This is a sponsored column by attorneys John Berry and Kimberly Berry of Berry & Berry, PLLC, an employment and labor law firm located in Northern Virginia that specializes in federal employee, security clearance, retirement and private sector employee matters.

By John V. Berry, Esq.

Many security clearance holders and future applicants have been affected by the COVID-19/Coronavirus pandemic, most often in connection with their overall financial situation or credit. This article discusses the potential security clearance implications of the Coronavirus/COVID-19 for security clearance holders and applicants.

Financial Issues

The most common security clearance concern for clearance holders, even before the pandemic, involved financial issues. The current COVID-19 crisis will directly impact these types of security concerns. Individuals will likely face potential financial losses, bankruptcy, bad credit or unmanageable debt as a result of the crisis.

These types of issues fall under Guideline F, Financial Considerations pursuant to Security Executive Agent Directive 4 (SEAD 4). SEAD 4 provides the Government’s security clearance guidelines that adjudicators review in evaluating whether or not to grant a security clearance. Financial concerns usually include bad credit, unpaid debts, unpaid taxes and other related financial issues.

It is very likely, due to the existing and future disruptions in business and work that many individuals could be laid off or lose their jobs if the COVID-19 pandemic lasts for an extended period of time. We may very well be entering a recession right now given the number of jobless claims that have recently been filed.

With these recent layoffs, individual finances are clearly going to be negatively impacted. An economic downturn and loss of work can have massive financial implications for many government contractors and other private-sector employees in a relatively short period of time. If individuals are laid off, it is often the case that they find themselves financially underwater within a month. As a result, these individuals are often unable to pay their mortgage, rent, car loans, consumer credit loans or other major bills.

These types of issues affect security clearance holders as debts which result from such a recession are not easily rectified immediately even when new positions requiring clearances become available. We still have clients who lost a majority of their investments during the Great Recession between 2007 and 2009 who still have to address financial issues in connection with their security clearances. In other words, COVID-19 may lead to a downturn which can have a major effect on security clearance holders or applicants for a long period of time.

The COVID-19 Crisis Will Most Certainly be Viewed as Unique and Mitigating

In terms of security clearances, there is good news for clearance holders, applicants and future applicants. Clearance adjudicators recognize that major shared events, like recessions, are unique in nature which can help to mitigate those security clearance concerns. COVID-19 related financial issues and any downturn would almost certainly fall in this category.

Specifically, SEAD 4, under Guideline F, Financial Considerations, provides mitigation to those facing security concerns related to debts, credit and other financial issues. SEAD 4. Paragraph 20(a) provides as mitigation that “the behavior happened so long ago, was so infrequent, or occurred under such circumstances that it is unlikely to recur…” Furthermore, Paragraph 20(b) states, as a key mitigating factor that “the conditions that resulted in the financial problem were largely beyond the person’s control (e.g., loss of employment, a business downturn, unexpected medical emergency… and the individual acted responsibly under the circumstances.)”

There is no reason to doubt that security clearance adjudicators will give serious consideration to mitigating financial-related security clearance concerns related to debts, bankruptcy and taxes as they have done in the past as it relates to losses occurring as a result of the COVID-19 pandemic.

Our general advice to security clearance holders is for them to keep on top of their finances, work with creditors (even if they are uncooperative) if they are laid off or lose their jobs and keep copies of all documents and their attempts to resolve debts or otherwise appear to act responsibly. Even if a creditor doesn’t act reasonable, copies of records showing that the individual tried to do their best in a difficult financial situation is often very helpful.

Contact Us

If you are in need of security clearance law representation or advice, please contact our office at 703-668-0070 or through our contact page to schedule a consultation. Please also visit and like us on Facebook or Twitter.

This is a sponsored column by attorneys John Berry and Kimberly Berry of Berry & Berry, PLLC, an employment and labor law firm located in Northern Virginia that specializes in federal employee, security clearance, retirement and private sector employee matters.

