District Judge Rejects Server's Effort to Exclude Food Runners From Tip Pool

Posted on February 21, 2012 by Noel Tripp

Tip pool participation under the FLSA, like classification of employees as exempt or non-exempt, turns on the duties of those participating in the tip pool, not their job titles. An example of this analysis is a recent Florida federal court decision rejecting a plaintiff server’s  challenge to the inclusion in the tip pool at a Ruth’s Chris Steak House of food runners. Santana v. Rcsh Operations, 2012 U.S. Dist. LEXIS 17355 (S.D. Fla. Feb. 13, 2012).

Santana’s tip pool claim turned on his allegation that the 2-4 food runners who supported the 8-12 servers on any given shift at the restaurant were not properly tipped employees under the FLSA because the “majority of the food runners’ duties—assembling food on the trays and garnishing the food—were actually those of an expediter, taking place in the kitchen out of the presence of guests.” Id. at * 9-10. However, Santana’s evasive testimony regarding the frequency with which food runners perform service tasks (such as serving salad, bringing entrees to tables, or bringing other items to guests), coupled with affidavit evidence from those holding the food runner position and those supervising them as managers, created an evidentiary record from which Magistrate Judge Barry Seltzer concluded that “no reasonable jury could find that food runners at Ruth’s Chris had only de minimis interaction with customers.” Thus, the court held that the food runners were properly included in the tip pool.

Tip pool challenges continue, despite the employer victory in the Santana case and the recent pro-employer decision involving prominent D.C. eatery Marcel’s. Industry employers must continue to stay abreast of legal developments and analyze their tip practices accordingly to ensure compliance with applicable federal and state law.

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Federal Court Reiterates That Banquet Servers Can Satisfy Section 7(i) Exemption

Posted on June 18, 2010 by Noel Tripp

Among the many ambiguities in the FLSA’s often-confusing overtime exemption for commissioned employees of retail or service establishments (known as the “7(i)” exemption), is courts’ varying interpretations of what constitutes a “commission.” This has long been particularly vexing for the banquet industry, where it is customary to charge a mandatory service charge, then distribute that service charge in whole or in part to the banquet service staff. Is such a payment a “gratuity”, or can it be a “commission” within the meaning of 7(i)?

For approximately 20 years, the leading case directly on point was Judge Posner’s decision in Mechmet v. Four Seasons Hotels, Ltd., 825 F.2d 1173 (7th Cir. 1987), in which the court held that such a distributed service charge is a commission for purposes of 7(i).  A second federal court, the Southern District of Florida, has now issued a decision consistent with Mechmet. Judge Marcia Cookeheld that such payments are commissions for purposes of 7(i), rejecting the claims of a banquet server who alleged that he received a paltry hourly wage and that his service charge distributions were “tips”, thereby creating violations of the FLSA’s minimum wage and overtime provisions. Nascembeni v. Quayside Place, 2010 U.S. Dist. LEXIS 58707 (S.D. Fla. June 11, 2010). The Judge noted that the service charge payment by the banquet customer was non-negotiable and involuntary. Thus it was a service charge, not a tip, and distributions from that mandatory charge were commissions for purposes of 7(i).   Id. at * 6-7. 

Hospitality employers utilizing 7(i) should be heartened by the decision, but must remain wary of any practices which might undermine the characterization of supplemental payments for service as mandatory service charges under the FLSA.

 
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