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Matt Miller has nearly 20 years of experience representing and advising management in all areas of labor and employment law, including anti-discrimination laws, wage and hour law, ERISA, OSHA, and covenants not to compete. He regularly advises clients on preventive measures, including creation and revision of policies and procedures, and represents clients in court cases in federal, state and administrative forums. View articles by Matt

Unless you have been living in a cave for the last month, you have heard about the sexual misconduct allegations against Hollywood mogul Harvey Weinstein. The story has all of the makings of a Hollywood blockbuster, except this time it’s not a movie. Here’s why it should also raise the curtain for employers outside of Tinseltown.

Why the Harvey Weinstein Scandal Should Scare the Pants Off EmployersRising Tide of Allegations Will Result in Increased Scrutiny

The Weinstein allegations have triggered an avalanche of claims against Hollywood stars, celebrity chefs, executives and politicians unlike anything in recent memory. The EEOC has weighed in with renewed interest in harassment claims, seizing upon an opportunity to publicize the issue. Those who use their workplace positions to make unwelcome sexual advances deserve to be called out for their misconduct. To be clear, this post is not for them. However, the sheer number of allegations regarding misconduct that occurred years ago and were never reported poses a real problem for conscientious employers. What does this mean for employers who face fallout for this kind of misconduct?

First, employers will have to deal with increased administrative interest. Undoubtedly, the EEOC will more carefully scrutinize claims of harassment and increase litigation efforts against companies alleged to harbor harassers, especially in the C-suite. Second, litigation could get tougher. Juries and courts may be more inclined to believe that alleged harassment occurred and to disbelieve denials by an accused executive and by extension his or her employer. In short, we will likely see an increase in claims, so what can employers do?

An Ounce of Prevention

You have heard it before but it bears repeating. While employers can’t stop employees from acting badly, they can take steps to try to prevent bad conduct and to properly address it when brought to their attention.

  • Review your policies. Any employer reading this almost certainly has a policy against harassment or discrimination, but far too often we see employers with cut and paste policies gleaned from another company or pulled off the internet that don’t really align with their workplace. You need clear, well-thought-out policies that your employees understand. Be sure the policy explains what harassment is and encourages people to report it.
  • Identify the right person to receive complaints. A policy merely advising employees to report harassment to their immediate supervisor, who has little or no training in how to identify or address harassment, often proves of limited help. Think about who is best to receive allegations about harassment and to properly address them and draft your policy to match. Clear policies with carefully crafted reporting procedures (perhaps supplemented with a third-party hotline option) can help.
  • Distribute the policy. A policy buried in a handbook, with no stand-alone employee acknowledgment, can be portrayed as mere words on the page with no real meaning. Worse still, employees may claim (sometimes truthfully) that they never received or read it. A policy given to employees and acknowledged in writing is critical.
  • Training, training, and more training. The again obvious, but often overlooked or sporadically implemented, additional step is education and training. For those of you in states that require annual training, make sure you do it and document it. For the rest of the country, have annual training of management in EEOC matters and trends. Add training of HR staff in how to identify, investigate and address allegations. Make sure your supervisors can identify harassment and know what to do when they see it or get a complaint. Educate employees in the company’s reporting procedures and make sure they understand that the company will not tolerate retaliation for a complaint. Finally, implement the training in a manner that avoids the holes created by employee and supervisory turnover.

Again, all of this sounds obvious but it can mean the difference between preventing harassment in your workplace and being found liable for the bad acts of people who you thought knew better.

Relishing the Moment: Tenth Circuit Allows Restaurant to Keep Server Tips and Rejects DOL RegulationIn a victory for restaurant employers, the Tenth Circuit Court of Appeals has ruled that Relish Catering can keep customer tips without violating the Fair Labor Standards Act (FLSA), so long as the employee is paid at an hourly rate above minimum wage. The court also found that the U.S. Department of Labor overreached in its regulatory rulemaking in this area and rejected the department’s interpretation of the law.

The Facts

Bridgette Marlow worked for Relish Catering at an hourly rate of $12 ($18 for overtime). If customers paid a gratuity, Relish kept the money. Ms. Marlow didn’t like that and sued Relish and its manager/part owner in federal court, alleging that Relish had violated the minimum-wage provisions of the FLSA because it kept customer tips she claimed should have gone to her and other catering workers.

The FLSA (Section 203(m)) gives employers of “tipped employees”—such as hotels and restaurants—the option of paying a reduced hourly wage of $2.13 so long as their workers receive enough tips to bring them to the $7.25 minimum wage. If there are not enough tips, the employer must pay the difference; if there are more than enough, the excess tips go to employees.

The court granted Relish’s motion for judgment on the pleadings and dismissed the case, and the Tenth Circuit has now affirmed that dismissal.

What the Appeals Court Said and Why It is Important

The Court of Appeals found that the FLSA’s restrictions on employers’ use of tips apply only when the employer uses tips as a credit against the employee’s minimum wage. If an employer such as Relish pays its employees more than the minimum wage without regard to tips, the FLSA does not restrict the employer’s use of tips. The court also found that a DOL regulation categorically barring employers from retaining tips is invalid because it exceeded the DOL’s authority.

This case serves as an example of the importance of the FLSA’s technical language and how such language can sometimes actually favor the employer. It also serves as an example of the increasing number of cases where the courts have found that an agency of the federal government has exceeded its authority in issuing a regulation, standard or interpretation.

Business man signing a contract

The NLRB wants to stop class action waivers in employment arbitration agreements, arguing they violate the National Labor Relations Act. This issue has been raging for several years and divided federal courts. As reported in our November 2, 2015, blog post, the Fifth Circuit Court of Appeals upheld a class action waiver in the important Murphy Oil case. Undaunted, the NLRB has asked the U.S. Supreme Court to review the issue and the high court has agreed to do so in a series of three cases, one of which is Murphy Oil.

What does this mean for employers? If the Supreme Court holds that class action waivers are enforceable in employment arbitration agreements the NLRB’s attack on this issue will end. However, if the Supreme Court rules in favor of the NLRB, the decision could have far reaching impact on employers’ use of class action waivers in arbitration agreements. Such waivers are often the saving grace for employers facing costly class or collective action lawsuits as the class allegations fall away when the employer compels arbitration and then asserts the class waiver provisions. Without such provisions employers should brace for more employment class actions. If you have those waivers or are considering implementing them, keep an eye on this case, including whether President’s Trump’s choice for a ninth justice will be seated in time to participate in the decision.