By John V. Berry, Esq.

Virginia employees, if House Bill 123 is signed by Governor Ralph Northam or not otherwise acted upon by April 6, 2020, will have new rights to wages that are unlawfully unpaid.

Virginia House Bill 123 has been passed by both the Virginia House and Senate. The new legislation would create a private right of action for collecting unpaid wages in Virginia. House Bill 123 allows employees that have not been paid to sue an employer to recover their pay, in addition to damages.

Details of Employer Damages and Penalties

House Bill 123 permits Virginia employees to bring claims against employers that fail to pay wages and allows them to recover the wages owed, plus 8% interest from the date that the wages were due. Employees can also be awarded triple damages (3 times the amount of unpaid wages), their attorney’s fees and other costs if a court finds that the employer knowingly failed to pay the wages.

In our experience, most employers are aware that they did not pay wages owed to an employee. There is also a $1,000 civil penalty against the employe for a violation.

Example: Under the law, for example, if an employer fails to pay an employee $1,000 that they earned, they could be liable for that amount, plus 8%, potentially 3 times the wages that were not paid, along with attorney’s fees incurred by the employee, and a civil penalty.

The $1,000 that was unpaid could easily become a judgment against the employer for $5,000 to $8,000 by the time damages and fees are included. Then the civil penalty would also need to be added. If a court finds that there is a genuine dispute between an employer and employee, the employer would not be required to pay triple damages.

Criminal Penalties for Employer Apply

There are also criminal law penalties in the new law. Employers could be found guilty of a misdemeanor, punishable by up to 12 months in jail, if the wages owed are less than $10,000. Employers are to be considered guilty of a felony, punishable by a prison term of up to five years, if the value of wages owed is at least $10,000 or if the employer previously had been convicted of such a violation.

Criminal liability now only applies if the nonpayment of wages was willful with the intent to defraud. If signed by the Governor or allowed to become law, the legislation would take effect July 1, 2020.

Contact Us

If you are in need of employment law representation or advice, please contact our office at 703-668-0070 or through our contact page to schedule a consultation. Please also visit and like us on Facebook or Twitter.

This is a sponsored column by attorneys John Berry and Kimberly Berry of Berry & Berry, PLLC, an employment and labor law firm located in Northern Virginia that specializes in federal employee, security clearance, retirement and private sector employee matters.

By Kimberly Berry

Our law firm handles many different types of federal retirement issues in our representation of federal employees.

One of the more common types of retirement cases that we often handle involves the representation of federal employees in the disability retirement process before various federal agencies and the Office of Personnel Management.

Federal employees filing for disability retirement are typically covered under the Federal Employees Retirement System or the Civil Service Retirement System.

Federal employees should consider the following questions before they pursue OPM disability retirement:

How serious are the federal employee’s medical issues and are they linked to the federal employee’s position description duties?

When making a disability retirement decision, keep in mind that OPM evaluates your continued ability to work with your medical condition in the context of the duties described in your position description. If the medical disability is not deemed serious enough, or not fully supported by medical documentation and evidence, and is not sufficiently linked to your inability to “usefully and efficiently” carry out your job duties, then OPM may deny the disability retirement application.

How long is the medical disability realistically expected to last?

OPM requires that a medical disability be expected to last at least one year in duration. When considering whether to file for disability retirement, it is important for you to consider the expected duration of your medical disability. Disabilities with known shorter duration could be problematic for you in the application process.

Can a federal employee survive on a reduced annuity?

If you are considering filing for OPM disability retirement, understand that this type of retirement usually provides you with a lower monthly retirement annuity in comparison to full retirement. As a result, we recommend that you obtain benefit estimates from your human resources representative and consult with a financial advisor about the impact of a potential reduced annuity prior to filing for disability retirement.

Are there modifications to a federal employee’s current position that can be made to allow the federal employee to continue to work?

