Tax Free Wages? Why Employers Should Pay Attention

By Kayla M. Jacob and Fred Preis

Some employers and their qualified employees just scored a tax break. Certain tips and overtime are officially off the IRS’s menu, effective retroactively from January 1, 2025 through December 31, 2028.

Under the Federal One Big Beautiful Bill Act, eligible workers can claim a federal income tax deduction for a portion of their qualified overtime pay. The Act similarly establishes a new income tax deduction for qualified tips for eligible tipped workers.

While that translates to bigger take-home pay for employees, employers should take precautions to avoid turning these employee perks into wage and hour pitfalls.

Monitor Overtime. With a tax break on the table, employees are more motivated than ever to log extra hours, including unauthorized overtime. Employers should revisit their overtime policies, retrain supervisors where necessary, and monitor hours worked to ensure compliance and control costs.

Broader Eligibility. The Treasury Department’s preliminary list of occupations eligible for tax-free tips is far broader than the Department of Labor’s categories of workers “customarily tipped” under Federal wage and hour law. Employers should not mistake tax eligibility for tip credit and tip-pool eligibility and should obtain legal guidance to avoid any misinterpretation of these laws.

Reporting. Employers are required to report to the IRS certain cash tips received, the occupation of the tip recipient, and the total amount of qualified overtime compensation paid during the year. New regulations on yearly reporting may be forthcoming, so employers should be prepared to properly report employee earnings for the upcoming tax season and stay alert for IRS guidance on this matter, which may require implementing new internal payroll and reporting controls.

Employer Advantage. The Act also broadens the industries eligible to receive tip credit, which was previously available primarily to employers in the food and beverage industry. Now however, employers in the beauty and personal care industry (i.e., hair and nail care, spas, barbers, etc.) may also be eligible for tip credits if tipping is customary for those services. Employers in those industries should consult legal counsel to determine their eligibility and how to take advantage of the tip credit available to them.

Tax-free tips and overtime may be cause for cheers, but it also calls for employers to nail down implementation and reporting strategies to avoid footing the bill.

What to Expect During an OSHA Investigation After a Workplace Accident

By Joseph J. Cefalu, III

When a serious workplace accident occurs, employers may face immediate scrutiny from the Occupational Safety and Health Administration (OSHA). For many employers, an OSHA investigation presents unfamiliar procedures and significant financial and legal risk, especially when severe injuries, fatalities or serious hazards are involved. Knowing what to expect and how to prepare can make a significant difference in the outcome.

Below is an overview of the OSHA investigation process and how legal counsel can assist at every stage.

When Does OSHA Investigate?

OSHA initiates investigations for a variety of reasons, including:

A fatality of an employee (must be reported within 8 hours);
Hospitalization of an employee (must be reported within 24 hours);
Amputation or loss of an eye (must be reported within 24 hours);
Employee complaints;
Referrals from other agencies or media reports;
Follow-up or targeted inspections; and
National, regional, or local emphasis programs.

Serious accidents that require reporting almost always result in an onsite inspection.

What Happens During an Inspection?

An OSHA inspection typically unfolds in several phases:

Opening Conference: OSHA will begin with an opening conference, identifying the purpose of the inspection and outlining the scope. Employers may have counsel present.
Walkaround Inspection: OSHA can tour the incident site and any relevant areas. They may take photos, identify potential hazards and document violations of OSHA’s regulations. Employers have the right to accompany the inspector and have counsel present.
Employee Interviews: Inspectors may interview employees privately. While employers cannot require counsel to be present during non-supervisory employee interviews, counsel should be present for supervisory interviews to protect the employer’s interests.
Document Requests: OSHA may request safety records, training logs, equipment maintenance reports and OSHA 300/301 logs, among other documents. These requests can be broad, and employers should consult counsel regarding legal exposure, privilege and relevance prior to production. However, if OSHA 300/301 logs are requested, they must be produced within four hours.
Closing Conference: After the fieldwork concludes, OSHA will hold a closing conference to discuss potential violations; however, OSHA does not have to reveal all of its findings at this time. This conference is a chance to explain the employer’s position, show abatement efforts and begin the process of addressing potential citations

Citations and Penalties

OSHA has up to six months from the violation to issue citations. Citations will classify any violation as:

Willful
Serious
Other-than-serious
Repeated

Each classification carries different financial penalties and reputational consequences. In 2025, serious and other-than-serious violations can result in penalties up to $16,131 per violation, while willful or repeated violations carry a potential $161,323 penalty.

