by Senator Patrick Leahy in 1978, it was noted that although some interpretations of the existing statutory framework had been generous to whistleblowers, many courts were still “reluctant to play a role in the whistleblower problem”

Thus, the Civil Service Reform Act (“CSRA”) was passed in an attempt to cement protections for federal whistleblowers, creating an office within the Merit Protections Board (“MSPB”) to bring retaliation claims on behalf of whistleblowers. However, by 1989 not a single corrective action had been brought on behalf of whistleblowers to the MSPB, which was seen as largely ineffectual. In 1989, the Whistleblower Protection Act was passed, which for the first time created an individual right of action for federal employee whistleblowers. As the law currently stands, a federal employee whistleblower may bring a discrimination claim that would have been appealable to the MSPB as a civil action in federal court after the relevant administrative agency has failed to take action for a certain amount of time.

While this statutory framework provides critical tools for female whistleblowers to come forward and expose sex discrimination in the workplace, the accessibility of these tools remains particularly limited for federal employees who are required to go through the MSPB’s arduous administrative procedures before being heard in federal court, all the while often suffering continued discrimination and harassment at work. Thus, the real thrust of the work to protect female whistleblowers has been accomplished not by the provisions of the law but by those individual women brave enough to come forward and fight extensive legal battles to enforce, cement, and expand those provisions.

The Right to a Jury Trial for Federal Whistleblowers

Among the shortcomings of the statutory framework seeking to protect whistleblowers of sex discrimination in the federal workplace is an ambiguity in the scope of the individual right of action. The text of the statute explicitly gives the district court jurisdiction over discrimination claims arising under, inter alia, the Civil Rights Act. Therefore, it remains unclear whether a “mixed case”– which includes both discrimination claims and related non-discrimination retaliation claims – must remain within agency jurisdiction, or whether the entire mixed case, including the whistleblower retaliation claims, can be heard by a federal jury. This crucial gap in the legislation has been directly remedied by individual female whistleblowers.

In 1999, Dr. Duane Bonds was serving as Deputy Chief of the Sickle Cell Disease Branch of the Division of Blood Diseases and Resources within the NIH, where she was a highly prominent medical researcher. Throughout her employment, Dr. Bonds experienced repeated sexual harassment at the hands of her male supervisor. In retaliation for reporting the harassment to the EEOC, Dr. Bonds was removed from her position and demoted. In her new position, Dr. Bonds discovered that human DNA had been improperly used in NIH projects. She escalated these concerns over the objections of her supervisor, who retaliated by submitting negative performance reviews which caused her removal from the project. Dr. Bonds again filed a complaint with the EEOC in 2005, alleging that the removal constituted unlawful discrimination and retaliation. Throughout the complaint and investigation process, Dr. Bonds experienced continued sex discrimination and harassment in her workplace and was ultimately terminated in 2006. Dr. Bonds initiated a final EEOC complaint in 2007, detailing the extensive discrimination and whistleblower retaliation she had experienced. With no administrative action taken within the statutorily determined time frame, Bonds filed her case with the District Court.

Because it included both discrimination and claims of retaliation for protected whistleblowing activity, Bonds’ case was considered a “mixed case,” and the district court struggled with the question of jurisdiction under the CSRA, ultimately dismissing the claims citing failure to exhaust administrative remedies. In her appeal to the 4th Circuit, Dr. Bonds argued that mixed cases like hers must be treated as a single unit and heard in combination in either an administrative proceeding or in federal court. The 4th Circuit agreed, granting Bonds and other whistleblowers in her situation the right to a federal jury trial, on both her CSRA discrimination and WPA retaliation claims.

In determining this jurisdictional question, the 4th Circuit cited to a D.C. Circuit case which held in favor of another female whistleblower bringing both discrimination and retaliation claims. In this case, Kiki Ikossi – an electrical engineer at the Navy Research Lab – suffered continuous discrimination by her employer on the basis of age, gender, and national origin, stunting her career progression. Dr. Ikossi fought the misconduct in federal court, where the D.C. Circuit found that interpreting the law to require a whistleblower’s retaliation claims to be held up in administrative proceedings would be adverse to Congress’ intent to have discrimination and retaliation claims settled “expeditiously.” The Court noted that the regulatory structure surrounding mixed cases had become “extremely complicated,” and that access to a judicial forum for complainants of sexual discrimination in the federal workplace was critical to the legislative purpose, otherwise such claims would “languish undecided in the administrative machinery.”