Oftentimes a federal agency will work with you to provide you with a reasonable accommodation (i.e., change in duties, hours, telework or other adjustments) that can make your current position and medical condition workable. This can often be the best solution, even if it is only a short-term solution.

As a part of the disability retirement process, the federal agency is required to certify that it is unable to accommodate your disabling medical condition in your present position. The agency must also certify that it has considered you “for any vacant position in the same agency, at the same grade or pay level, and within the same commuting area, for which [you] qualified for reassignment.”

Do your medical professionals believe that you should not continue in your current position?

This is an important consideration when filing for disability retirement. In most cases, physicians will be open with their patients about whether it is a good idea to keep working in their current federal employment position.

There are at least two reasons to discuss a possible filing for OPM disability retirement with your treating medical provider(s). First, your health should be of primary importance and a consideration when determining whether continuing in a job hinders or impedes your recovery. Second, physicians and their medical opinions are necessary and, in fact, crucial in the disability retirement application process with OPM.

OPM will require a physician’s statement about your medical issues, and the physician’s statement can either make or break the outcome of your disability retirement application.

When considering OPM disability retirement, it is important to obtain the advice and representation of legal counsel. You can contact our law firm through www.retirementlaw.com, www.berrylegal.com, or by telephone at (703) 668-0070, to schedule a consultation to discuss your individual federal employment retirement matter. Please also visit and like us on Facebook or Twitter.

This is a sponsored column by attorneys John Berry and Kimberly Berry of Berry & Berry, PLLC, an employment and labor law firm located in Northern Virginia that specializes in federal employee, security clearance, retirement and private sector employee matters.

By John V. Berry, Esq.

Government contractors, federal employees and military personnel holding security clearances have a duty to self-report security issues that happen between investigations.

Not reporting timely security concerns can lead to a loss of one’s security clearance in itself. Unfortunately, there are often uncertain about self-reporting and when and how it applies to a clearance holder.

The Duty to Self Report

The duty to self-report was best defined by an administrative judge from the Defense Office of Hearings and Appeals (DOHA) in a 2001 case: “[I]t is the responsibility of security clearance holders to report events which negatively affect the status of the security clearance holder or the facility. [A]ny information… [which] reflects adversely on the integrity or character of a security clearance holder should be reported to security personnel to avoid compromising situations that make the security clearance holder vulnerable to coercion, exploitation, or duress.”

Examples of What Might be Reported

A reportable security concern is an incident that falls under one of the Adjudicative Guidelines contained in Security Executive Agent Directive 4 (SEAD 4). In most cases legal counsel should be consulted to determine how to self-report an issue. The following are just a few of the more common examples of security issues that could trigger a duty to self-report:

• An individual uses illegal drugs (including the use of marijuana even in states or countries where legal locally). This can be a very complicated security concern given the intersection of criminal law and clearance law where legal advice will definitely be needed.
• An individual is arrested. The timing and substance of reporting this incident will be important so legal advice will be needed.
• An individual petitions for bankruptcy. Because filing for bankruptcy bears on financial considerations under SEAD 4, the individual should likely report the filing as soon as possible to his or her security officer.
• An individual marries a foreign citizen. Because marrying a foreign citizen can raise foreign influence issues under SEAD 4, it most likely will trigger a duty to self-report.

When Should a Security Concern be Reported?

When an individual who holds a security clearance determines that a security concern requires self-reporting, it is important to do so as soon as timely as possible. The typical procedure for doing so is to notify one’s security officer of the security concern. The security officer may simply take note of the situation, report it or take other action.

The individual almost always feels embarrassed to self-report a security concern. However, not reporting an incident can lead to the loss of an individual’s security clearance. If an individual has questions about what should be reported, he or she should seek legal advice from an attorney experienced in security clearance law as soon as possible. There are risks to self-reporting, so it is important to seek legal counsel prior to doing so where possible.

Contact Us

If you are in need of legal representation or advice on the reporting of security clearance issues or any other security clearance matters, please contact our office at 703-668-0070 or through our contact page to schedule a consultation. Please also visit and like us on Facebook or Twitter.

