TAXES ON OVERTIME AND TIPS: THE IMPACT OF LAST WEEK'S FEDERAL LEGISLATION

Both Opinion Letters offer some clarity on these wage and hour issues under the federal Fair Labor Standards Act, “FLSA,” and are briefly summarized below: Tip Pooling – The question was whether a bartender could engage in a tip pooling arrangement when he was bartending and acting as a Shift Supervisor. The answer was no, because a manager or supervisor is prohibited from keeping tips received by other employees. The fact that the individual was also performing non-managerial duties (bartending) did not change the result. The individual could keep all tips he receives directly from customers based solely on the service he provides. Unpaid Meal Period – Employees were given 60 minutes of unpaid time each day to eat lunch. They had to walk 3-7 minutes to and from a break area to eat lunch. The question was whether employees were provided with enough time for a “bona fide” unpaid meal period. The answer was that they were. Generally, a meal period is considered “bona fide” under the FLSA, and therefore not compensable, if the employees are completely relieved of their duties for at least 30 minutes. In this case the employees had longer than 30 minutes, even with the walk to and from the break area.

Employers with 15 employees are required by federal law to provide reasonable accommodation to an employee requesting such an accommodation for religious reasons, unless providing the accommodation would cause an undue hardship on the business. Most states have similar laws. In the past, an employer only had to show that the requested accommodation would cause it some additional cost, even de minimis, to show that an accommodation would be an undue hardship. However, the Supreme Court greatly complicated the question of undue hardship 3 years ago in a case, Groff v. DeJoy, which involved the common employee religious accommodation request not to be scheduled on a specific day of the week for religious observance. In Groff, the Court moved the goalpost by finding that an employer now must show that granting the request would cause substantial increased cost, or a substantial burden in the overall context of the business to meet the hardship standard. So what does this mean? When considering an employee request for accommodation, an employer should consider the following in relation to its particular business when making the undue hardship determination: Financial costs relative to the size and financial resources of the business. Remember, this is based on each individual business. What is an undue hardship to a small business might not be to a larger employer. Whether the requested accommodation would cause operational disruption by undermining the business operations or core efficiency. Occasional shift swapping, temporary adjustments, or administrative costs do not meet the substantial costs standard. How the requested accommodation would impact coworkers. An employer can’t deny a request just because a coworker might be uncomfortable with the religious practice that is the basis of the request. An employer can consider whether the accommodation would affect coworkers in a way that disrupts business operations or would violate a collective bargaining agreement. Whether the accommodation would create a legitimate objective safety risk to employees. An employer should engage in a good faith interactive process with an employee requesting an accommodation to explore all reasonable accommodations in an attempt to reach agreement. An employee may not be entitled to the precise accommodation requested if another accommodation is available which would be effective to address the employee’s concern. Unfortunately, there obviously is no bright-line rule for employers in this area. The Groff decision did away with the more predictable de minimis rule which had been observed by the courts for over 40 years. Employers should carefully consider all requests for religious accommodation.

On May 28, the US Department of Labor, “DOL,” issued four Opinion Letters in an attempt to answer some “real world” questions Employers have about wage and hour law, governed on the Federal level by the Fair Labor Standards Act, “FLSA.” You can find links to the actual Opinion Letters here: https://www.dol.gov/newsroom/releases/whd/whd20260529-0 . Additional Opinion Letters are also available on that site. Unfortunately, the FLSA is an old law with many complexities and nuances. Set forth below is our attempt to provide the takeaways from two of the Opinion Letters: FLSA 20026-7 – This was a meal period case. The question was whether employees were entitled to pay for time spent walking out of a large facility and going through security to take their meal break. The short answer is no. The employees in this case had the meal period option to leave the worksite or stay onsite. Their choice to leave did not convert their travel time into time worked. The letter notes that the FLSA does not require that employees be given a meal period at all (Please note that state law often does require a meal period). However, if an UNPAID meal period is provided, it must be at least 30 minutes of UNINTERRUPTED time during which the employees are COMPLETELY relieved of all duties. The letter also mentions that employees may be required to stay on the premises during the unpaid meal period, provided they perform no work. FLSA 2026-5 – The question in this letter was whether an employee who is properly exempted from overtime can also be paid for working in an hourly position that is not exempt from overtime. The short answer is yes, provided that the employee’s PRIMARY DUTY is in the overtime exempt position. The case involved nurses who worked 62 – 77% of their weekly hours in a properly overtime-exempt Specialist position; with the other hours being worked in an hourly nonexempt Floor Nurse position. Under the FLSA, an exempt employee can pick up extra hourly shifts in a non-exempt role and be paid hourly for that non-exempt work, so long as their primary duty is exempt work and they are paid the full guaranteed salary for the exempt position on a salary basis.

With military deployments of National Guard, and other military personnel, being at a 20 year high, employers are likely to have employees who request to be absent from work due to military service. Set forth below is a summary of the protections provided to such individuals by USERRA. This is only a summary. This law contains more provisions, and some complexities, as do most federal laws. Additionally, state laws may also be applicable. Employers should consult an expert for specific guidance. USERRA SUMMARY USERRA applies to all employers: There is no threshold based on the number of workers. An employer with just one employee must provide USERRA protections. Prohibition against discrimination and retaliation : Employers cannot deny initial employment, reemployment, retention, promotion, or any benefit on the basis a person’s membership, application for service, or obligation for service in the armed forces. Retaliation is similarly prohibited. Continuation of benefits while on leave : Employers must provide eligible employees with up to five years of unpaid leave during the life of their employment. Throughout this period, employers must maintain the employee’s seniority, health care, and pension benefits. Right to reemployment : Returning service members have a nearly unfettered right to reemployment by their pre-service employers upon timely application for return to work – and need to be returned to a position and pay level they would have risen to had they remained at work during their military leave. Exception to at-will employment: Employees returning from protected leave are no longer pure “at will” employees for a period of time following reemployment. If the deployment was for more than 30, but less than 180 days, they can only be terminated “for cause” for 180 days following reemployment, or for one year if the length of deployment exceeded 180 days.