Ohio Appellate Court Remands Physician Non-Compete Case To Evaluate Whether Continuing Education Investment Was Sufficient Protectible Interest

In October, the Hamilton County Court of Appeals reversed a hospital employer’s summary judgment in a declaratory judgment action brought by a former employee-physician on the grounds that the trial court had incorrectly increased the employee’s burden of proof.   Wigton v. University of Cincinnati Physicians, Inc., No. 2021-Ohio-3576.  There was no issue of stealing patients or confidential information.  The employer justified the non-compete clause on the basis of the investment which it had made in the physician’s continuing education.  Neither party moved for injunctive relief and both moved for summary judgment.  Nonetheless, the trial court ruled that the physician failed to carry his burden of clear and convincing evidence (as required for injunctive relief).   The court of appeals ruled that the burden of proof should have been the simple no dispute of material fact and judgment as a matter of law standard and remanded the case to decide whether the employer’s investment in continuing education was significant enough to restrict otherwise fair competition.  In particular, the trial court was instructed to evaluate “whether the doctor’s “expertise was increased * * * more than would have been through experience as [a physician] in solo practice,” . . . and/or whether the training provided by the hospital facilitates some type of unfair competition.”

According to the Court, the plaintiff physician signed a non-compete clause which prohibited him from practicing medicine for 18 months within 10 miles of any location where he had previously worked in the prior 12 months.  After four years of employment , he accepted another position and sought a declaratory judgment on the enforceability of the non-compete clause, but did not move for injunctive relief (which requires clear and convincing evidence).  Instead, he sought a summary judgment (which only requires no disputes of material fact and judgment as a matter of law).  In opposing the summary judgment motion and moving for its own summary judgment, the employer’s attorneys argued the injunctive relief standard of proof (i.e., clear and convincing evidence).  There was no dispute about the physician attempting to steal patients or possessing any trade secrets or confidential information.  The employer was relying simply on the amount of training it claimed to have provided the physician to justify the restriction.

The appellate court observed that while reasonable restrictions are enforceable, physician non-complete clauses are disfavored:

Noncompete restraints on physicians are, therefore, “strictly construed in favor of professional mobility and access to medical care and facilities.” Id. Nevertheless, “covenants not to compete in the medical profession are not per se unenforceable, and will be upheld if they are reasonable.” Id. That said, we only enforce noncompete restraints on physicians “to the extent necessary to protect an employer’s legitimate interests; if there is no legitimate interest to be protected, the noncompete is unreasonable.”

             . . . Generally, noncompete restraints are only enforceable when the employee possesses protected business information (such as trade secrets or customer lists) that she can use against her former employer. . . . . Indeed, this is why noncompete caselaw focuses on preventing unfair competition, not simply ordinary competition.

Without ruling on whether the employer’s investment in the physician’s training was a sufficiently strong interest to justify a restriction on competition, the Court observed:

It concluded that UCP’s position as a nonprofit academic hospital provided a legitimate business interest in deterring defections like Dr. Wigton’s and that UCP invested in Dr. Wigton’s training. We take no position on the merits of these conclusions because they were assessed under an incorrect standard, but we do point out that in considering a physician’s training, a court should not simply evaluate whether a doctor received training (as all doctors do) but whether the doctor’s “expertise was increased * * * more than would have been through experience as [a physician] in solo practice,” id. at ¶ 28, and/or whether the training provided by the hospital facilitates some type of unfair competition.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

OFCCP Moves Closer to Requiring Annual AAP Certification by June 30

As the OFCCP moves closer to requiring annual compliance certification from service and supply contractors and subcontractors, last week it unveiled its compliance portal where contractors can submit their affirmative action plans (during a compliance review) and annually certify compliance with their affirmative action obligations.  “The Contractor Portal is a new OFCCP platform where covered contractors must certify whether they are meeting their requirement to develop and maintain annual AAPs.”  The portal will open on February 1, 2022.  The OFCCP has also announced that the certification details (like the content of the certification and public availability of the information) will be available in the portal by March 31, 2022.  “By June 30, 2022, existing contractors must certify whether they have developed and maintained an affirmative action program for each establishment and/or functional unit, as applicable.”

In its User Guide, the OFCCP explains:

Currently, federal contractors submit their AAPs via mail or email. The AAP-VI system will be the primary source for entering, tracking and submitting your Affirmative Action Programs for review by OFCCP. AAP-VI will provide federal contractors a system to submit their Programs in a more efficient manner and provide visibility and reporting capabilities of the data submitted by the Programs.