This is a sponsored column by attorneys John Berry and Kimberly Berry of Berry & Berry, PLLC, an employment and labor law firm located in Northern Virginia that specializes in federal employee, security clearance, retirement and private sector employee matters.

By Melissa L. Watkins, Esq.

Failing to accommodate an employee based on their religious beliefs can be costly for an employer.

Recently, a hotel dishwasher in Miami was awarded $21.5 million in damages after her employer refused to grant a religious accommodation, requiring that she work on Sundays and eventually terminating her. While the employee will not likely be able to recover this amount due to a cap on punitive damages, the award demonstrates the courts and Equal Employment Opportunity Commission’s (EEOC’s) heightened attention to employers’ obligation to adequately respond to employees’ requests for religious accommodations.

Religious Discrimination and Title VII

Title VII of the U.S. Code protects workers from employment discrimination based on their religion. The law forbids discrimination in any aspect of employment, including hiring, firing, pay, job assignments, promotions, training, benefits and other terms and conditions of employment. Title VII requires reasonable accommodation of an employee’s sincerely held religious beliefs, observances, and practices when requested.

The need for religious accommodation most often arises where an individual’s religious beliefs, observances, or practices conflict with a specific task or requirement of the job or application process. Accommodation requests often relate to work schedules, dress, grooming, or religious expression or practice while at work.

The prohibition on religious discrimination and the requirement for reasonable accommodation apply whether an employee’s religious views are mainstream or non-traditional, and even if the views are not recognized by an organized religion. An employer cannot require that an employee provide documentation from an established religious congregation.

Under Title VII, employers are required to accommodate the religious practices of their employees unless a requested accommodation can be shown to be an undue hardship. An accommodation may cause undue hardship if it is costly, compromises workplace safety, decreases workplace efficiency, infringes on the rights of other employees, or requires other employees to do more than their share of potentially hazardous or burdensome work. However, customer preferences or even the anticipated loss of business are not considered undue hardships.

How Religious Discrimination Claims are Established

In order to establish a claim of discrimination for an employer’s failure to grant a religious accommodation, employees generally need to show that the following:

(1) he or she has a bona fide religious belief, the practice of which conflicted with their employment

(2) he or she informed the agency/employer of this belief and conflict

(3) the agency/employer nevertheless enforced its requirement against the employee

Contact Us

If you are in need of employment law representation or advice, please contact our office at 703-668-0070 or through our contact page to schedule a consultation. Please also visit and like us on Facebook or Twitter.

This is a sponsored column by attorneys John Berry and Kimberly Berry of Berry & Berry, PLLC, an employment and labor law firm located in Northern Virginia that specializes in federal employee, security clearance, retirement and private sector employee matters.

By Kimberly H. Berry, Esq.

With the new year, many businesses offer severance to certain employees as a way for both parties to make a new start in the new year.

Employees in Virginia are “at will,” which means they can be terminated at any time for any reason and severance is not typically required. When employment ends, however, an employer may offer a severance package to an employee in exchange for the employee’s waiver of rights.

However, employers, in the absence of an agreement or severance policy, generally have no obligation to provide employees severance pay. If severance pay is offered, an employer will require the employee to sign a Severance Agreement agreeing to a number of terms.

A Severance Agreement is a contract between the employee and an employer that provides end of employment terms between the employer and the employee. Severance Agreements are often offered in termination cases, but can also be offered to employees who are laid off or who are considering retirement.

Additionally, depending on the circumstances, a Severance Agreement may be offered to an employee who resigns or is terminated. A Severance Agreement must have something of value (also referred to as consideration) to which the employee is not already entitled to be enforceable.

Employers are generally required to provide an employee time to consider the Severance Agreement before signing. For instance, an employee usually has a 21-day consideration period to accept the Severance Agreement and at least a seven-day revocation period to revoke an employer’s Severance Agreement if the employee is 40 years or older.

