As we previously discussed, the airline industry, like the hospitality industry, has been assailed with lawsuits alleging that tips from customers intended for certain employees—in this case, baggage handlers, a/k/a skycaps—have been misappropriated by the employer, in violation of state statutes and common law. In the airline industry, conflicting authority has emerged even within the same federal judicial district as to whether such claims are preempted by federal law. Compare Brown v. United Air Lines, Inc., 656 F. Supp. 2d 244, 249-51 (D. Mass. 2009)(preempted) with DiFiore v. Am. Airlines, Inc., 688 F. Supp. 2d 15 (D. Mass. 2009)(not preempted). Recently, the Court of Appeals for the First Circuit reversed the lower court’s DiFiore decision and vacated the jury’s award to Plaintiffs.based federal on preemption DiFiore v. Am. Airlines, Inc., 2011 U.S. App. LEXIS 10306 (1st Cir. Mass. May 20, 2011).

The central issue in these cases is whether the Airline Deregulation Act, 1978 legislation designed to ensure that the federal de-regulation of the airline industry did not result in a body of inconsistent state regulations governing air carriers, preempts state statutes and common law theories relating to the tips through its language preempting all state laws “related to a price, route, or service.” Id. at 11, citing 49 U.S.C. § 401713. Observing that this preemption provision is “broad but vague,” and citing three Supreme Court cases providing general guidance regarding construction of the Act, the court concluded that while the Supreme Court would be unlikely to utilize the preemption clause to free airlines from many, if not most common law and wage law claims, the Massachusetts tip statute at issue in the court’s view had a direct connection to both price and service – the baggage handling at issue itself constituting a service – and thus fell within the preemption clause. 

Jackson Lewis Partner Roger Briton, a leading expert on all aspects of employment law within the aviation industry, observes “The DiFiori decision opens the door a bit further to allowing employers in the aviation industry to fight wage/hour claims based on ADA preemption. While most wage claims are remote from issues ‘related to a price, route or service’, this potential defense should be considered in all cases.” 

Litigation over gratuities and tip practices continues to assail all industries where the practice is prevalent, including hospitality, aviation and car washes. Employers must ensure they understand all applicable federal and state requirements related to gratuities.