The impetus for the new program presumably comes from a 2016 GAO report finding that the OFCCP does not effectively track compliance with the affirmative action obligations of the vast number of contractors and subcontractors.

While the specific details of the required contractor certification have not been revealed, there was a sample of a question and certification page for companies seeking to receive a federal contract through the System for Award Management:

Select the checkbox pertaining to the correct SAM statement that best describes your AAP requirements.

o It has developed and maintained affirmative action programs at each establishment, as applicable. See 41 CFR Chapter 60.

o It has been party to a qualifying federal contract or subcontract for 120 days or more and has not developed and maintained applicable affirmative action programs at each establishment, as applicable. See 41 CFR Chapter 60.

o It became a covered federal contractor or subcontractor within the past 120 days and therefore has not yet developed applicable affirmative action programs. See 41 CFR Chapter 60.

New federal contractors have 120 days in which to develop an affirmative action program and 90 days after that in which to certify their compliance.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Ohio Court of Appeals Rejects Disability Discrimination Claim When Plaintiff Had Poor Attendance

On Tuesday, the unanimous Stark County Court of Appeal rejected the disability discrimination claim  under Ohio Revised Code 4112 of a former restaurant dishwasher who claimed that he had been terminated on account of his alleged MS.  Coco v. Beysely’s Restaurant, No. 2021-Ohio-4201.   The plaintiff alleged that he was replaced after missing work for a few days in November 2017 following a fall at work caused by his MS.  However, the undisputed evidence reflected that since being hired in March 2017, he had called off work over 26% of the days he was scheduled and on almost half of the days he was scheduled, he explained that he was physically unable to perform his duties.   He was also late to work 22 days when he did show up.  Considering that the restaurant had no more than 7 employees and the plaintiff’s poor attendance required the 79-year-old co-owner/cook to fill in for him (sometimes delaying food orders while he washed dishes), the Court found that the plaintiff’s poor attendance rendered him unqualified for his position (and thus not entitled to a reasonable accommodation).  The Court did not find the employer’s additional stated concern with potential liability if plaintiff were injured at work to affect the outcome.   Following federal ADA precedent, the Court indicated: “[a]n employee who cannot meet the attendance requirements of the job at issue cannot be considered a ‘qualified’ individual protected by the ADA.”  This is because “[r]egular attendance and ability to perform the work are an essential function of any position.”  In short, the employee had been terminated – not because he required a temporary leave of absence following his fall – but because he had not reliably and predictably reported to work and performed his essential job duties.

The trial court granted summary judgment to the employer:

As noted by the trial court in its decision, appellant “was absent for about 26% of his scheduled days and on approximately half of the days he did appear for work, he claimed that he was unable to perform his job requirements.” Moreover, washing and putting away dishes are essential functions of appellant’s job as a dishwasher and must be performed in person. Appellant’s absences and his inability to perform such functions caused a hardship to appellee as a small business. There was evidence that Bill Maronitis was often forced to perform these functions. Maronitis, in his affidavit, stated that appellant’s attendance was terrible and that he frequently had to interrupt his food preparation to wash dishes.

The Court rejected the plaintiff’s argument that it was direct evidence of discrimination for the employer to also express concern with its potential liability for his potential self-injury from falling at work because the same discussion including an emphasis of the plaintiff’s poor attendance and inability to perform the essential functions of his position.  The employer

voiced concerns about potential liability if appellant were to fall at work, especially during the winter when the parking lot was salted and slippery. However, during the same conversation, Maronitis indicated that they never knew when appellant was going to be off of work. During the conversation, Larry Beyes, Maria’s husband, stated at page 9 that “[t]he job requires somebody’s going to be here every single time and when you are not confident that that job is going to be filled every single day, how can you run your business? You can’t that’s the bottom line.” Maria Beyes also indicated that she and her father could not physically perform appellant’s job functions along with their own since they were not “spring chickens anymore.”

 

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Sixth Circuit Reverses Employer’s Summary Judgment in Age Discrimination and Retaliation Case

 Earlier this month, the Sixth Circuit Court of Appeals reversed an employer’s summary judgment  on an age discrimination and retaliation case where the employee had been terminated in a reduction in force. Sloat v. Hewlett-Packard Enterprise Co., No. 20-6169 (6^th Cir. 2021).  After five years of excellent performance evaluations, the plaintiff’s new manager had asked him at least 10 times when he planned to retire and encouraged staff to refer to him as “Uncle.”  When confronted with whether he had a problem with the plaintiff’s age, he screamed, spoke to the plaintiff very little over the next four months, gave him the second worse possible mid-term evaluation and recommended him for termination.    In short, the court concluded that the plaintiff had produced enough evidence that the jury—and not the trial judge --  should be able to decide what the employer’s true motivation was in terminating his employment.