Severance agreements usually contain far more than just compensation terms. They can include any number of agreements. Some examples of possible terms in a Severance Agreement follow:

• Reference Information
• Financial terms, the timing of severance payments and potential tax information
• Continuation of health benefits
• Unemployment compensation benefits
• Waiver of claims against an employer (e.g. whistleblower, discrimination)
• Confidentiality (e.g. neither side will reveal the terms of the agreement)
• Non-Disparagement (e.g. neither side will say negative things about the other)
• The possibility of re-employment
• Non-competition agreements
• Preservation of trade secrets

Severance Agreements will always include a general release or waiver that prohibits the former employee from filing a lawsuit against his or her employer for wrongful termination. Before an employee signs a Severance Agreement, he or she should consult with an attorney to discuss the rights that he or she may be waiving and the terms of the Severance Agreement.

If you need assistance with a severance agreement or other employment matter, please contact our office at (703) 668-0070 or at www.berrylegal.com to schedule a consultation. Please also visit and like us on Facebook.

This is a sponsored column by attorneys John Berry and Kimberly Berry of Berry & Berry, PLLC, an employment and labor law firm located in Northern Virginia that specializes in federal employee, security clearance, retirement and private sector employee matters.

By John V. Berry, Esq.

A psychological condition can become a security clearance concern for government contractors and federal employees.

The good news is that federal agencies, especially over the past 10-15 years, have responded to such concerns with more empathy and consideration than ever before. However, there are some considerations to be aware of when these issues arise.

We all know that a mental health condition can enter an individual’s life at any time and for any reason. It can be genetic or can be triggered by a death, divorce, loss of employment or injury. When a psychological condition arises in the context of applying for or attempting to retain a security clearance, the individual needs to seek legal advice to enable the person the best opportunity to maintain or obtain their security clearance.

Being diagnosed with a mental health illness doesn’t mean that the individual can’t obtain or continue to hold a security clearance. Thousands upon thousands of clearance holders retain their security clearances even if they have psychological conditions. These days, the best way for a security clearance holder to address psychological issues is to disclose them where appropriate and demonstrate that any psychological issues are under control or no longer an issue. There are many ways to do this.

Furthermore, the revised Adjudicative Guidelines (SEAD 4) for Psychological Concerns (Guideline I) state that “no negative inference concerning the standards in this guideline may be raised solely on the basis of mental health counseling.”

The key for an individual is to be upfront and honest in completing security clearance forms and in speaking with investigators about such issues. It is often the case that an individual can lose a security clearance because they did not disclose a serious psychological condition (dishonesty) when had they disclosed the psychological concern they would have obtained their security clearance.

The following are examples of the potential mitigation evidence that can be used in security clearance cases involving psychological conditions, depending on the specific facts or condition at issue. These can include:

1. Medical opinions issued by mental health professionals (psychiatrists, psychologists, counselors) showing that a psychological condition is under control
2. Evidence that demonstrates that an individual has complied with medical treatment and recommendations related to a psychological condition
3. Evidence that the individual has entered counseling, therapy or other treatment programs administered by medical professionals
4. Evidence that a psychological condition no longer affects the individual

Each case under Guideline I is different, but we have found that most cases can be mitigated with the proper attention to treatment and the preparation of documentation showing that any major psychological condition is under control or in the past.

Conclusion

If you are in need of security clearance representation or advice, please contact our office at 703-668-0070 or through our contact page to schedule a consultation. Please also visit and like us on Security Clearance Blog, Facebook or Twitter.

This is a sponsored column by attorneys John Berry and Kimberly Berry of Berry & Berry, PLLC, an employment and labor law firm located in Northern Virginia that specializes in federal employee, security clearance, retirement and private sector employee matters.

By John V. Berry, Esq.

With the change in control of the Virginia House of Delegates and Senate, there is an opportunity to modernize employment laws in the Commonwealth of Virginia.