The decisions on mixed case jurisdiction secured by Dr. Ikossi and Dr. Bonds have been cited by numerous other circuit courts, further expanding protections for federal employee whistleblowers facing sex discrimination in the workplace. On the basis of this precedent, Bunny Greenhouse – a high ranking official at the Army Corps of Engineers who discovered and exposed egregious contracting fraud by the Department of Defense – was able to take her case of whistleblower retaliation to federal court in the District of Columbia. Under pressure of a federal trial, the Army agreed to settle the case for nearly $1 million in restitution. After the settlement, Ms. Greenhouse made an impassioned statement: “I hope that the plight I suffered prompts the Administration and Congress to move dedicated civil servants from second-class citizenry and to finally give federal employees the legal rights that they need to protect the public trust.”

Among many other female whistleblowers who have helped to shape the law as it stands today, Dr. Ikossi, Dr. Bonds, and Ms. Greenhouse’s lengthy legal battles paved the way for future whistleblowers of gender discrimination to have their claims heard by a federal jury of peers rather than a politically appointed federal agency. The whistleblowing community is indebted to these women who were willing to take significant personal, professional, and financial risks to expose sex discrimination in the workplace, and to ensure future whistleblowers remain protected.

Copyright Kohn, Kohn & Colapinto, LLP 2023. All Rights Reserved.
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Michigan House Moves Quickly to Repeal Michigan Right to Work Act

The Michigan House of Representatives moved quickly yesterday to advance legislation repealing Michigan’s Right to Work law, which has been in effect for the last decade. Right to Work prohibits the inclusion of a clause in a union labor contract that conditions access to employment (and continued employment) on becoming and remaining a Union member in good standing. Before enactment of Michigan’s Right to Work law, Unions could legally negotiate a union security clause into a labor contract. In a nutshell, union security means that employees performing work covered by a labor contract must join the union and remain in good standing with the union or be terminated. On March 8, the House passed both House Bill 4005 (private sector unions) and House Bill 4004 (public sector unions). The bills will now be taken up by the Michigan State Senate.

What Does Repeal of Right to Work Mean for Michigan Companies?

If Right to Work is repealed, employers with Union labor contracts can expect requests to meet and bargain regarding union security clauses. If repealed, existing labor contracts will not be presumed to include such clauses. Rather, union security clauses and the terms and scope of such provisions are a subject of negotiation. Existing labor contracts should be reviewed with labor counsel to determine the employer’s obligations to engage in mid-contract bargaining on this important topic. Labor contracts on this issue vary. For example, labor contracts may contain:

  • A union security clause that becomes effective upon a change in the law;
  • An obligation to meet and negotiate with the Company upon a change in the law; or,
  • The labor contract may be silent on the issue.

Article By Maureen Rouse-Ayoub and Ashleigh E. Draft of Varnum LLP

For more labor and employment legal news, click here to visit the National Law Review.

© 2023 Varnum LLP

Time Is Money: A Quick Wage-Hour Tip on … the Tip Credit

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?

The Fair Labor Standards Act (“FLSA”) defines a tip as “a sum presented by a customer as a gift or gratuity in recognition of service performed[.]” 29 C.F.R. § 531.52. Tips are separate from the payment due for the service, and whether to tip and in what amount is in the sole decision of the customer. If a customer provides a tip, it is generally the property of the tipped employee. Employers, including supervisors, may not take any portion of employee tips, except employers may offset reasonable processing fees from a tip provided by credit card so long the deduction does not reduce the employee’s hourly wage below the minimum wage. 29 U.S.C. § 203(m)(2)(B); 29 C.F.R. §§ 531.52, 531.53.  However, note that some states (e.g., California) prohibit employers from deducting credit card processing fees from employee tips.

Tips a should not be confused with mandatory service or administrative charges (“service charges”) that an establishment imposes on customers, and which are increasingly common in the restaurant industry. Service charges are not tips because they do not involve customer discretion. Further, service charges are the employer’s property and part of its taxable gross receipts.

If the employer distributes all or some portion of the charges to its employees, the amount distributed is treated as employee wages and not gratuities. Although service charges distributed to employees can help satisfy an employer’s minimum wage requirements under the FLSA, service charges cannot count as tips for the purposes of satisfying the tip credit. See 29 C.F.R. § 531.55.

What is a tip credit?

The FLSA allows employers to pay “tipped employees” a reduced hourly wage (currently $2.13 per hour) so long as the cash wage plus tips received by an employee satisfy the federal minimum wage (currently $7.25 per hour). The “tip credit” is the portion of an employee’s tips the employer can apply toward its minimum wage obligations. 29 U.S.C. § 203(m); 29 C.F.R. § 531.59(b).