According to the Court, the plaintiff trainer had worked with stellar performance evaluations, incentive compensation and promotions until he was transferred in November 2016 after 6 years to a new division, which he had been told wanted him to roll out the training program that he developed.  However, it was apparent that this was not the true reason for his transfer because his new manager had no knowledge of or interest in his training program and found his position to be redundant and without any assigned responsibilities or recognition of achievements. The plaintiff was the manager’s oldest direct report.   The manager’s chief of staff called him by the wrong name and then referred to him as “Uncle” thereafter, with support from the manager.  The manager asked him at least ten times when he planned to retire and why he was still there and interacted him on an extremely limited basis.  After the plaintiff complained about age discrimination, the manager then began advocating for him to be terminated. In this mid-year performance evaluation, the manager gave him the second lowest score.  The manager also became very angry when the plaintiff raised his concerns with HR and with the manager directly.  HR refused to conduct any investigation of the plaintiff’s concerns.  The plaintiff was informed of his termination by a different executive, who freely admitted that he was merely the messenger and not the decisionmaker.

While the Court agreed that a few inquiries about retirement plans could be necessary or prudent, badgering an employee – especially considering their limited interaction – was evidence of age discrimination.  That the employer attempted to explain the inquiries was merely an attempt to shift the summary judgment burden and did not give favorable inferences to the non-moving party:

That response is inexplicable: one or two inquiries along these lines from one’s boss might be dismissed as isolated; even more inquiries could form a pattern; but ten inquiries, a jury could easily find, is a campaign. [The employer] also responds that [the manager] asked about [the plaintiff’s] retirement plans “in the context of [the manager] telling [the plaintiff] that he did not appreciate his constant emails.” Br. at 33. But that point merely views the evidence in a light favorable to [the employer]; that [the manager] complained about [the plaintiff’s] emails in these conversations does nothing to preclude the straightforward inference that [the manager] thought [the plaintiff] should retire because [the manager] thought he was too old for the job. In sum, [the plaintiff] has sufficient evidence that [the manager] was biased against him because of his age.

[The manager’s] inquiries about retirement also support an inference that [he] engaged in a series of actions, driven by bias, whose intended effect was to drive [the plaintiff] out of the company. At first (one could reasonably infer) [the manager] pushed to have [the plaintiff] leave voluntarily; to retire from a position is to leave it. That [the manager] gave [the plaintiff] “the lowest bonus of all his direct reports”—and told [him] as much directly—supports this view. So does the fact that, in March 2017, [the manager] asked [the plaintiff], “Why are you still here?” ([The manager] did not dispute that point either in his deposition.) But [the plaintiff] did not leave voluntarily, so (one could reasonably infer) [the manager] sought to terminate him. [His] first attempt took the form of a proposed one-person workforce reduction. . . —in which [the plaintiff’s] position alone would be eliminated.  [The manager] abandoned that plan only after [HR] flagged it for “legal attention” and  . . .  advised him to wait for a company-wide workforce reduction that was then pending . ..

The Court also found sufficient evidence that the manager, and not the executive, had been the decisionmaker or the executive had relied on the manager’s recommendation and explanation for why the plaintiff should be fired.   The executive had limited and only favorable impressions of the plaintiff’s work and had been unaware of how he had been treated by the manager.   There was no independent investigation and no break in the chain of causation showing that the plaintiff had been terminated for reasons unrelated to his manager’s alleged discriminatory animus.   The Court concluded that a reasonable jury could find that the manager’s discriminatory animus based on the plaintiff’s age was the but-for causation, or had a determinative influence on the outcome of the decisionmaking process.

