As promised in our April 2021 post regarding the rules for tipped employees, here’s the update on the final rule. RecallTitle: Finally Final: The Tipped Employee Rule that not all of the rule became effective earlier this year but certain portions were implemented to help workers increase earnings during the pandemic. For example, the April 2021 rule allowed employers who did not take a tip credit to allow dishwashers, cooks, chefs, custodians and other non-tipped employees to participate in the tip pool. For a refresher on the details of what actually became final in April 2021, click here.

Now that other portions of the tipped employee rule are finally final, they go into effect November 23, 2021. Here’s what you need to know:

  • Notably, the rule restores the U.S. Department of Labor’s ability to assess civil money penalties (CMP) of up to $1,100 per violation against employers. CMPs may be assessed any time an employer unlawfully takes tips earned by their employees, regardless of whether the violation is willful.
  • Employers may use the tip credit for minimum wage when there is no traditional tip pool, only if the tipped employee retains all the tips he or she receives and those tips are sufficient to make up the difference between cash wages paid and the current federal minimum wage, which is $7.25 per hour.
  • If you use a tip pool and claim credit, the tip pool must include only those traditionally eligible employees and not back-of-the-house employees, such as dishwashers and custodians. However, like we said in April, if you do not take a credit, you may have “non-traditional” tip pools that include back-of-the-house employees. Consult your employment attorney on advice as to whether you should take a tip credit or not.
  • Regardless of the credit, managers and supervisors should not collect tips from an employer-mandated tip pool but may be required to contribute tips to the pool. If the manager or supervisor receives tips for services that he or she “directly and solely” provides, the manager or supervisor may retain those tips, but you may also require them to contribute (but not receive) a portion to the tip pool.

What Does This Mean?

Whatever you do, make every effort to understand and comply with the FLSA tipped employee rules.  Then, update your policies, train your supervisors and managers, and be sure to consider state and local laws. As always, reach out to your employment attorneys with any questions and for assistance with figuring out the best approach for your business.

Get Poked or Get Canned – Can You Terminate an Employee for Refusing the Vaccine? The answer is it depends.

Why is the employee refusing the vaccine?

For employers mandating the vaccine, an employee’s refusal to receive it because he or she simply does not want to be vaccinated is likely fair game for termination. Typically, however, an employee will seek a reasonable accommodation that enables him or her not to get the vaccine, raising an objection pursuant to the Americans with Disabilities Act (a medical issue) or Title VII (a sincerely held religious belief). Those scenarios require an employer to entertain the request by engaging in an interactive process to determine, primarily, whether there exists a way to provide the accommodation without creating an undue burden (or hardship) on the employer. The threshold for the hardship analysis is much higher for a medical reason than a religious reason. Keep in mind that you do not have to remove essential functions of a job or create a separate position as a reasonable accommodation.

What if you have a union or a federal contract?

The issue becomes even more complicated if a union is involved or the employer is a federal contractor. With a union, you must make sure you bargain appropriately before imposing a change in working conditions.

On the federal contract side, those employees will fall under a vaccine mandate starting October 15, just like federal employees. In the past months, vaccine requirements have differed from site to site depending on the particular government contracting agent. For example, if the site lets visitors (including contractor/subcontractor employees who perform their duties onsite) enter with masks or a negative test as an alternative to vaccination, the employer will in most cases need to provide the same accommodation. If the site takes a more stringent approach and does not allow masks and negative tests as an alternative, the employer may be able to deny such a request and terminate the employee instead. Before you terminate an employee, make sure to check for any vacancies in which you can provide the accommodation. If no such vacancies exist, the employer should allow the employee to exhaust available sick or PTO time, as well as FMLA leave, if his or her vaccine refusal is based on a medical issue. For a religious issue, the employee would not qualify for sick time, but the employer should allow that employee to exhaust available PTO prior to termination.

What about the OSHA Emergency Temporary Standard?

We expect OSHA to issue its Emergency Temporary Standard (ETS) soon, which will shed light on the analysis, but we do not yet know exactly what that guidance will be. We expect, however, that exceptions based on disability or religious requests for accommodation will be a part of the rules, and the ADA and Title VII analysis will be necessary.

As always, stay tuned for additional guidance after OSHA issues its ETS.

What’s New with COVID-19 This Week?The Biden administration has been very busy rolling out its plan to manage the COVID-19 pandemic. While we blogged about the president’s announcement last week, we just can’t help ourselves and are going to have an hour-long webinar to talk some more about it. Join us tomorrow while Craig Oliver, Chuck Mataya, and Anne Yuengert talk more about the latest and greatest in what employers need to worry about in the wonderful world of COVID-19.