Employers have 15 working days to contest citations. Before that, they may request an informal conference with the OSHA area office, which could resolve or mitigate the citations. Involving counsel is crucial during this process.

How Legal Counsel Helps

Involving counsel early in the process, ideally within the first few hours of the incident, can:

Guarantee proper reporting of the incident;
Assist in gathering and preserving evidence;
Ensure the employer’s rights are protected during the investigation and inspection;
Manage communications with OSHA;
Prepare supervisory employees for interviews;
Evaluate potential civil or criminal liability exposure;
Strategize for informal conferences or formal contests of citation; and
Assist with negotiating a withdrawal or reduction of the penalties and violations.

Counsel can also help implement or refine safety policies or other abatement procedures to reduce the risk of future citations.

Conclusion

OSHA inspections are not just administrative hurdles, they can lead to significant financial, operational and legal consequences. Being prepared and involving experienced counsel early allows employers to manage these investigations strategically and reduce long-term exposure.

EEOC Signals Increased Focus on Religious Discrimination Cases

By Philip Giorlando and Fred Preis

With a Republican majority restored to the Equal Employment Opportunity Commission (EEOC), employers should expect a significant uptick in religious discrimination litigation. Acting Chair Andrea Lucas has pledged to advance “broader litigation priorities” emphasizing religious liberty, marking a shift in enforcement focus under the current administration.

Key Developments:

The EEOC filed 11 religious bias lawsuits in fiscal year 2025, the most in nearly a decade, even as overall case filings declined.
The agency is expected to pursue systemic religious discrimination cases that could impact entire industries, including those involving:
Social media posts and online religious expression
Religious symbols or observances in the workplace
Requests for schedule changes, prayer breaks, or dress accommodations
Recent actions include lawsuits against Apple (over Sabbath observance) and The Rock Snowpark (for terminating an employee over faith-based social media posts).

Legal Backdrop:

The Supreme Court’s 2023 Groff v. DeJoy decision clarified that employers must accommodate an employee’s religious practice unless doing so would cause “substantial increased costs” or an undue hardship—raising the bar for denying such requests.

The EEOC has since emphasized that it’s the employer’s responsibility to demonstrate persuasively that an accommodation would impose a significant burden.

Policy Implications:

Updated EEOC guidance on religious discrimination is expected soon, incorporating Groff standards.
Employers may see greater tension between religious accommodation and LGBTQ+ protections (i.e., an employee requesting a religious accommodation to avoid providing service to an LGBTQ+ couple), as the EEOC reinterprets Title VII to balance these competing rights.
The Agency may scrutinize diversity and inclusion programs that appear to limit or conflict with religious expression.

How to Handle Religious Accommodation Issues:

Policy Review
Anti-discrimination and accommodation policies should be updated regularly to ensure compliance with changing laws.
All employment policies should be reviewed to ensure they apply equally to all faiths (and nonreligious beliefs).

Interactive Process
Treat each request for religious accommodation individually.
Engage in a documented, good-faith dialogue to identify reasonable options.

Manager and HR Training
Supervisors should be trained to recognize and appropriately respond to religious accommodation requests.

Balancing Competing Rights
Employers should be prepared and consult guidance to evaluate potential conflicts between religious beliefs and other protected classes (e.g., gender identity, sexual orientation).

Documentation and Communication
Keep clear records of accommodation requests and decisions.

The EEOC’s renewed emphasis on religious discrimination—combined with the broader reach of Groff—means employers must approach religious issues with care, consistency, and documentation. Proactive compliance, thoughtful policy updates, and manager training can help minimize risk as this enforcement trend continues.