The Court similarly found that the plaintiff could satisfy his burden of proving that retaliation was a but-for cause for his termination:

As to that question, Sloat emphasizes that Hagler “scream[ed]” at him and was “furious” when (per Iyer’s advice) he told Hagler directly that he thought Hagler was discriminating against him because of his age. Sloat also has evidence that, after that conversation, Hagler avoided speaking with him (by Hagler’s count, they spoke seven times in the next four months), stripped him of all his remaining responsibilities as to Ropes, and gave him his worst performance review ever. Hagler also tried to get Sloat transferred off his team and—when that failed—sought to terminate him in a one-person “WFR.” Moreover, Iyer’s email flagging that “situation” for “legal attention” and an examination of “the rationale and any risks associated with it” supports an inference that even she thought the one-person “WFR” was potentially retaliatory. Thus, much of the same evidence that supports Sloat’s claim of age discrimination likewise provides sufficient support for his prima facie case for the retaliation claim.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

DOL Publishes Final Regulation on New Minimum Wage for Certain Federal Contractors

Last week, the Federal Register published the final regulation by the Department of Labor implementing Executive Order 14026, raising on January 30, 2022 the minimum wage applicable to many, but not all, federal contractors to $15/hour with automatic annual increases.   Like other Executive Orders, this only applies to new contracts, renewals and extensions, but agencies have been “strongly encouraged” since April to include this requirement in new contract solicitations, contracts and extensions.  It also only applies to certain types of federal contracts, including McNamara-O'Hara Service Contract Act of 1965 covered contracts, concessions contracts, contracts related to federal property and “a procurement contract or contract-like instrument for services or construction” if those employees are also subject to the Service Contract Act, the Davis-Bacon Act or the Fair Labor Standards Act and only for hours worked on or in connection with a federal contract.   The regulation gradually phases out all tip credits by 2024 and revokes some prior exemptions granted by the prior Administration.  The DOL has also created a new poster to be displayed or distributed by covered employers.

Sections 23.30(d) and 23.40 specifically exclude coverage to certain types of federal contracts and workers: (i) “contracts for the manufacturing or furnishing of materials, supplies, articles, or equipment to the Federal Government, including those that are subject to the Walsh-Healey Public Contracts Act, 41 U.S.C. 6501 et seq.” (ii) grants, (iii) agreements with Indian Tribes, (iv) construction procurement contracts not covered by the Davis-Bacon Act, (v) certain contracts specifically excluded from the Service Contract Act, (vi) with certain exceptions, employees exempt under the FLSA, (vii), FLSA-covered employees who perform less than 20% of their time in connection with (rather than directly for) a covered contract and (viii) contracts resulting from a solicitation issued before January 30, 2022, but entered into on or between January 30, 2022 and March 30, 2022. 

The definition section of the regulation describes the covered “workers” as follows:

any person engaged in performing work on or in connection with a contract covered by the Executive Order, and whose wages under such contract are governed by the Fair Labor Standards Act, the Service Contract Act, or the Davis-Bacon Act, other than individuals employed in a bona fide executive, administrative, or professional capacity, as those terms are defined in 29 CFR part 541, regardless of the contractual relationship alleged to exist between the individual and the employer. The term worker includes workers performing on or in connection with a covered contract whose wages are calculated pursuant to special certificates issued under 29 U.S.C. 214(c), as well as any person working on or in connection with a covered contract and individually registered in a bona fide apprenticeship or training program registered with the U.S. Department of Labor's Employment and Training Administration, Office of Apprenticeship, or with a State Apprenticeship Agency recognized by the Office of Apprenticeship. A worker performs “on” a contract if the worker directly performs the specific services called for by the contract. A worker Start Printed Page 67227 performs “in connection with” a contract if the worker's work activities are necessary to the performance of a contract but are not the specific services called for by the contract.

Except when covered by FAR, applicable federal agencies, contractors and subcontractors are required to include a new clause in their covered contracts:

(b) Flow-down requirement. The contractor and any subcontractors shall include in any covered subcontracts the Executive Order minimum wage contract clause referred to in § 23.110(a) and shall require, as a condition of payment, that the subcontractor include the minimum wage contract clause in any lower-tier subcontracts. The prime contractor and any upper-tier contractor shall be responsible for the compliance by any subcontractor or lower-tier subcontractor with the Executive Order minimum wage requirements, whether or not the contract clause was included in the subcontract.

The new, lengthy clause reads as follows: 

(a) Executive Order 14026. This contract is subject to Executive Order 14026, the Start Printed Page 67234 regulations issued by the Secretary of Labor in 29 CFR part 23 pursuant to the Executive Order, and the following provisions.

(b) Minimum wages. (1) Each worker (as defined in 29 CFR 23.20) engaged in the performance of this contract by the prime contractor or any subcontractor, regardless of any contractual relationship which may be alleged to exist between the contractor and worker, shall be paid not less than the applicable minimum wage under Executive Order 14026.