What is a tipped employee?

Employers may take a tip credit for employees who work in an occupation in which they customarily and regularly receive more than $30 per month in tips. 29 U.S.C.A. § 203(t). These “tipped employees” can be full-time, part-time, permanent, or temporary employees. and usually include wait staff, bartenders, and hairdressers, but not dishwashers, cooks, or janitors. 29 C.F.R. §§ 531.56(a), 531.57.

The “customarily and regularly” standard provides some flexibility for employers to account for slow months. Tipped employees can sometimes receive less than $30 in tips in a particular month but still meet the standard, so long as they receive the required amount in tips more than occasionally. See 29 C.F.R. § 531.57.

What if the tipped employee performs multiple roles?

Tipped employees are considered to have “dual jobs” if they are employed in two occupations for the same employer (e.g., a janitor who is also a bartender). If an employee has dual jobs, the FLSA’s regulations permit employers to take a tip credit for only those hours the employee spends working in their tipped occupation (e.g., the time spent working as a bartender). 29 C.F.R. § 531.56(e).

However, work that is part of an employee’s tipped occupation is not strictly limited to tip-producing work such as making and serving a drink. In December 2021, the Department of Labor promulgated a rule clarifying that employers may take a tip credit for tip-producing work and directly supporting work (e.g., restocking the bar or rolling silverware), provided the employee does not perform the directly supporting work for a substantial amount of time. The rule defines “substantial” as either more than 20% of the employee’s workweek or a continuous period of more than 30 minutes. In other words, according to this regulation, employers cannot take a tip credit for any directly supporting work that exceeds the 20% threshold or exceeds 30 continuous minutes.  This regulation is currently facing a challenge in the courts, with restaurant associations contending that the rule is contrary to the FLSA.

What are the employer’s notice and recordkeeping obligations?

Before taking a tip credit, the FLSA’s regulations require employers to notify all tipped employees of the following:

  • the amount of cash wage the employer is paying the tipped employee;
  • the additional amount claimed by the employer as the tip credit;
  • the tip credit claimed by the employer cannot exceed the amount of tips actually received by the employee;
  • that all tips received by the tipped employee are to be retained by them except for a valid tip pooling arrangement limited to employees who customarily and regularly receive tips; and
  • that the tip credit will not apply unless the employee has been informed of these provisions.

29 C.F.R. § 531.59(b). Employers may provide the tip credit notice orally or in writing but should require employees to sign an acknowledgement that they received and understood the notice and maintain copies of the signed acknowledgment in employee personnel or payroll files to document compliance. Generally, employers should provide the tip credit notice to new employees upon hire and to existing employees whenever there are changes to the minimum wage, cash wage, tip credit, or mandatory tip pool requirements (if appliable). Employers who take a tip credit without providing the proper advanced notice may be required to pay tipped employees the difference between the cash wage and the minimum wage for all hours worked before the employer provided the notice.

In addition to providing advanced notice, employers who take a tip credit must maintain and preserve payroll records that contain all the information required for non-exempt employees under 29 C.F.R. § 516.2(a), and:

  • a symbol, letter, or other notation in their pay records that identities each employee receiving a wage determined in part by tips;
  • the weekly or monthly amount of tips reported by each employee to the employer;
  • the amount of any tip credit taken, up to the maximum permitted by the FLSA (note: employers must notify employees in writing each time the tip credit amount changes);
  • the number of hours worked each workday in which the employee does not receive tips (i.e., worked in any non-tipped occupation) and the total daily or weekly straight-time pay for such hours; and
  • the hours worked each workday in any tipped occupation and the total daily or weekly straight-time earnings for such hours.

29 C.F.R. § 516.28(a).

States Laws on Tip Credit

State and local laws may have different rules when it comes to tip credits. For example, some states allow employers to take a tip credit, but require them to pay a higher cash minimum wage to employees. Other states may provide different definitions for a tipped employee or permit tip credits under different circumstances than the FLSA.

Currently, seven states prohibit employers from taking a tip credit: Alaska, California, Minnesota, Montana, Nevada, Oregon, and Washington. Further, in November 2022, District of Columbia voters approved Initiative 82, which will phase out the tipped minimum wage by July 2027. Although the D.C. Council recently postponed the initial increase to the minimum regular cash wage (and decrease to the maximum tip credit) from January 1, 2023, until May 1, 2023, the rest of the schedule remains unchanged.

©2023 Epstein Becker & Green, P.C. All rights reserved.
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