While there are a number of other suggestions out there already regarding the raising wages, right to work laws and other wage-related issues, I think that there are also some less contentious fixes that could offer employees enhanced protections.

Here are some suggestions for the Virginia Legislature to consider:

Enact a Whistleblower Law: Virginia has been one of those states where whistleblower laws for the private sector are nearly non-existent. Currently, there is no general statute where an individual employed in the private sector is terminated because of disclosures about illegal activities.

There has been a common-law cause of action known as a Bowman claim but the courts have long avoided holding employers accountable without a statute in place. We are hopeful that the legislature is able to accomplish this. New York has a very good law that protects private-sector employees from whistleblower retaliation that should be considered. NY Consolidated Laws, Labor Law – LAB § 740.

Add Sexual Orientation Discrimination to the Virginia Human Rights Act: The Virginia Human Rights Act does not currently protect workers from sexual orientation discrimination. It is past time for the Commonwealth of Virginia to change this. Doing so would only require a minor addition to VA Code § 2.2-3900.

Provide an Employee the Right to Dispute Termination Allegations: While Virginia and other jurisdictions remain at-will states, there is no reason why an employee should not be permitted to rebut false allegations made against them in a termination matter which have been placed on file with the employer. Massachusetts has an excellent law (MGL Ch. 149, Section 52C) on this subject which provides an employee a complete copy of their personnel file and the opportunity to negotiate what their final employment record will reflect.

Alternatively, the law provides the employee the opportunity to respond to negative termination allegations that would be kept in their employment file. If a third party requests information about the person’s former employment, both the termination letter and the former employee’s response would be provided, not just the termination letter. While amended recently, the Virginia Legislature would likely have to amend VA Code § 8.01-413.1 to accomplish this needed reform.

Revamp the Administrative Grievance Process for State/Public Employees: Presently, while there is a process that allows public employees to file a grievance and seek a hearing in termination cases, the truth is that the process is heavily slanted to the public employer. The hearing officers rule overwhelmingly on an employer’s behalf even when a termination is flawed. There is no reason why the hearing process cannot provide a level playing field for public sector employees. This would not require legislation, only changes and training at the hearing official level at the Virginia Office of Equal Employment and Dispute Resolution.

Conclusion

If you are in need of employment law representation or advice, please contact our office at 703-668-0070 or through our contact page to schedule a consultation. Please also visit and like us on Facebook or Twitter.

This is a sponsored column by attorneys John Berry and Kimberly Berry of Berry & Berry, PLLC, an employment and labor law firm located in Northern Virginia that specializes in federal employee, security clearance, retirement and private sector employee matters.

By John V. Berry, Esq.

A common concern for security clearance holders and applicants involves foreign influence.

A significant portion of security clearance appeals typically focuses on this very issue. With respect to foreign influence, the Government is chiefly concerned with an individual’s loyalty or ties to another country over those to the United States.

The rules regarding foreign influence and security clearance cases are set forth in Security Executive Agent Directive 4 (SEAD 4), Guideline B, which discusses the foreign influence concerns that could lead an individual not obtaining or in losing a security clearance.

Examples of Foreign Influence Issues

Some brief examples of issues that might come up to cause the Government concern in potentially denying a security clearance follow:

Example 1 — U.S. citizen was born in India. She has recently inherited a home worth $75,000 and other assets of $50,000 in India. The individual’s parents and family also still live in India.

Example 2 — U.S. citizen born in Taiwan has family that still lives in Taiwan and extended family in China. The individual also has received health benefits from Taiwan in the past.

Example 3 — U.S. citizen’s brother is a general in the Iraqi forces. The risk of having a close relative in such a high foreign position causes a significant security concern for the U.S. Government. See DOHA Case.

Example 4 — U.S. Citizen had 6 relatives in the Philippines. The large number of relatives in the Philippines caused security concerns for the individual in their security clearance matter. See DOHA Case.