(2) The minimum wage required to be paid to each worker performing work on or in connection with this contract between January 30, 2022 and December 31, 2022, shall be $15.00 per hour. The minimum wage shall be adjusted each time the Secretary of Labor's annual determination of the applicable minimum wage under section 2(a)(ii) of Executive Order 14026 results in a higher minimum wage. Adjustments to the Executive Order minimum wage under section 2(a)(ii) of Executive Order 14026 will be effective for all workers subject to the Executive Order beginning January 1 of the following year. If appropriate, the contracting officer, or other agency official overseeing this contract shall ensure the contractor is compensated only for the increase in labor costs resulting from the annual inflation increases in the Executive Order 14026 minimum wage beginning on January 1, 2023. The Secretary of Labor will publish annual determinations in the Federal Register no later than 90 days before such new wage is to take effect. The Secretary will also publish the applicable minimum wage on https://alpha.sam.gov/​content/​wage-determinations (or any successor website). The applicable published minimum wage is incorporated by reference into this contract.

(3) The contractor shall pay unconditionally to each worker all wages due free and clear and without subsequent deduction (except as otherwise provided by 29 CFR 23.230), rebate, or kickback on any account. Such payments shall be made no later than one pay period following the end of the regular pay period in which such wages were earned or accrued. A pay period under this Executive Order may not be of any duration longer than semi-monthly.

(4) The prime contractor and any upper-tier subcontractor shall be responsible for the compliance by any subcontractor or lower-tier subcontractor with the Executive Order minimum wage requirements. In the event of any violation of the minimum wage obligation of this clause, the contractor and any subcontractor(s) responsible therefore shall be liable for the unpaid wages.

(5) If the commensurate wage rate paid to a worker performing work on or in connection with a covered contract whose wages are calculated pursuant to a special certificate issued under 29 U.S.C. 214(c), whether hourly or piece rate, is less than the Executive Order minimum wage, the contractor must pay the Executive Order minimum wage rate to achieve compliance with the Order. If the commensurate wage due under the certificate is greater than the Executive Order minimum wage, the contractor must pay the worker the greater commensurate wage.

(c) Withholding. The agency head shall upon its own action or upon written request of an authorized representative of the Department of Labor withhold or cause to be withheld from the prime contractor under this or any other Federal contract with the same prime contractor, so much of the accrued payments or advances as may be considered necessary to pay workers the full amount of wages required by Executive Order 14026.

(d) Contract suspension/Contract termination/Contractor debarment. In the event of a failure to pay any worker all or part of the wages due under Executive Order 14026 or 29 CFR part 23, or a failure to comply with any other term or condition of Executive Order 14026 or 29 CFR part 23, the contracting agency may on its own action or after authorization or by direction of the Department of Labor and written notification to the contractor, take action to cause suspension of any further payment, advance or guarantee of funds until such violations have ceased. Additionally, any failure to comply with the requirements of this clause may be grounds for termination of the right to proceed with the contract work. In such event, the Government may enter into other contracts or arrangements for completion of the work, charging the contractor in default with any additional cost. A breach of the contract clause may be grounds for debarment as a contractor and subcontractor as provided in 29 CFR 23.520.

(e) Workers who receive fringe benefits. The contractor may not discharge any part of its minimum wage obligation under Executive Order 14026 by furnishing fringe benefits or, with respect to workers whose wages are governed by the Service Contract Act, the cash equivalent thereof.

(f) Relation to other laws. Nothing herein shall relieve the contractor of any other obligation under Federal, state or local law, or under contract, for the payment of a higher wage to any worker, nor shall a lower prevailing wage under any such Federal, State, or local law, or under contract, entitle a contractor to pay less than $15.00 (or the minimum wage as established each January thereafter) to any worker.

(g) Payroll records. (1) The contractor shall make and maintain for three years records containing the information specified in paragraphs (g)(1)(i) through (vi) of this section for each worker and shall make the records available for inspection and transcription by authorized representatives of the Wage and Hour Division of the U.S. Department of Labor:

(i) Name, address, and social security number;

(ii) The worker's occupation(s) or classification(s);

(iii) The rate or rates of wages paid;

(iv) The number of daily and weekly hours worked by each worker;

(v) Any deductions made; and

(vi) Total wages paid.

(2) The contractor shall also make available a copy of the contract, as applicable, for inspection or transcription by authorized representatives of the Wage and Hour Division.

