Labor & Employment Law Update

On Friday, September 19, 2025 the Internal Revenue Service issued proposed regulations clarifying the “no tax on tips” provisions under President Trump’s One Big Beautiful Bill Act.  Starting January 1, 2026, eligible tipped workers can deduct up to $25,000 each year in “qualified tips” from their federal taxable income through December 31, 2028. This will allow eligible tipped workers to take home more income each year. The deduction is retroactive to the beginning of the 2025 tax year, meaning it can be used by tipped workers to deduct qualified tips in the 2025 tax year. But the catch is that your payroll systems need updates NOW in order to properly track and report this new benefit for employees.

It is becoming more common for employees to claim “bullying” or “harassment” when a supervisor enforces rules, sets boundaries, or addresses underperformance. While it is important to take every complaint seriously, company leadership must also recognize the distinction between inappropriate conduct and the normal exercise of managerial responsibilities.

Earlier this month, the Sixth Circuit issued a decision in Bivens v. Zep that significantly narrows when an employer can be held liable under Title VII for harassment committed by a third party, such as a customer or client. The court held that an employer may only be liable in this scenario if the employer intended for the harassment to occur. This ruling departs from the EEOC’s longstanding interpretation of Title VII as well as from the majority of other federal appeals courts that have considered the issue.

On September 3, 2025, in Minnesota Chapter of Associated Builders and Contractors v. Ellison, et al., the U.S. Court of Appeals for the Eighth Circuit, in a 2-1 ruling, dismissed a lawsuit challenging Minnesota’s captive audience speech law (aka the “Employer-Sponsored Meetings or Communication Act” or the “Act”).  In short, the Eighth Circuit’s decision means that the Act remains in effect and is enforceable against Minnesota employers. 

Governor Pritzker recently signed yet another amendment to the Illinois Prevailing Wage Act (“IPWA”). While this latest change does not directly impact non-union/merit shop contractors, it does have an immediate impact on certain union signatory contractors. Courtesy of HB2488, effective June 30, 2025 forward, all contractors must ensure that their apprentices are paid full journeyworker fringe benefits—regardless of the terms in the underlying prevailing union contract.