Specific Security Concerns Involving Foreign Influence

There are numerous examples of foreign influence issues that can arise when seeking a security clearance. According to SEAD 4, Paragraph 7 the guidelines define serious foreign influence issues as involving the following types of issues:

7(a) contact, regardless of method, with a foreign family member, business or professional associate, friend, or other person who is a citizen of or resident in a foreign country if that contact creates a heightened risk of foreign exploitation, inducement, manipulation, pressure, or coercion

(b) connections to a foreign person, group, government, or country that create a potential conflict of interest between the individual’s obligation to protect classified or sensitive information or technology and the individual’s desire to help a foreign person, group, or country by providing that information or technology

(c) failure to report or fully disclose, when required, association with a foreign person, group, government, or country

(d) counterintelligence information, whether classified or unclassified, that indicates the individual’s access to classified information or eligibility for a sensitive position may involve unacceptable risk to national security

(e) shared living quarters with a person or persons, regardless of citizenship status, if that relationship creates a heightened risk of foreign inducement, manipulation, pressure, or coercion

(f) substantial business, financial, or property interests in a foreign country, or in any foreign-owned or foreign-operated business that could subject the individual to a heightened risk of foreign influence or exploitation or personal conflict of interest

(g) unauthorized association with a suspected or known agent, associate, or employee of a foreign intelligence entity

(h) indications that representatives or nationals from a foreign country are acting to increase the vulnerability of the individual to possible future exploitation, inducement, manipulation, pressure, or coercion

(i) conduct, especially while traveling or residing outside the U.S., that may make the individual vulnerable to exploitation, pressure, or coercion by a foreign person, group, government, or country

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This is a sponsored column by attorneys John Berry and Kimberly Berry of Berry & Berry, PLLC, an employment and labor law firm located in Northern Virginia that specializes in federal employee, security clearance, retirement and private sector employee matters.

By John V. Berry, Esq.

The President recently proposed a new federal rule which will affect the wages of employees who earn tips.

The new rule was proposed on October 8, 2019 by the Department of Labor (DOL) and would permit employers to require widespread sharing of tips with other types of co-workers. One of the major industries affected would be the foodservice industry. The newly proposed rule would permit employers to share wait staff tips with food preparation staff and others (e.g. dishwashers, food delivery personnel).

Difficulties With the New Tip-Pooling Rule

A problematic part of the newly proposed rule would give employers newfound flexibility in assigning non-tipped assignments to workers who rely on gratuities for the major portion of their income. The restaurant lobbying industry has sought these types of changes for some time. Former President Obama’s Administration had previously mandated that tips belonged to the workers that received them.

One of the major problems with the new rule, for employees that earn tips is that it takes funds earned by them and transfers them to employees that don’t earn tips. By doing this, restaurant owners are potentially able to compensate food staff (non-tip earners) with lower salaries.

Tipped Employees Wages will be Affected

The DOL, in their proposal, even acknowledges that the new rule will result in tipped employees spending more time on lower-paying duties:

“The removal of the twenty percent time limit may result in tipped workers such as wait staff and bartenders performing more of these non-tipped duties such as ‘cleaning and setting tables, toasting bread, making coffee, and occasionally washing dishes or glasses.’ …Tipped workers might lose tipped income by spending more of their time performing duties where they are not earning tips, while still receiving cash wages of less than minimum wage.”

Employers will Gain

Employers will gain from the situation and may be able to provide lower salaries to non-tip earners, offsetting the loss with tip income. The DOL also provides the real rationale for the change in the proposed regulation: “[E]mployers that had been paying the full minimum wage to tipped employees performing related, non-tipped duties could potentially pay the lower direct cash wage for this time and could pass these reduced labor cost savings on to consumers.”

The proposal should become final in about 6 weeks and could have some changes in the final version. However, if a new administration comes in, the tip-pooling policy could potentially change once again.

Conclusion

If you are in need of employment law representation or advice, please contact our office at 703-668-0070 or through our contact page to schedule a consultation. Please also visit and like us on Facebook or Twitter.