(3) Failure to make and maintain or to make available such records for inspection and transcription shall be a violation of 29 CFR part 23 and this contract, and in the case of failure to produce such records, the contracting officer, upon direction of an authorized representative of the Department of Labor, or under its own action, shall take such action as may be necessary to cause suspension of any further payment or advance of funds until such time as the violations are discontinued.

(4) The contractor shall permit authorized representatives of the Wage and Hour Division to conduct investigations, including interviewing workers at the worksite during normal working hours.

(5) Nothing in this clause limits or otherwise modifies the contractor's payroll and recordkeeping obligations, if any, under the Davis-Bacon Act, as amended, and its implementing regulations; the Service Contract Act, as amended, and its implementing regulations; the Fair Labor Standards Act, as amended, and its implementing regulations; or any other applicable law.

(h) Flow-down requirement. The contractor (as defined in 29 CFR 23.20) shall insert this clause in all of its covered subcontracts and shall require its subcontractors to include this clause in any covered lower-tier subcontracts. Executive Order 14026 does not apply to subcontracts for the manufacturing or furnishing of materials, supplies, articles, or equipment, and this clause is not required to be inserted in such subcontracts. The prime contractor and any upper-tier subcontractor shall be responsible for the compliance by any subcontractor or lower-tier subcontractor with this contract clause.

(i) Certification of eligibility. (1) By entering into this contract, the contractor (and officials thereof) certifies that neither it (nor he or she) nor any person or firm who has an interest in the contractor's firm is a person or firm ineligible to be awarded Government contracts by virtue of the sanctions imposed pursuant to section 5 of the Service Contract Act, section 3(a) of the Davis-Bacon Act, or 29 CFR 5.12(a)(1).

(2) No part of this contract shall be subcontracted to any person or firm whose name appears on the list of persons or firms ineligible to receive Federal contracts.

(3) The penalty for making false statements is prescribed in the U.S. Criminal Code, 18 U.S.C. 1001.

(j) Tipped employees. In paying wages to a tipped employee as defined in section 3(t) of the Fair Labor Standards Act, 29 U.S.C. 203(t), the contractor may take a partial credit against the wage payment obligation (tip credit) to the extent permitted under section 3(a) of Executive Order 14026. In order to take such a tip credit, the employee must receive an amount of tips at least equal to the amount of the credit taken; where the tipped employee does not receive sufficient tips to equal the amount of the tip credit the contractor must increase the cash wage paid for the workweek so that the amount of cash wage paid and the tips received by the employee equal the applicable minimum wage under Executive Order 14026. To utilize this proviso:

(1) The employer must inform the tipped employee in advance of the use of the tip credit; Start Printed Page 67235

(2) The employer must inform the tipped employee of the amount of cash wage that will be paid and the additional amount by which the employee's wages will be considered increased on account of the tip credit;

(3) The employees must be allowed to retain all tips (individually or through a pooling arrangement and regardless of whether the employer elects to take a credit for tips received); and

(4) The employer must be able to show by records that the tipped employee receives at least the applicable Executive Order minimum wage through the combination of direct wages and tip credit.

(k) Antiretaliation. It shall be unlawful for any person to discharge or in any other manner discriminate against any worker because such worker has filed any complaint or instituted or caused to be instituted any proceeding under or related to Executive Order 14026 or 29 CFR part 23, or has testified or is about to testify in any such proceeding.

(l) Disputes concerning labor standards. Disputes related to the application of Executive Order 14026 to this contract shall not be subject to the general disputes clause of the contract. Such disputes shall be resolved in accordance with the procedures of the Department of Labor set forth in 29 CFR part 23. Disputes within the meaning of this contract clause include disputes between the contractor (or any of its subcontractors) and the contracting agency, the U.S. Department of Labor, or the workers or their representatives.

(m) Notice. The contractor must notify all workers performing work on or in connection with a covered contract of the applicable minimum wage rate under the Executive Order. With respect to service employees on contracts covered by the Service Contract Act and laborers and mechanics on contracts covered by the Davis-Bacon Act, the contractor may meet this requirement by posting, in a prominent and accessible place at the worksite, the applicable wage determination under those statutes. With respect to workers performing work on or in connection with a covered contract whose wages are governed by the FLSA, the contractor must post a notice provided by the Department of Labor in a prominent and accessible place at the worksite so it may be readily seen by workers. Contractors that customarily post notices to workers electronically may post the notice electronically provided such electronic posting is displayed prominently on any website that is maintained by the contractor, whether external or internal, and customarily used for notices to workers about terms and conditions of employment.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.